Economy 14:00 23/02/2024 Armenia

How come Armenian government gets hold of major private companies' shares?

Babken Tunyan, an MP from Armenia’s ruling Civil Contract party who heads the National Assembly Standing Committee on Economic Affairs, does not recall a single case in history in which a leading private company decides to voluntarily cede its shares to the government.

First, the Armenian government acquired a ZCMC stake in a shady deal. Later, Lydian Armenia and MTS Armenia announced transfer of some of their shares to the government.

In an interview to Pastinfo, Tunyan claims there are numerous cases of a government owning stakes in private companies or nationalizing them, especially when those companies operate in strategic areas.

“The examples of a private company becoming a state ownership could either be found or not, but every country has its own dynamics,” he said. “We could be a unique state when it comes to initially state-owned companies that were privatized and changed hands, leading to the current situation. There is nothing illegal about a company ceding some of its shares to the government,” Tunyan added, rejects the allegations of state racketeering.

Remarkably, in response to a Pastinfo inquiry, the Armenian government staff failed to name a single developed country in which a leading and profitable company decides to “donate” its shares to the government at no cost.

“Don't our history and the activity of ANIF prove that the state is not an effective manager or investor, and that ANIF did not effectively manage finances by providing high salaries, which was confirmed even by the State Oversight Service and criminal proceedings were launched after its inspection,” Pastinfo says.

Babken Tunyan argued that the state owns a very small stake in ANIF and its participation in management is strictly restricted.

“In other words, decisions are made there by professional managers. It is the same if, for example, a company decides to sell 30% of its shares on a stock exchange and thousands of people acquire them. There is corporate management and these shareholders create a team of professional managers to deal with these matters,” he added.

Back in September 2021, it became known that the new owner of ZCMC donated some of its shares to the government.

At a cabinet meeting in January 2024, Prime Minister Nikol Pashinyan revealed that the Armenian government would be granted a 12.5% stake in Lydian Armenia which had failed to ensure the smooth operation of the company for many years.

In January 2024, MTS Armenia also announced that it would give the government 20% of its shares at no cost. The decision came after the government approved the sale of the operator’s shares to Fedilco Group Limited, having previously blocked the transaction.



Source Panorama.am
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