Yesterday the National Assembly’s Audit Chamber demanded the extraordinary measure following a detailed inspection of GPM Gold, the Armenian subsidiary of Russia’s GeoProMining group. The latter rejected the accusations and said it will take the chamber to court. GeoProMining purchased the company, which controls the gold mines at Sodk and Meghradzor and owns an ore smelter in the southern town of Ararat, from Indian investors in late 2007. The Indians decided to sell it after being accused of large-scale fraud by the Armenian government. GPM Gold has since stood idle or operated at a fraction of its capacity, despite record-high international prices of gold. Its Russian owner pledged to finally breathe a new life into the company earlier this year. GeoProMining announced recently the launch of a $200m plan to modernize its production facilities by 2014. According to Ishkhan Zakarian, the chairman of the Audit Chamber, GeoProMining’s February 2008 licensing agreement with the Armenian Ministry of Energy and Natural Resources was signed in violation of the country’s mining legislation and regulations. Zakarian claimed that the company has also failed to honor key terms of that agreement that committed it to making substantial capital investments and producing at least 600,000 tons of gold ore from each mine. The official added that the Audit Chamber has submitted its findings and recommendations to Prime Minister Tigran Sarkisian’s office. They call, among other things, for the revocation of GPM Gold’s licenses, he said. According to Ishkhan Zakarian, the chairman of the Audit Chamber, GeoProMining’s February 2008 licensing agreement with the Armenian Ministry of Energy and Natural Resources was signed in violation of the country’s mining legislation and regulations. Zakarian claimed that the company has also failed to honor key terms of that agreement that committed it to making substantial capital investments and producing at least 600,000 tons of gold ore from each mine. Perhaps everybody knows who bad the situation is in the mining sector of Armenia. And there is no doubt that the chamber headed by Zakaryan will make sure that the company is punished not because to avoid the further fuss but because the side payments of the company were less than supposed. In a statement released later, GPM Gold categorically rejected the results of the inquiry, saying that it was conducted by “incompetent specialists” and that “their presumptions are evidently false.” It also said the Audit Chamber “utterly neglected” the company’s written objections and explanations. “We believe that the Audit Chamber report … is damaging the company’s international reputation and standing,” read the statement. “In view of that, the GPM Gold company is officially stating that it intends to appeal to judicial bodies with a lawsuit against the illegal actions of the Audit Chamber.” In this regard the press office of the Audit Chamber responded to us, “This is their constitutional right, which we respect. They can easily apply to the court and the consequences will be very interesting for us.” Only time will show how this story will end. Let us only inform that the Chamber has suggested the government to review the case and discuss the expediency of the case. Let us also mention that the GPM Gold company is one of the companies, which are registered by an unknown owner in offshore zones. In this case they are registered on Cayman islands. Moreover, back in the day the government has illustrated the results of the registration as a successful example of foreign investment in Armenia.
