Armenia's illicit cash outflow under spotlight

/By AzerNews/

By Mushvig Mehdiyev

A recent report published by an influential financial organization revealed the amount of money taken out of the world's developing countries.

Armenia left its previous ranking due to a year-on-year increase in amount of illicit money outflows.

The Global Financial Integrity, a non-profit, Washington, DC-based research and advisory organization, which produces high-caliber analyses of illicit financial flows, disclosed that about 1.25 billion was taken out of Armenia in 2012. It is $63 million more than the figure in 2011.

The Illicit Financial Flows from Developing Countries: 2003-2012 Report claims that Armenia faced nearly $7.5 billion illegal cash takeout over the period from 2003 to 2012, as a result of government corruption, tax evasion and other illicit financial dealings.

The figure almost doubles Armenia’s foreign debt, as illicit outflows from the post-Soviet country surpassed the $1 billion mark with a sustainable growth since 2007, according to the report.

Armenia has been ranked 69th (71st in the previous report) among 145 countries in terms of annual average amount of the clandestine money outflow calculated at $750 million over the period between 2003 and 2012, while the country has been put to 60th place based on the amount of illegal money leakage amounted to $1.23 billion only during 2012.

What happened to that money or where were they harbored is not known yet, according to the Global Financial Integrity.

The report concludes that developing and emerging economies have lost $6.6 trillion in illicit financial flows from 2003 through 2012, staggering average rate of 9.4 percent per year, which is roughly twice as fast as global GDP.

China is the world's top country over the 10-year period with $1.25 trillion in illicit outflows, followed by Russia, Mexico, India, and Malaysia, said the report.

The recent and controversial offshore deal in Armenia was one of the notorious examples of illegal money takeout. Former Prime Minister Tigran Sarkisyan and Archbishop Navasard Kchoyan were reportedly blamed for taking out some $10.7 million from the country through an offshore company in Cyprus. Even the former premier's resignation was linked to his reported involvement in the money laundering operation.

Predominant oligarchy in Armenia, which is represented mainly by the state officials, may well affect the growth in amount of illegal money takeout. For instance, according to declarations by the parliamentarians, there are 19 millionaire legislators in the Armenian parliament. Since the constitution bans the public servants from engaging in any business activity, tycoons of the poor country (32.3 percent poverty rate in 2014) turn to illegal ways of saving their fortune from the rule of law.

The Global Competitiveness Report 2014 unveiled the oligarchy-controlled monopoly in Armenia, ranking the former Soviet nation 105th among 144 countries in terms of the effectiveness of antitrust policy.