Armenia: Diaspora Investors Ready To Move On?


By Gayane Abrahamyan

Business investors from Armenia’s far-flung diaspora, a key engine for the South Caucasus country’s sluggish economy, increasingly are expressing frustration with what they describe as Armenia’s corrupt judicial system and state bureaucracy. The government, for its part, asserts that it promotes favorable conditions for diaspora investors.

Reports vary about how large a stake diaspora investment holds in Armenia’s Gross Domestic Product of $18.17 billion, the lowest in the South Caucasus; estimates range from “60 to 70 percent” to as little as 10 percent.


But, given the diaspora’s strong networks, keeping those investors happy is key. “Profit, while at the same time building the country of our dreams,” President Serzh Sargsyan urged diaspora Armenians in London on July 31.

In interviews with, though, some diaspora investors claim that such appeals fail to materialize into reality.

“Diaspora Armenian businesspersons are leaving Armenia to avoid total bankruptcy,” alleged Valerie Ashkhen Gortsunian, the founder of coffee importer and popular retailer Le Café de Paris, which employs 50 people in Yerevan.

As part of a divorce from her husband, Armenian jazz drummer Vazgen Assatrian, Gortsunian lost control over her company in 2007 when a Yerevan court awarded Assatrian half of the property rights in Le Café de Paris. The decision was made despite a marriage contract, signed in France, which defined Gortsunian as the sole owner of the business, she said.

Faced with a “huge” 80-million-dram fine (about $200,000) for unpaid taxes – a fine Gortsunian says should be applied to the company itself rather than her personally – the diaspora businesswoman says she eventually had to sell her remaining half-stake in Le Café de Paris.

Reasons for why the court did not honor the terms of Gortsunian’s alleged marriage contract were not immediately available. Gortsunian charges that her ex-husband, a prominent musician, used “bribes, acquaintances, connections with the top” to secure the ruling. Assatrian declined to comment to about the case.

Gortsunian, who moved back to France from Yerevan this January, says that she “ended up leaving Armenia empty-handed” after investing roughly $2 million into the company since 1995.

“If the president makes promises, offers assurances for us to come and invest, he has to ensure fair competition as well,” she fumed. “The corruption of Armenia’s judicial system has reached a point when it’s simply impossible to run a business there.”

Edmond Khudian, a real estate investor from Glendale, California, has similar complaints.

In 2010, Khudian filed a lawsuit against his two Armenian partners, Eduard Yesaian and Vladislav Mangasarian, in construction business Arin Capital for allegedly embezzling funds from the company and forging his signature on documents for the sale of apartments in a 13-storey building in downtown Yerevan that had already been sold to diaspora buyers.

When the company declared bankruptcy, the initial diaspora buyers were unable to reclaim the $4 million they had paid for the flats.

In 2010, Khudian filed a criminal case against Arin Capital, but claims that the company’s director, Eduard Yesaian, has not been called in for questioning and that his own fingerprints have not been taken to test his accusation of forgery.

“No action has been taken to investigate those deals, because they have powerful sponsors in the top,” he said in reference to Yesaian, whom he described as a friend of President Sargsyan’s brother, Levon.

Levon Sargsyan, a former member of parliament for the ruling Republican Party of Armenia, has denied the acquaintance.

Contacted by about Khudian’s charge of deliberate negligence, General Prosecutor’s Office case investigator Tigran Harutiunian responded that “[i]t’s my business when to call in someone for questioning.”

“This case needs more time than the diasporan thinks,” Harutiunian said, hanging up the phone.

Similar scenarios have marked the investments of several other diaspora Armenians, leading to the loss of sums ranging from a few hundred thousand dollars to a few million.

Senior officials have been quick to absolve the government from any blame for the failed investments. In general, the losses of diaspora investors are “not massive, and the state isn’t at fault, but rather some deceitful people and diaspora Armenians’ lack of knowledge about Armenia’s legislation,” asserted Armen Alaverdian, deputy chairperson of Armenia’s State Revenue Committee.

One advocacy group for diaspora Armenians argues otherwise. The main stumbling block for diaspora investors, claimed Chamber of Advocates Vice-President Nikolai Baghdasarian, a member of the Initiative Group for the Protection of Diaspora Armenian Investors’ Rights, occurs when individuals in the elite abuse their ties to the state bureaucracy.

“Documents are forged and through these ‘legal’ documents everything is seized and appropriated, and when the [diaspora] investor turns to the courts, fake bankruptcy is declared,” claimed Baghdasarian.

International monitors long have chastised Armenia for a judiciary system that allegedly does the executive branch’s bidding and for widespread corruption among government bureaucrats. The 2012 US Department of State Human Rights Practices Report identified corruption as “a serious problem.”

“Officials frequently engaged in corrupt practices with impunity, and authorities took limited preventive measures,” the report found. Armenia’s courts, meanwhile, are expected “to find the accused guilty in almost every case.”

But Minister of Diaspora Hranush Hakobian is convinced that Armenia’s diaspora still believes in the government’s sincerity. “Those cases will not affect the overall sentiment” of Diaspora investors toward Armenia,” she told

“The issue here is not about trust, but, rather, [the] economic profitability” of individual investments, Hakobian stressed.

Economy Minister Tigran Davtian agrees, telling that “serious investors” take into consideration “weighty international ratings” that show supposed improvements in Armenia’s business climate, and “macroeconomic data” that shows 8 percent growth in the first five months of 2012, rather than individual cases” of bad investments.

“Naturally, we don’t want our compatriots to leave Armenia in disappointment, but not everybody can succeed in business,” said Davtian.

Gayane Abrahamyan is a reporter for in Yerevan.


Originally published at Eurasianet. Eurasianet is an independent news organization that covers news from and about the South Caucasus and Central Asia, providing on-the-ground reporting and critical perspectives on the most important developments in the region. A tax-exempt [501(c)3] organization, Eurasianet is based at Columbia University’s Harriman Institute, one of the leading centers in North America of scholarship on Eurasia. Read more at

2 thoughts on “Armenia: Diaspora Investors Ready To Move On?

  • September 5, 2012 at 11:08 pm

    No way. We’re ready to invest more and more. This is ridiculous.

    We want our homeland to be an economic engine.

  • September 6, 2012 at 7:22 am

    An obvious negative propaganda. The diaspora will never let go of its homeland. So dream on!


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