Has the time of the local “princes” passed? Pashinyan’s statement and the new acting mayor of Jermuk

On October 13, Prime Minister Nikol Pashinyan signed a decree to appoint Vahagn Arsenyan acting mayor of Jermuk. Vahagn Arsenyan is the son of a well-known businessman, former MP of the Republican faction Ashot Arsenyan.

Ashot Arsenyan was a member of parliament from the Republican Party of Armenia in 2003-2018. Before that he was the director of the Jermuk Mineral Water Factory and then the mayor of Jermuk. Ashot Arsenyan left the Republican Party after the revolution, against the background of a heated debate on the exploitation of the Amulsar gold mine.He stated that being a member of the Republican Party prevented him from discussing the Amulsar issue with the residents of the affected community.

However, Arsenyan is largely famous as the owner of “Jermuk Group”, rather than as an MP. The Jermuk mineral water factory and production is owned by “Jermuk Group”. Production of mineral water began in 1951, during the Soviet period. The company also exports mineral water to the United States, Russia, Ukraine, Georgia, EU countries, Israel. In the 2020 list of 1000 taxpayers, “Jermuk Group” ranks 132nd, having paid more than AMD 1.4 billion in taxes. “Jermuk Group” also owns another water brand called “Byuregh“.

A criminal case over draft evasion

It became known in 2019 that the Investigative Committee had initiated a criminal case in connection with Vahagn Arsenyan’s exemption from military service. He was accused of fabricating documents, evading military service by other means of fraud. Vahagn Arsenyan was exempted from military service on the basis of his health condition. Months later, however, the criminal charges against Vahagn Arsenyan were dropped and the lawsuit was dismissed. In 2019, the “Jermuk Group” was also on the list of companies that donated 2 snowplows and garbage trucks to Yerevan Municipality. Vahagn Arsenyan can be seen in official press releases, hosting former President Serzh Sargsyan and Prime Minister Karen Karapetyan at the factory as the director of “Jermuk Group”.

Vahagn Arsenyan’s involvement in businesses

According to the State Register of Legal Entities of the Ministry of Justice of the Republic of Armenia, the only shareholder and director of “Jermuk Group” is the newly appointed acting head of Jermuk community Vahagn Arsenyan. According to the State Commission for Protection of Economic Competition, “Jermuk Group” has a dominant position in the commodity market of bottled mineral waters.

“Jermuk Group” has also started construction activities in recent years, and is building “Nor Byuregh” residential complex on Arshakunyats Avenue in the capital Yerevan. Although the developer of the complex is “Jermuk Group”, the construction work is carried out by “ML Mining” company owned by the former Chief of Staff of the Special Investigation Service David Sukiasyan, and the architectural planning is provided by the architectural studio of former Chairman of the Urban Development Committee Narek Sargsyan. “Nor Byuregh” complex consists of 7 residential buildings (one of which is 25-storey) and 2 business centers, and has 1.2 hectares of green area.

The newly appointed acting mayor of Jermuk also has a 30% share in Reload LLC. This company is engaged in providing services, programming and consulting in the field of information technologies. It is noteworthy that Kibar Khalvashi, registered in Germany, has a 30% share in the company. Khalvashi is a Georgian millionaire businessman. He owns the highest rated TV company in Georgia (Rustavi-2), as well as a number of other companies.  He is also the co-founder of Pepsi production in Georgia, and one of the biggest critics of Mikheil Saakashvili’s government. The business partnership between the Arsenyans and Khalvashi, in fact, started from the business of importing and selling Pepsi in the region.

Ashot Arsenyan was the importer and seller of Pepsi carbonated soft drink in Armenia. This activity was carried out by “Jermuk International Pepsi-Cola Bottler” LLC. According to the State Register of Legal Entities, Ashot Arsenyan’s other son, Arsen Arsenyan, was a shareholder of the company in 2006-2017. In 2013, he sold 50% of his shares to Highbury & Beverage Limited, a company registered in the Virgin Islands. According to Hetq, Highbury & Beveridge Limited is part of the Highbury Group and is headed by President Armen Sargsyan. In 2017, Jermuk International Pepsi-Cola Bottler LLC was transferred to another company registered in the Virgin Islands, Elsu Inc. LLC, which, according to Hetq, also belongs to the Sargsyan family.

Vahagn Arsenyan is also the sole shareholder of “Jermuk Main Factory” LLC. This company is included in “Jermuk Group”.

The acting mayor of Jermuk was also the shareholder of “Jerm Farm” LLC until last year. “Jerm Farm” was formed by being separated from “Jermuk Group”. The company was engaged in cattle breeding and crop production. In 2020, the farm was transferred to “Father and Son Yeremyans” LLC, which in its turn belongs to the owner of restaurant chains Davit Yeremyan. Besides, in 2019 Yeremyan bought “Eco Farm” company from Vahagn Arsenyan. The company is engaged in cattle breeding and milk production.

“Jermuk Hydrotech” LLC also operates within the “Jermuk Group”. The company operates the “Jermuk HPP-2” small hydropower plant on the Arpa River. The installed capacity of the SHPP is 2.35 MW, and the diversion pipeline is 3513 meters long.

Should a businessman be involved in politics or not? 

The appointment of Vahagn Arsenyan, the owner of “Jermuk Group” as the acting mayor of Jermuk, is in direct contradiction with Nikol Pashinyan’s statements on drawing a line between business and politics. In his Prime Minister nomination speech in the parliament on May 8, 2018, Pashinyan stated that “a businessman should not be involved in politics.”

“A businessman should not be involved in politics. And this is right and fair. But the application of this principle will not be complete and just if we do not apply the other substantive aspects of this principle. If a businessman should not be involved in politics, a politician should not be engaged in business either. Politics should not be a tool to make money for anyone, and the public should have leverage to make sure officials do not engage in business activities,” Pashinyan said.

On July 5 of the same year, Pashinyan announced in Syunik that “the time of local princes and feudal lords has passed.”

Mkrtich Karapetyan