Armenia's Air Navigation Company Caused 613 Million Dram in Damages to the State

The Armenian State Audit Office has summarized the results of its study on the activities of the "Armenian Air Navigation" Company (100% state-owned) covering the years 2013-2020. The examination reviewed the company's issues regarding the establishment and use of funds, management of free financial resources, unrecoverable receivables, staff listings, actual number of employees, salaries paid, travel expenses, and procurement processes.

The study revealed that approximately 613 million drams were caused in losses to the state and/or potential revenue losses. It is important to note that the audit established that the company's accumulated financial resources amounting to 1 billion 202 million drams could enable the company to operate fully and uninterrupted if transferred to the Armenian state budget. As a result, on May 15, 2020, the stated amount was transferred to the state budget as an additional dividend.

The overall findings of the study indicated that:

• Due to violations of mandatory provisions related to reserve funds by the company's executive body, the company lost at least 257.8 million drams of potential additional income.
• One of the Armenian airlines (linked to a state official during that period) accumulated around 181 million drams of debts to the company in 2014, and was later declared bankrupt by a court ruling. The executive body of the company, failing to exercise its rights, did not take action in this regard.
• The company, by not adhering to labor laws and internal legal documents, had more employees than stipulated positions and paid them at least 109 million drams.
• Some employees of the Civil Aviation Committee were simultaneously registered at the company and received salaries amounting to around 55 million drams.
• For reimbursement of certain employees' foreign business trips, there was an excess calculation and payment of around 3.1 million drams beyond the amounts set forth by Armenian legislation.
• The company calculated and paid approximately 7.4 million drams in bonuses to employees who were on long-term training assignments during that period.
• Violations of the Armenian law on procurement were found in the processes related to audit services and vehicle acquisitions.

The report created as a result of the study has been sent to the Armenian Prosecutor's Office for legal assessment.