OPPOSITION BUSINESSMAN'S COMPANY SOLD IN

C O N F I D E N T I A L YEREVAN 000106 SIPDIS E.O. 12958: DECL: 02/18/2019 TAGS: ECON PGOV PREL PHUM KDEM AM SUBJECT: OPPOSITION BUSINESSMAN'S COMPANY SOLD IN GOVERNMENT AUCTION REF: A) 08 YEREVAN 1018 B) 08 YEREVAN 1043 Classified By: CDA Joseph Pennington. Reasons 1.4 (b/d) ¶1. (C) SUMMARY: Nearly two months after first putting it up for auction, the GOAM on February 16 finally found a buyer for the Bjni mineral water company, seized last fall from fugitive opposition oligarch Khachatur Sukiasian. This was the second attempt to auction off the firm. The first auction attracted no bidders after Armenia's leading oligarch (and Prosperous Armenia party leader) Gagik Tsarukian, publicly criticized the government action against Bjni, stating he would not bid on the firm and no one else should either. While a GOAM spokesperson declined to name the successful bidder, on February 17 the buyer revealed himself: Prominent pro-government oligarch and MP Ruben Hayrapetian (aka Nemets Rubo),who is widely believed connected to Russian organized crime. END SUMMARY NO BIDDERS -------------- ¶2. (C) Bjni was first put up for sale on December 19 after the GOAM seized the company's assets to pay fines imposed earlier in the year for alleged misappropriation of state-owned water resources and tax violations. After the auction resumed in January following a court's rejection of Bjni's claim for bankruptcy protection, it still failed to attract any bids. The GOAM again suspended the auction and reopened it yet again on February 5, this time reducing the price by ten percent, to AMD 4.44 billion (USD 14.4 million). CHARGES POLITICALLY MOTIVATED? -------------- ¶3. (C) The Sukiasian-owned SIL Group, owner of Bjni and several other companies, has claimed from the outset that the charges are without merit and constitute thinly-veiled retaliation for Sukiasian's public support in fall 2007 for the Presidential candidacy of Levon Ter-Petrosian. They contend that the auction is illegitimate and announced shortly after the sale their intention to challenge the transaction in court. The GOAM has consistently denied any political motivation to the actions against any of the SIL Group companies. THE BUYER -------------- ¶4. (C) Ruben Hayrapetian is one of the most notorious of Armenia's oligarchs, with strong suspected ties to organized crime and a close relationship with the Armenian authorities (including the President). He is also President of Armenia's Football (soccer) Federation. COMMENT -------------- ¶5. (C) We have long suspected the seizure and auction of Bjni would ultimately land the company under control of a government insider, much as occurred with Sukiasian's distributorship of Philip Morris (now controlled by President Sargsian's son-in-law, Mikhail "Misha" Minasian). It is not clear at this point whether Hayrapetian purchased Bjni as a strict business proposition, though the failure to attract a bidder for the company and the resulting publicity was likely proving an embarrassment to the GOAM. We suspect Hayreptian was strongly encouraged by the president to break ranks with the other oligarchs and buy Bjni, thus saving the GOAM the embarrassment of a second failed auction. However, the profitable Bjni business may well be a lucrative investment nonetheless. End Comment. PENNINGTON