JAILED BUSINESSMEN ACQUITTED IN LANDMARK RULING
By Ruzanna Stepanian

Radio Liberty, Czech Rep.
July 16 2007

In a landmark ruling, a court in Yerevan acquitted and set free on
Monday two businessmen who were arrested nearly two years ago after
publicly alleging high-level corruption in the Armenian customs.

Gagik Hakobian, a leading shareholder in the coffee processing and
packaging company Royal Armenia, and its deputy director Aram Ghazarian
walked free in the court after being unexpectedly cleared of smuggling,
tax evasion and fraud.

The two men were arrested in October 2005 at the height of Royal
Armenia’s bitter dispute with the State Customs Committee (SCC).

Hakobian had repeatedly claimed in the months leading up to the
arrest that his company is being illegally penalized by the SCC for
its refusal to engage in a scam that would have benefited two senior
customs officials.

The SCC has dismissed the corruption allegations, saying that Royal
Armenia itself illegally avoided paying more than 1 billion drams
($3 million) worth of taxes and import duties.

The embattled company has strongly denied this. Its representatives
have said all along that the criminal case was "fabricated" by
Armenia’s National Security Service (NSS) in retaliation for its
high-profile spat with the customs service. The latter is headed by
a figure close to Prime Minister Serzh Sarkisian.

The NSS stood by the grave accusations throughout the eight-month
trial, demanding that Hakobian and Ghazarian be sentenced to 12
and 11 years in prison respectively. The case was largely based on
incriminating testimony given by Vache Petrosian, a U.S. citizen and
former Royal Armenia supplier.

However, the court of first instance of Yerevan’s Kentron and Nork
Marash districts found the charges baseless and acquitted the
defendants on all counts. It also ordered prosecutors to launch
criminal proceedings against Petrosian, saying that he falsely
incriminated his former business partners.

It was apparently the first major court defeat ever suffered by the
Armenian successor to the Soviet KGB. The feared security agency
has until now had little difficulty securing guilty verdicts by
Armenian judges.

Gevorg Minasian, the chief Royal Armenia lawyer, said he was surprised
by the full acquittal, which many of those present in the courtroom
greeted with rapturous applause. "I though that the court will likely
come up with a compromise solution that will somehow satisfy both us
and those who fabricated this case," he told RFE/RL.

"But to our surprise, justice prevailed in full."

"The trial showed that my clients are 100 percent innocent," said
Minasian.

"The trial showed that the whole thing was trumped up," agreed Ashot
Sargsian, another defense lawyer. "I am surprised that there can be
just verdicts in this country."

Prosecutors who represented the NSS at the trial think otherwise,
though. A spokeswoman for the Prosecutor-General’s Office told RFE/RL
that they will appeal the ruling.

The SCC is reputed to be one of the most corrupt government agencies
in Armenia, with local businessmen routinely complaining about its
allegedly arbitrary practices. However, most of them avoid going
public with their grievances for fear of government retribution. In
fact, Royal Armenia is the only private firm which is known to have
publicly clashed with the SCC.

The dispute stems from the SCC’s discretionary power to determine
the market value of imported commodities before levying a fixed 10
percent duty from them. It broke out more than two years ago when
Royal Armenia charged that the deputy chief of the customs, Gagik
Khachatrian, and another senior official offered the company to
grossly undervalue the price of its imported coffee beans in return
for sharing in the resulting extra profits.