ARMENIAN CUSTOMS SERVICE JOINS CRACKDOWN ON

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000297

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/03/2018
TAGS: PGOV ASEC CASC PREL PHUM KDEM AM
SUBJECT: ARMENIAN CUSTOMS SERVICE JOINS CRACKDOWN ON
OPPOSITION OLIGARCH

YEREVAN 00000297 001.2 OF 002


Classified By: CDA JOSEPH PENNINGTON. REASON 1.4 (B/D)


1. (C) In what appears to be the GOAM's latest retaliatory
measure against a pro-opposition (and currently fugitive)
oligarch, Khachatur "Grzo" Sukiasian, a Sukiasian aide tells
us the customs agency has for several weeks been holding up
release of cigarettes imported by a Sukiasian-affiliated
company. Sukiasian's representatives believe the customs
agency may be trying to wrest control of the business in
order to hand it over to a relative of President-Elect Serzh
Sargsian and his favorite oligarch. While Sukiasian and his
businesses have previously been subject to harassment as
apparent retaliation for his support of LTP, this appears to
be the first time the GOAM has attempted to destroy or seize
one of his business assets. END SUMMARY.

SEVERAL SHIPMENTS HELD UP
--------------


2. (C) Khachatur Sukiasian is the oligarch who controls,
through a network of family and loyalists, the Sil Group
conglomerate and various associated firms. Sukiasian's
personal assistant has met several times in recent weeks with
EmbOffs to discuss the situation of the Sukiasian brothers
and the GOAM's campaign of harassment against them and their
business interests. Unless otherwise indicated, the following
information comes from EmbOffs' discussions with Sukiasian's
assistant or briefing papers she has provided us. This matter
has not yet been reported in local media. (NOTE: Armenian
law forbids members of parliament from having any direct
ownership in any kind of business. As one would expect from
such an unrealistically draconian ban, this restriction is
universally flouted. Upon entering parliament, Armenian
businessmen customarily restructure the ownership of their
businesses to put everything in the names of various family
members and loyal associates. Accordingly, while everyone
knows that Sil Group and its associated companies are de
facto Sukiasian's companies, in fact his formal title is
"honorary chairman" and nothing is legally in his own name.
END NOTE)


3. (U) Pares Armenia, a company 50-percent owned by Khachatur
Sukiasian's three brothers (the other 50 percent is owned by
a foreign holding company) has been the official importer and
distributor of Philip Morris brands of cigarettes in Armenia
since 1998. In 2007 the company was the country's
eighth-largest taxpayer, paying USD 22 million in customs
duties and other taxes, according to State Tax Service
statistics. Pares says that in 2007 it paid an average of
$246,000 per week in duties on 2,600 boxes (each box
containing 10,000 cigarettes). Until recently, the Customs
Service would release the shipments within several days of
receiving payment.


4. (C) In recent weeks the Customs Service has refused to
release several shipments from Philip Morris, despite Pares'
insistence that it has made all the required payments. Pares
claims to have paid over USD 1.4 million for documentary
stamps needed to clear three different shipments, none of
which has yet been released. On March 1, Customs denied the
request for the stamps (despite having received a payment of
USD 128,000 several days earlier),saying the length of the
contract with the partner (Philip Morris) was not clear.
Pares provided documentation of the contract on March 10, but
Customs has still not released the shipment, nor explained
the reason for holding up any of the shipments. Pares
indicates that it was due to pay another USD 387,000 to clear
a fourth shipment but is not willing to risk making another
payment while its previous shipments have not been released.
Meanwhile, its inventory levels are running low and the
company risks not being able to fill customer orders.


REVENGE - AND A BUSINESS OPPORTUNITY?
--------------


5. (C) Sukiasian's assistant told PolOff this week that
Pares' lawyers are trying to negotiate with the Customs
Service for release of the shipments, but thus far without
success. She claims that it is a politically motivated
action and that President-Elect Sargsian is attempting to
take away Pares' business as retaliation for Sukiasian's
support of LTP, as well as to help enrich a favored oligarch
and a family member. She claims that Sargsian's son-in-law
and senior adviser, Misha Minasian, and oligarch Samvel
"LaFik Samo" Alexanian (an MP/oligarch who led a roving goon
squad on Election Day, that invaded a number of polling
places to stuff ballot boxes for Serzh Sargsian) are now
negotiating with Philip Morris to take over the business from
Sukiasian. (NOTE: Minasian recently told CDA that he plans to

YEREVAN 00000297 002.2 OF 002


step down from his official position as Sargsian's advisor,
and return to his business interests. END NOTE).


A CREEPING CAMPAIGN AGAINST THE ROGUE OLIGARCH
-------------- -


6. (C) The holdup at Customs seems to be just the latest in a
series of moves undertaken by the GOAM as retaliation against
Sukiasian for his support of LTP. In October the State Tax
Service launched a surprise inspection against several SIL
Group companies, and since then the Director of SIL's Pizza
Di Roma restaurant chain has been jailed on tax-evasion
charges. More recently, police arrested two Pizza di Roma
employees, and continue to hold a cashier on tax-evasion
charges. The director of SIL's Bjni bottled water operation
was arrested March 22 on the Georgian border, reportedly on
tax-evasion charges. At present, of the four Sukiasian
brothers, only one - Eduard - is in Yerevan and free.
Khachatur's whereabouts are unknown ever since he was
stripped of his parliamentary immunity in early March, but he
is believed to be abroad. Robert, the President of
Pares-Armenia, was reportedly arrested several weeks ago in
Georgia and is currently being held there by police,
according to Sukiasian's aides and Armenian press, although
neither Armenian nor Georgian authorities have confirmed this
information officially. Robert Sukiasian's offense was
reported to be illegally crossing the border, which usually
can be excused by paying a USD 10,000 fine. The Georgian
government has reportedly declined offers by the family to
pay the fine and have Robert released, Sukiasian's assistant
told us privately that Saribek Sukiasian left Armenia six
months ago for unknown reasons.


COMMENT
--------------


7. (C) Given that the GOAM has used the State Tax Service in
recent months to harass or otherwise retaliate against
opponents, it is eminently plausible that they would likewise
employ the notoriously corrupt Customs Service to destroy the
business of an enemy, in order to hand the lucrative import
opportunity over to a relative or favored oligarch. We are
not yet ready to take at face value the Sukiasian side's
claim of who the reported beneficiary of this action may be.
Government insiders have repeatedly told us that as president
Serzh Sargsian would take on the notorious "nickname guys"
and drive them away from governmental circles. If indeed the
government arranges to transfer Sukiasian's cigarette import
business to Sargsian's son-in-law and the infamous "LaFik
Samo," that will speak volumes about Sargsian's
much-ballyhooed reform agenda. END COMMENT.
PENNINGTON