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On the trail of the Lincy lending project The $155 million grant project implemented by the Lincy Foundation is complete. Alongside this, the foundation implemented a lending project in collaboration with local banks. The loans were given to the local banks for lending to small and medium businesses in Armenia. For this, a $20-million loan had been made to the Armenian Government, which, according to the terms, is responsible for repaying it by the end of this year. But as Hetq-online has reported earlier, some of these banks were ailing at the time they received the loans, and have since gone bankrupt. Let’s take a look how the loan project got started. In summer 1998, the Lincy Foundation signed an agreement with the Government of Armenia promising a $100-million interest-free loan for the lending project. By 2000, it became clear that the project was impossible to accomplish. The process of lending was lengthy and bureaucratic. The government, with the foundation’s consent, decided to allocate $80 million of this money, again as a grant, for road building. $20 million was allocated for the lending project, and the government distributed this amount through local banks. Although the Lincy Foundation gave these loans interest-free, the government charged the banks an annual interest rate of three percent, and the banks, in their turn, lent the money at 15 percent. The project was under the supervision of the Center for Foreign Financial Projects Management of the Ministry of Finance and Economy (CFFPM). According to the center, twelve Armenian banks were involved. Seven of them went bankrupt. According to information that we have not been able to verify, some $5.5 million of the loan may be very hard to recover. Some of the banks have not been able to meet their obligations to repay the loans. It is impossible to find out from the CFFPM which banks have liabilities, and how much money has been frozen in each of them, since according to the loan agreement such information cannot be provided to the press. We do know that the Central Bank of Armenia played a key role in determining which banks should be involved in the Lincy lending project. It was the chairman of the Central Bank, Tigran Sargisyan, who submitted the list of reliable Armenian banks to whom the government granted the loans. How did certain banks, which experts had told Sarkisyan were ailing, make it onto his list? You may remember that the former head of the supervision department of the Central Bank, Artashes Davtyan, has been under arrest for seven months now. He was Tigran Sargisyan’s right-hand man. Levon Farmanyan, the chairman of the board of the defunct Ardshinbank was arrested recently. Martin Hovhannisyan, the chairman of Credit-Yerevan Bank and a former member of parliament, has gone into hiding. The Central Bank and its chairman, Tigran Sargisyan, played the main role in selecting the banks, and therefore they bear the prime responsibility. But as a former high-ranking Central Bank official who left Armenia a year ago stated, Tigran Sargisyan always seems to come out in the clear. The story isn’t over yet. One of our sources says that President Robert Kocharyan has demanded that those responsible be punished and the outstanding amounts be recovered. The noose around Tigran Sargisyan’s neck is tightening-he may not be in the clear much longer. It’s now known that some of the banks were granted loans on poor-quality mortgages, and even after selling them they will not be able to meet their obligations. Yet Tigran Sargisyan vouched for these banks. If it turns out that Lincy Foundation loans have been misappropriated, the consequences will be grave. The country’s president hopes that well-known businessmen Kirk Kerkoryan will continue his lending and grant projects, but this could be in jeopardy. The government, of course, has been at great pains to paint the results of the project in the most favorable light. To be continued Edik Baghdasaryan |
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