The UK's Serious Fraud Office - A Dissapointment for the People of Armenia

Over the course of the past year, the Government Accountability Project has backed the 'Blowing the World Bank Whistle' claim of corruption in World Bank-funded projects in Armenia. A number of British nationals were at the centre of the sordid affair, so since July 2007 the UK’s Serious Fraud Office (SFO) has been monitoring the case, in accordance with the new UK ‘Bribery and Corruption Law’, which gives UK courts jurisdiction over crimes of bribery committed wholly overseas by UK nationals.

In February 2008, a senior SFO officer travelled to Washington to discuss the matter with the Department of Institutional integrity (INT), and promised to report on the trip after his return to the UK.

On the 14th August, after many requests to the SFO, and after pressure from the British Ambassador in Armenia, the SFO eventually submitted the report promised on its year-long investigations, a one page letter which included the following statement: “I have explored your allegation that one named UK citizen received what would amount to a bribe. I have spoken to the INT department of the World Bank. They have uncovered no evidence to support your allegation during their extensive enquiries”.

It was later determined that the SFO statement referred only to the matter of bribery, not to the other 10 items of fraud, corruption and embezzlement. The conclusion reached by the INT on this matter, however again brings into question its sincerity with this investigation, after more than a year, which led to this amazing decision.

The UK Government “Law on Bribery and Corruption” clearly defines bribery as “the receiving or offering/giving of any benefit (in cash or in kind) by or to any public servant or office holder or to a director or employee of a private company in order to induce that person to give improper assistance in breach of their duty to the government or company which has employed or appointed them”. This definition of bribery is in line with the UN Convention against Corruption, to which the UK is a signatory.

The INT and the SFO reached the conclusion that Richard Walkling was not offered and did not accept a bribe when he was appointed General Director of the Yerevan Water & Wastewater Company, the company to which he was contracted to manage the World Bank Municipal Development Project. However, throughout the five-year duration of the project, Walkling presented himself to the Armenian public as the Authorized Representative for the Italian water utility company A. Utilities and concealed that he was also General Director of the Armenian state water company. In practice Walkling was contracted to himself, signing his own pay checks and involved in fraud, corruption and embezzlement which cost the Armenian people tens of millions of dollars. On the one side of his contract he was protected by a corrupt Armenian government and on the other by a corrupt World Bank Country Manager - a very beneficial position.

As a result of the INT decision, the UK’s Serious Fraud Office is not able to pursue an action against Richard Walkling, because according to the UK “Law on Bribery and Corruption”, without bribery there can not be corruption – interesting?

Apparently the INT investigation is still ongoing, but in the light of this unbelievable decision on the matter of bribery, there is not much hope that the investigation will find wrongdoings with the other ten items. The action is published on the Government Accountability Project website, "The Fight in Washington against Corruption in Armenia", which has links to the basic evidentiary documents behind the claim. There are eleven exhibits, of which Exhibit 1 gives details of Richard Walkling’s ‘Conflict of Interests’, which came about as a result of him accepting a bribe offered to him by the Armenian Government.

Together with GAP, we are still pressing for a final INT report on their investigation, but in the meantime, GAP is working to have the matter brought before the U.S. Congress.

Armenia’s Disgrace goes to the U.S. Congress

So here we are, after a year of asking, beseeching, shouting, petitioning and screaming for a World Bank INT investigation into the corruption that has led Armenia to its recent crisis. On Thursday 17th April, the whole affair is going before a U.S. Congressional hearing, held by the U.S. Helsinki Commission, otherwise known as the Commission on Security and Cooperation in Europe, or OSCE.

The hearing will focus on the ramifications of recent developments for Armenia and the United States, especially the ongoing negotiations on Nagorno-Karabakh and Armenia s qualifications for assistance from the Millennium Challenge Account. Testifying before the Commission will be: Mr. Matthew Bryza, Deputy Assistant Secretary of State for European and Eurasian Affairs, Mr. Vigen Sargsian, Assistant to the President of the Republic of Armenia, and Mr. Arman Grigorian, Spokesman for Levon Ter-Petrossian, Armenia’s former President who continues to contest the recent Presidential election farce.

The Blowing the World Bank Whistle campaign has long argued that World Bank / IMF irresponsibility has led to the crisis now unfolding in Armenia. Since the turn of the century, the World’s two most prestigious sister financial institutions have been jointly nurturing a politically motivated agenda to prepare for resolution of the Karabakh conflict. The conflict of course had to be resolved; but the secretive way in which they have chosen to tackle the problem has led to a major crisis for Armenia, which in turn has led to the U.S. Congress hearing of the 17th.

Kocharian and Sargsyan have been playing down the way their Presidential election disgrace has threatened the Millennium Challenge Account, unashamedly announcing that Russia might be allowed to make up the Two Hundred and Thirty Five Million Dollar shortfall. That they could easily do by channelling a small part of the Karabakh compensation package to a Millennium Account. And although that surrogate Millennium Account will then be used to solve their own personal challenges, rather than those of Armenia’s under-privileged, they will again argue that they have served in the people’s best interests.

In monetary terms the Karabakh compensation package is likely to be some 20 times larger than the Millennium Challenge Account. Moreover, although that compensation package will be more than adequate to finance re-location for the tens of thousands who are forced to leave Karabakh and the surrounding territories, the Kocharian / Sargsyan team will inevitably find interesting ways to add to their multi-billion dollar windfall and continue squeezing every last Dram from those who will choose to move to Yerevan.

Hopefully, on the 17^th the right questions will be asked for the peoples of Armenia and Karabakh. And hopefully the U.S. Congressional hearing will be able to shed some light on what has to date been a decidedly shady operation in preparation for resolution of the Karabakh conflict. And maybe with appropriate intervention following the U.S. Congressional hearing, the people of Armenia will be able to look forward to some level of normality.

Bruce Tasker
A Year Blowing the World Bank Whistle