The Armenian government took ownership of a 12.5% stake in Lydian Armenia, which operates the Amulsar gold mine, without finding out their real market value and conducting a financial audit on possible debts and liabilities of the company, News.am reports following the Economy Ministry’s response to its inquiry.
“In the case of long-term and large projects like Amulsar, state participation in them is expedient and effective for both the government and the private sector,” the ministry explained, without unveiling the donation conditions.
When asked whether the government took measures to conduct an external audit of Lydian Armenia CJSC in order to find out the company’s current liabilities (long-term, short-term, overdue, bad debts, etc.), the ministry said: “Before deciding to accept the donation, the Armenian government had worked with the company for months, studying the available information and documents to make sure that the final decision would be in line with interests of the state.”
Under the Armenian law on audit activity, an audit is carried out by audit organizations, whose task is to verify the information provided in the financial statements of the audited company in order to express an independent opinion on the credibility of the information.
The ministry’s response makes it clear that the government has not commissioned any organization to conduct an external audit of Lydian Armenia, while to qualify the conclusion provided on the basis of the data obtained as a result of the research conducted by the government, as an independent assessment is, to put it mildly, inappropriate. The standards used by the government also remain unknown. Both mandatory and voluntary audits are conducted in accordance with the procedure established by legal acts.
Moreover, the government did not even find out the market (real) value of the donated shares, probably acting on the principle “never look a gift horse in the mouth ” without assessing all the possible consequences of a dubious donation.
“Since Lydian is recognized a closed joint-stock company, its shares are not represented on the market, thus their exact market value is not determined at the moment,” the ministry explained.
