Problematic aspects of the New Year reception of the Ministry of Foreign Affairs organized with the means of the state budget

At the end of last year, the Ministry of Foreign Affairs spent AMD 2.4 million on its New Year reception. According to the official state procurement bulletin, this event was organized for the end-of-year meeting of the Minister of Foreign Affairs and 300 employees of the Ministry.

There would be nothing remarkable about it if the end-of-year party of the employees of the state agency was not organized by the means allocated from the state budget, and was not presented as a representation expense.

According to the state procurement website gnumner.am, the purpose of the event on December 29 was to organize a “reception for 300 people within the framework of the end-of-year meeting between the Foreign Minister and the staff.”

“Representation expenses” for staff gatherings

As mentioned, AMD 2.4 million was spent on the event, and “Coffees” LLC was chosen as a service provider based on the single source procurement method.

It is noteworthy that this procurement was presented as a representation expense, while representation expenses are mainly made within the framework of visits of foreign officials or business delegations, when it is necessary to spend funds to meet and serve guests or, respectively, during the visits of Armenian delegations abroad.

The concept of “representation expenses” is defined by the Tax Code, according to which “representation expenses are expenses incurred in order to establish and / or maintain mutually beneficial cooperation with other organizations and individuals“.

In this case, the Ministry of Foreign Affairs decided to hold an end-of-year meeting between the Minister and the staff at the expense of taxpayers, which is not provided by law.

The “only” catering service provider in Armenia

As the service was delegated to “Coffees” LLC based on single source procurement, we sent an inquiry to the Ministry of Foreign Affairs for clarification, asking to inform on what legal basis the corporate event was organized from the state budget and why the single source procurement option was chosen. In response, the Ministry of Foreign Affairs informed that there was a condition to fulfill the requirement set by Article 23 (1) of the Law on Procurement for the implementation of the transaction.

And what requirement does the aforementioned article set?

Article 23(1) of the Law on Procurement stipulates that a procurement can be made from a single source if it is conditioned by his / her copyright and related rights, the existence of a special or exclusive right․

This means that according to the Ministry of Foreign Affairs, the end-of-year reception is a subject of copyright, special or exclusive right. In other words, no other organization could provide a catering service except for “Coffees” LLC.

Thus, we can state that the reception organized by the Minister of Foreign Affairs for the end-of-year meeting with the Ministry’s staff is problematic, first of all, in the sense that it was carried out at the expense of the state budget, and according to the Ministry, the single source procurement is conditioned by copyright and related rights, existence of a special or exclusive right.

Sevada Ghazaryan