(It's great to see Baghdasaryan back to work after his assault!)
[December 15, 2008]
During the years 2205, 2006 and 2007, Armenia imported 1,955 tons of molybdenum ore from a variety of countries. The importation of the ore has officially been registered by the Customs Service as, « Temporary importation for reprocessing ». The value of the imported ore according to Customs is 19.7 billion drams (approximately $66 million). Industry experts state that one ton of molybdenum is derived from every two tons of ore. We should note that all the experts we talked to were amazed that Armenia has been importing molybdenum ore, stating that such a thing is an impossibility.
Product transported toArmenia under « Temporary importation for reprocessing » guidelines is not subject to custom taxes and VAT tax. Also, companies importing under such official conditions are obliged to export the finalized reprocessed goods. It is difficult to say under what category the reprocessed ore has been defined as and the amount of the final product. It is possible that after reprocessing the amount of molybdenum remained the same as the imported ore or a bit less. Then too, it could be more.
During the years 2005, 2006 and 2007, the average price of molybdenum of the international market was $80,000. If we assume for a moment that 977 tons of pure molybdenum was obtained from the 1,955 tons of imported ore then the value of the reprocess product would be around $78 million. If it turns out that the importation and exportation was transacted illegally with false documentation, those involved in the deal have dealt a multi-million dollar blow to the Armenian government.
We have the bases on which to make such deductions since the countries from which the molybdenum ore is being imported from do not possess such working mines. Then too, it doesn’t make much sense to transport the ore all the way to distant Armenia and incur great transportation costs when there are suitable reprocessing plants in neighboring countries. The countries from which Armenia imports molybdenum are Great Britain (Virgin Islands), China, Kirghizia, Russia, the United States, Estonia, Iran, Uzbekistan, etc.
As is well-known, the Virgin Islands serve as an off-shore zone and it is not by accident that the companies owned by some of Armenia’s oligarchs are registered there. We have yet been able to verify what company or companies have imported that product, where has it been reprocessed and, after reprocessing, how much molybdenum or other product has been exported in order to calculate the loss to the government. We have, however, applied to Gagik Khachatryan, President of the ROA State Customs Committee for answers and rest assured that we’ll inform our readers when we receive any new information regarding molybdenum ore imported to Armenia in the years 2005, 2006 and 2007.
Edik Baghdasaryan
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nazarian (787) – 1 year 37 weeks ago
Just like Armenia exporting bananas...
I am interested to know why these kind of strange documents are at the disposal of the Customs Office. I'm sure they are mainly scam to avoid taxes but haven't had time to research and figure out who and how makes money.
nazarian (787) – 1 year 37 weeks ago
Most probable scam goes like this:
1. extract the molibdenum ore in Armenia;
2. the cost of that molibdenum would be the direct costs and the allocated overhead leaving the profit margin as price minus the costs;
3. fraudulently obtain documents that show that you imported the ore from abroad;
4. the fraudulent documents would show the ore cost much more than the extracted ore in Armenia;
5. add the indirect and direct costs to the 'imported ore costs' to calculate your overall costs;
6. calculate your profit margin as price minus the new costs. Come up with a tiny profit or even a loss;
7. pay tax if you show profit, or defer your loss to the next year if you decide to show loss.
Not a very difficult scam to pull if you can show the proper paperwork.
Bruce Tasker (2494) – 1 year 37 weeks ago
The regime has absolutely no problem with simply throwing documents away, which is what they do with many of their import documents. But as exports from Armenia are so few, it is beneficial for the statistics (WB / IMF etc) to account for whatever is actually exported. So the theory works in reverse, they create import documents to cancel out the value of the export, and as you correctly suggest, so that no tax is paid, or even better a tax rebate.
Armenia presently imports four times more than it exports, so imported molybdenum ore to an equal value of the exported molybdenum has little detrimental effect on the import / export balance.
"those involved in the deal have dealt a multi-million dollar blow to the Armenian government" - Edik should have read my 'Stealing Armenia – How he did it! article http://www.khosq.com/en-us/article/2008/06/22/stealing_armenia_%E2%80%93...
which explains how the molybdenum factory (or to be more precise Cronimet, which owns the molybdenum factory) is owned by government cronies (or to be more precise, a state crony) - or to be absolutely precise, a former state crony.
Edik and others at Hetq do excellent work, and they deserve all the support possible.
nazarian (787) – 1 year 36 weeks ago
There was a time that I attributed all the ills of the country to the Soviet legacy. The solution, I thought, was to expose Armenians to the West.
Well, now we have Western educated people in the government who use the financial machinations used by the mafia or MBA-s in the US or Europe.
So much for that idea.
Bruce Tasker (2494) – 1 year 36 weeks ago
The system of throwing away import documents is not only very profitable at times of an 'economic boom', when hundreds of millions of dollars worth of import and other taxes are evaded as a result, it works nicely at times of crisis, when the amount of import documents thrown away can be regulated to demonstrate that imports are actually increasing.
NOYAN TAPAN - Dec 18, 2008
In January-October 2008 the foreign trade of Armenia amounted to 1 trillion 381.8 bln drams or 4 billion 520.4 million USD, including exports of 287.7 bln drams or 941.2 mln USD and imports of 1 trillion 94.1 bln drams or 3 bln 579.2 mln USD. ....exports grew by 0.9%, imports by 42.8% in January-October 2008.
http://www.nt.am?shownews=1010700
http://groong.usc.edu/news/msg253883.html
Falsifying the amount of exports is just as easy.
Edik might like to investigate the effect of the tax office accounting system changing from 'Cash' to 'Accrual' in 2008. I imagine the regime (and the WB/IMF) will be announcing that collections will have gone up remarkably. But the opposite will be the case with the increased debt hidden as 'Receivables'.
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