11.10.2019

A roundtable discussion on the “Importance and Benefits of Introducing Anti-Corruption Compliance Programs in the Private Sector” was held on 11 September.

The discussion was organised by the Armenian Lawyers’ Association (ALA) and CSOs Anti-Corruption Coalition of Armenia within the framework of the Center of International Private Enterprise funded "Promotion of Corruption and Reforms. Armenia" project and EU funded “Commitment to Constructive Dialogue” project.

Mariam Zadoyan, Project Manager of the ALA’s Component of “Armenia: Promoting Anti-Corruption Conduct and Reforms” project delivered a speech at the event.

She presented the program, and also referred to the introduction of the Institute of Criminal Liability of Legal Entities in Armenia. She noted that the institute has been incorporated in a number of countries, such as the US, England, Austria, Canada, China, Denmark, Iceland and a number of other countries;

“In different countries, there are different views on bringing legal entities to criminal liability. For example, the basis of corporate liability varies in different countries, some provide criminal liability and in some administrative. For example our country applies criminal liability.”

Mariam Zadoyan emphasized that the punishments should be more preventive than those that would lead the company to economic destruction. According to her, the introduction of this institute is aimed just at the prevention.

She also touched upon the issues of mitigating or excluding the legal responsibility of the legal person.

“The draft states that under certain circumstances it will be possible for the legal entity to evade liability, and this is highly appreciated. In international practice, the issue of mitigating or toughening it is different. In some countries, the company can generally avoid liability if it has an anti-corruption compliance programme in place.”

According to the representative of the Ministry of Justice Arman Babakhanyan, the draft Criminal Code of the Republic of Armenia will also envisage exclusion of liability when introducing the institute of criminal liability of legal entities in the Republic of Armenia. 

There will be 5 sanctions, including a ban for participation in public procurement. "There is a corporate governance problem, and when companies realize that imitation of risk management alone will cause problems, they will begin to refrain from illegalities," Narine Melikyan, Director of the Corporate Governance Center of Armenia said.

In her report, she presented evidence that the costs of not implementing anti- corruption compliance programs and running a business in a corrupt manner are far more than the costs of investing and working honestly.

Lusine Nalbandyan, a legal expert at the Armenian Lawyers’ Association, mentioned in her speech that the anti-corruption compliance program is a part of anti-corruption education, and that the only problem is that it is necessary to invest in Armenia in accordance to correct legislative and possibly fewer risks, also taking into account international experience. Further she presented a review of the international practice of mandatory implementation of these programs in the field of public procurement, emphasizing that certification is carried out by an independent body.

David Ter-Gulanyan, from the Ministry of Economy, noted that the government attaches great importance to the corporate governance issue and is in the process of revising its Code of Conduct. He also informed that in the context of the strategy of improving the business environment currently being developed by the Ministry of Economy, special attention is paid to the introduction of corporate governance and ways of raising awareness and encouraging it.

In his speech, representative of the RA Finance Ministry Sergey Shahnazaryan said,

“We know that the government recently adopted a decision that essentially introduced new content institutions to manage corruption risks in the field of public procurement, in particular the involvement of the banking system. Anti-corruption compliance programs in the context of this system may be addressed after the full implementation of the system, as it would be more difficult at present to determine its feasibility. That is, it is possible to implement anti-corruption compliance programs through the banking system and to include in this dialogue the Central Bank of Armenia and banks. It is also important to understand whether the independent certification body will be responsible for identifying possible cases. We also have to take into account, what privilege to the business we are talking about, the price or documentary.

The discussion was followed by question and answer session. As a result, an agreement was reached with the state authorities to redraft the proposals in the light of new legislative changes.