09 Jun 2020
By Vahe Sarukhanyan and Edik Baghdasaryan, OCCRP, 5 June 2020
OCCRP — When the coronavirus hit Armenia in early March, those who had been exposed to the first confirmed patient were ushered to the mountain resort town of Tsaghkadzor and quarantined at the posh Golden Palace Hotel Resort & Spa.
The facility had stood empty ever since the family of Armen Avetisyan, the country’s former head of customs, gave it to the state in 2019.
At the time, Avetisyan was being investigated for alleged money laundering and amassing part of his US$90 million hotel portfolio during his time as a public official, despite laws forbidding him from business dealings while in office. But just weeks after the state accepted his family’s gift, worth over $15 million, the probe against him was dropped.
Avetisyan, who left his top position with customs in 2008, came under suspicion as part of an anti-corruption campaign launched by Armenia’s new government, after it was swept to power by the peaceful Velvet Revolution in 2018.
Now a leak of bank documents analyzed by OCCRP and its Armenian member center, Hetq, sheds new light on his family’s assets. Records and emails from Cayman National Bank on the Isle of Man, a British Crown dependency in the Irish Sea, show Avetisyan claimed to have 3 million British pounds in a Cypriot bank account, and to earn at least $1 million a year from his Armenian businesses when he opened an account at Cayman National in 2012.
Cayman National flagged the account belonging to the Avetisyans’ company internally as early as 2014 over concerns they contained funds “possibly from a corrupt source.” But despite their worries, the account stayed open for four more years, and more than $10 million passed through it. The bulk of that money was transferred to Avetisyan’s brother-in-law, who was once a deputy minister in Armenia.
Last year the bank filed a suspicious activity report following a request for information from the financial regulator on the Isle of Man, where the account was based.
Armenian investigators told Hetq they were unaware of the offshore account, but were adamant the probe against him was dropped for legal reasons.
Avetisyan refused to respond to detailed questions through his lawyer. Cayman National Bank said it upholds stringent anti-money laundering controls, but declined to comment on specific clients.
A Golden Age
Armen Avetisyan’s company, Golden Group Limited, was flagged as a high-risk client from the time it opened an account at Cayman National in 2012.
The company was registered on the Isle of Man in January of that year. Publicly it was owned by a nominee company also based on the island, Dolmen Holdings Limited, but Avetisyan declared himself the ultimate beneficial owner.
When the account was opened, Avetisyan claimed his wealth came from his hotel and furniture companies in Armenia, as well as his salary as a civil servant. He detailed how his family developed their first 5-star hotel in 2005, when he was a public official, and was now generating annual profits of around $1 million from his businesses. He also claimed to have 3 million British pounds in an account in Cyprus, which he was ready to transfer to the Isle of Man.
Based on public information about civil service pay scales in Armenia, Avetisyan would have been earning around $1,350 a month during his last year in office.
In 2014, an internal Cayman National report said the accounts should be closely monitored “in light of large and frequent deposits made by Avetisyan into [a] Golden Group account – funds possibly from a corrupt source.”
The previous year Golden Group Limited took ownership of the hotels from a Cyprus-registered company called Riverhill Holdings Limited.
Just before the takeover, Armen Avetisyan officially turned the company over to his 22-year-old son, Artashes Avetisyan.
Investigators at Armenia’s National Security Services (NSS) alleged Avetisyan used Riverhill Holdings to pretend that the first of his Golden Palace hotels was financed by foreign investment. In fact, they claimed in a 2018 report, the hotel built in Yerevan’s Victory Park in 2005 — now branded as Radisson Blu Hotel Yerevan — was paid for largely in cash by Avetisyan and unnamed associates.
What’s more, the NSS said Avetisyan had personally overseen its construction and even used his official position as chairman of the State Customs Committee to resolve problems with the development.
“In order to make the fact of the hotel construction with foreign investments more convincing, in 2005, during the opening ceremony of the hotel, a Lebanese citizen was introduced as a foreign investor,” investigators said in the preliminary findings of the NSS probe into Avetisyan, released in October 2018.
In reality, they wrote in the report, the Lebanese man “had no connection to that company and for some time worked in the same hotel as director.
Not long after the opening ceremony for the first hotel, which was attended by then-President Robert Kocharyan, Armenian press outed Avetisyan’s brother-in-law, Hayk Tshshmarityan, then Deputy Minister of Transport and Communication, as the official owner of the Cypriot firm, Riverhill Holdings Ltd. He resigned from his post following the revelations.
But Avetisyan remained unscathed for another few years. He was dismissed from his position as head of customs without explanation in 2008, and he would go on to secretly build his second hotel, the Golden Palace Hotel Resort & Spa in Tsaghkadzor. The opening ceremony was held in March 2013, with then-President Serzh Sargsyan in attendance.
It was not until July 2018 that Avetisyan was designated as an “unacceptable risk” by Cayman National.
In an internal memo, Managing Director Nigel Gautrey warned the bank’s Compliance and Risk Committee that Armenia’s former head of customs presented a “material” risk to the company
“This is an ongoing PEP relationship where there are doubts in my view about the legitimacy of the original beneficial owner’s wealth, given his dismissal from public office due to corruption,” wrote Gautrey, citing an allegation that had been aired in the media but was never substantiated.
Read more at OCCRP
Photo (cropped and edited): Preacher lad/CC BY-SA 3.0
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