US embassy cable - 05YEREVAN309

UNCLAS YEREVAN 000309 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EUR/CACEN, EUR/ACE 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, AM 
SUBJECT: MALFEASANCE IN THE GOAM AUDIT OFFICE 
 
 
1. (U) Sensitive but unclassified.  Please protect 
accordingly. 
 
2. (SBU) Armenian authorities arrested Levon Shahinian, the 
head of the Financial Control Department of the Ministry of 
Finance and Economy (the department charged with auditing 
GOAM budget expenditures) February 23.  He had already 
resigned from his post February 18.  While there has been no 
official comment for the reasons for his resignation or 
arrest, a Ministry of Finance official told us that he had 
been told to resign on the grounds that Shahinian had hired 
his own private accounting firm to conduct audits of 
government ministries. 
 
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COMMENT:  POWER STRUGGLE, NOT A CRACKDOWN ON CORRUPTION 
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3. (SBU) According to U.S. Resident Treasury Advisor, who 
has an office in the Financial Control Department of the 
Ministry, Shahinian was engaged in a power struggle over 
control of the new internal audit function with another 
official, Karen Brutyan, a Special Advisor who reports 
directly to the Minister.  It could be this fact, rather 
than Shahinian's malfeasance, that led to his dismissal. 
Outsourcing government contracts to your own firm is not 
uncommon in Armenia, and Ministry officials surely knew of 
Shahinian's arrangements with his own firm before last week. 
 
GODFREY