Azernews.Az

By Abdul Kerimkhanov

Russian Railways state company is preparing to terminate agreement with the Armenian authorities on the management of Armenian railways.

The reason for the termination is that Yerevan is blocking the work of the company's subsidiary South Caucasus Railways (SCR), which operates the Armenian railways.

Ministry of Transport of Russia has confirmed the information about terminating the agreement, while the SCR press service has not given any comments to the Armenian media.

The agreement in question was based on 2008 law under which Armenia transferred 100 percent of the state-owned Armenian Railways to Russian Railways for the concession period of 30 years.

Relations between Russian Railways and the Armenian authorities escalated due to searches and criminal cases that Yerevan opened against the South Caucasus Railways.

Thus, the company’s office was searched in August 2018, on suspicion of tax evasion in the sum of $19,000, and the company’s documents were confiscated by the security officials. Armenian Prime Minister Nikol Pashinyan said back then that “some legal processes are taking place surrounding the company,” saying there was no reason “to make a tragedy.”

The SCR was involved in another scandal earlier, in December 2018 when the Department of Investigation of Particularly Important Cases of Armenia announced a criminal case against the former Deputy Minister of Transport of Armenia who according to investigation, concealed abuses revealed during the SCR inspections.

In the same month, the Investigative Committee of Armenia reported they had been investigating the SCR activities for over 10 years, to check the effectiveness of investments worth $226.8 million. The company responded by saying that the investigation was “biased”.

Seven cases were brought against SCR, which were combined into one proceeding. During the searches, the company had to hand over the entire archive of documents from the start of the company to 2018. The company tried to return the documentation through the court, but failed.

The SCR leadership considers financial charges against the company as baseless. "Throughout ten years of SCR’s work, the total time of inspections of tax authorities in the company was three years," the company’s representative has said. If Armenia wanted like to clarify the situation without putting pressure on Russia, it would have appealed to an international court, a source familiar with the negotiations course between Russia and Armenia informed.

"For example, the agreement provides for appeal to arbitration in Paris to resolve disputes on the execution of the agreement, but instead, the Armenian side preferred exerting pressure using criminal cases," the source added.

The Russian side tried to resolve the conflict at the government level. The Ministry of Transport of Russia was negotiating with the relevant ministry and Mher Grigoryan, Deputy Prime Minister of the Armenian Government. Russia offered to close the criminal case, in exchange of additional investments. Russia also suggested conducting a new independent inspection if the Armenian authorities were not ready to withdraw their claims.

"However, the dialogue yielded no results, so Moscow is considering withdrawing from the agreement with Armenia," a source noted.

Vladimir Tokarev, Deputy Head of the Russian Ministry of Transport, said that Armenia has created a situation in which SCR cannot work normally.

"All documents for 10 years have been seized, unproven charges have been brought and no guarantees have been given. Our arguments that earlier checks did not reveal violations, as well as arguments on the fulfillment of the concession conditions are ignored," Tokarev added.

He also confirmed that Russia has begun to work on early termination of the agreement on the Armenian railways management.

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Abdul Kerimkhanov is AzerNews’ staff journalist, follow him on Twitter: @AbdulKerim94

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