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The issues concerning the transfer of the Zangezur Copper Molybdenum Combine (ZCMC) shares to the Armenian government, one of the shadiest deals in the history of independent Armenia, remain up in the air.

It remains unclear how the government cut a deal with the mining giant, which is Armenia’s largest taxpayer, as its details have not been publicly disclosed.

It all started back on 30 September 2021, when it emerged that the Industrial Company JSC, a wholly owned subsidiary of Russian billionaire Roman Trotsenko’s GeoProMining Gold, acquired 60% of ZCMC and immediately donated a quarter of that stake to the Armenian government. Thus, Prime Minister Nikol Pashinyan’s government got hold of 15% of ZCMC’s stock.

Incidentally, the Industrial Company had never been listed among the shareholders of the mining company. It became a ZCMC shareholder on September 30, when 15% of its ZCMC stake were granted to the government.

Pashinyan's statement and changes in ZCMC

Campaigning for the June 2021 parliamentary elections, Nikol Pashinyan vowed to punish ZCMC’s “owners” for harassing its employees and make sure that their shares are “returned to the people” as parts of a “steel revolution” which he said would start from Syunik Province.

“Employees of the Zangezur Copper Molybdenum Combine have been threatened with dismissal if they attend [Pashinyan’s] rallies. I promise you now that none of those threatening you will have worked at ZCMC by mid-July. It's enough that some bashibozouks remained in charge of the Zangezur Copper Molybdenum Combine," Pashinyan said at an election campaign in the town of Kajaran on 15 June.

He also revealed some secrets. "I would like to reveal a secret; now negotiations are underway in this regard and I hope that some will take a constructive stance. Otherwise, the Armenian people shall get back their shares in the Zangezur Copper Molybdenum Combine from those bashibozouks, even under the nationalization law."

The ZCMC deal was struck not long after his statements.

Here’s another striking circumstance. Decision No. 270-А of Armenia’s Competition Protection Commission dated 29 September 2021 reveals that the commission allowed the concurrence of the Zangezur Copper Molybdenum Combine and the Industrial Company. It was based on a June 15 application submitted by the two companies, which said the Moscow-based Industrial Company sought to acquire around 60% of ZCMC’s stock.

Thus, the Competition Protection Commission received the application on the same day when Nikol Pashinyan told his supporters in Kajaran that "the Armenian people will regain their shares in the Zangezur Copper Molybdenum Combine.”

Subsequently, the government handed over its 15% stake in ZCMC to the trust management of the Armenian National Interests Fund (ANIF). Strikingly, ANIF Board of Directors is led by Armenia’s former Deputy Prime Minister Tigran Avinyan.

A number of economists, politicians and media outlets sounded the alarm about this non-transparent deal. Moreover, the media asked the government to provide a copy of the donation agreement, however the latter rejected the request, citing “commercial issues” concerning the transfer.

CivilNet and the Transparency International Anti-Corruption Center next filed a lawsuit in the Administrative Court in December 2021, asking the court to oblige the government to publicize the deal.

Earlier in October, Varuzhan Hoktanyan, Project Director at the Transparency International Anti-Corruption Center, told Pastinfo that the deal to sell 60% of the ZCMC shares to Roman Trotsenko was not transparent and no further clarifications were provided.

"It’s unclear why GeoProMining was kind enough to donate 15% of its stake to the government. In turn, the government justified the deal claiming that its role in the distribution and use of the ZCMC profits, as well as in its further development will increase. Basically, it’s not a bad objective, but the question is whether those claims correspond to reality or not," Hoktanyan said.

He also called out the transfer of the shares to the prime minister’s office rather that the Ministry of Economy, which, Hoktanyan claimed, was a more competent agency.

"This is yet another evidence of the concentration of power, because it it’s clear why the stake was granted to the prime minister's office. Everything is concentrated in the hands of the prime minister's staff. If it continues like this, there will be no need for ministries, since they will emerge into departments of the prime minister's office," Hoktanyan stated.

Addressing the parliament on 6 October 2021, Pashinyan excitedly announced GeoProMining’s plans to build a copper smelter and a nuclear power plant in Armenia thriugh new investments, which essentially remained up in the air.

Incidentally, even Armenian politician Aram Sargsyan, who is a close ally of Nikol Pashinyan, called the deal reckless. "A Russian investor comes to Kajaran and says he will invest $3 billion there. However, a maximum of $800 million is needed to build a metal smelting plant," he stated.

Later on 24 August 2022, the Armenian government endorsed a draft decision to hand over 6.8% more stake in ZCMC to ANIF for management. Pashinyan revealed at a weekly cabinet meeting that the firm called AMP Holding secretly donated its 6.8% stake to the government in March. The premier said AMP asked the government at the time not to publicize the transfer due to “commercial issues.”

“Now they have no need for secrecy, and we are handing over that 6.8% stake to ANIF for management. Starting from March 24, the Armenian government holds a 21.875% stake [in ZCMC], which is a crucial development,” Pashinian said.

The decision said that Armenia would more effectively manage its shares in the company through ANIF which could create a long-term joint vision and opportunities between the state and the company's shareholders for business development and economic benefits for Armenia.

ANIF and transparency

Was ANIF transparent at work? The media can best answer this question, as their requests to ANIF were mostly ignored or they received vague answers after several warnings.

Panorama tried to obtain any information on the Zangezur Copper Molybdenum Combine from the ANIF website. There were just two reports regarding ZCMC: The one revealed the transfer of the government’s stake in ZCMC to the fiduciary management of ANIF, while the other said ANIF “will no longer manage the shares owned by the government.” No other data was available.

Pastinfo also reported the issue, saying it could not reach the Italian and French members of the ANIF Board of Directors as well as Chairman of the ANIF Investment Committee Khaled Helioui to get answers to a number of controversial questions.

ANIF proposed the news outlet to send the requests to them, promising to forward them to the addressees. "We have not heard back from the addressees, thus we can assume that the questions have not been passed to them,” Pastinfo said.

It comes to show that ANIF’s foreign leaders are not authorized to provide any information on the management of the ZCMC shares. In other words, ANIF has adopted a policy of restricting and obstructing the media's right to access information, which is repeatedly reported by Pastinfo, GivilNet, and other media outlets.

It could not go without consequences

A few months after the government transferred its 21.8% stake in the Zangezur Copper Molybdenum Combine to ANIF, it made another decision.

At a meeting on 22 December 2022, the government approved a decision to hand over its 21.9% stake in ZCMC to the State Property Management Committee, without giving any reason.

It only cited the need for a “more institutional approach” to its involvement in the corporate management of the company. No other details were available.

Referring to the matter, Pastinfo writes: "Serious discussions were held at ANIF, as some foreign members were concerned that their names were affected in the management of shares acquired through a highly suspicious corrupt transaction, which could negatively affect their ratings.”

It all comes under the government whose leader, Nikol Pashinyan, came to power on a promise to promote “transparency and openness”.