On 4 December, an online discussion in the format of a public-private dialogue on the development of the Open Government Partnership (OGP) National Action Plan 5 on the open the Public Procurement sector and the institute of beneficial owners was held.
The event was organized in the framework of the “Co-creation Support for the 2020-2022 OGP National Action Plan” project implemented by a consortium of 3 Non-Governmental Organizations “Armavir Development Center”, “Armenian Lawyers’ Association” and “Freedom of Information Center” with the support of the “OGP” Support Unit.
The aim of the initiative is to improve the governance system through the active involvement of civil society, to promote its efficiency, by increasing the level of transparency, credibility and accountability of state-citizen relations. In order to do this, government and civil society representatives develop action plans, setting out clear measures to achieve the goals of the Initiative.
The discussion started with the opening speech of Ms. Ani Harutyunyan, representative of the “Armavir Development Center” NGO. She presented the “Co-creation Support for the 2020-2022 OGP National Action Plan” Project”, and the activities envisaged within its framework.
Ms. Lilya Afrikyan, OGP Armenia Program Coordinator under RA Prime Minister’s Office/RA Contact Person, presented the “OGP Initiative and Armenia Relations” topic. She mentioned that the two important components in this area are grants and the institute of beneficial owners. “In this respect, the countries that surpass Armenia are unique. There is a deviation from the deadline for public procurement, which can be corrected. In particular, one of the reasons for the non-acceptance the system of electronic grants was the situation of war and COVID-19. In any case, the issue is on the agenda now.”
Mr. Sergey Shahnazaryan, Head of the Public Procurement Policy Department of the Ministry of Finance, presented the OGP commitments undertaken by the Republic of Armenia in the field of public procurement.
He reminded that the OGP 2018-2020 program did not envisage action in the field of procurement. “Regarding the 5th plan, the Ministry of Finance has proposed a change in the appeal procedure. In particular, it is envisaged not to have an out-of-court appeal procedure, to examine the appeal only in court, within the framework of a special proceeding. The subject of the appeal will be only an interested person, while today everyone has that right. It should be noted that public associations can also be the subject of an appeal, but if there is no de jure public association, it is necessary to prove that the latter is an interested party.” Sergey Shahnazaryan noted that discussions on this part have been carried out.
Ms Mariam Zadoyan, an expert at the Armenian Lawyers’ Association, presented an “Overview from the international practice on OGP commitments in the field of beneficial owners.” First, taking into account the complexity of the topic, the speaker introduced the concept of public procurement and the existing regulations on them, referring to the subject composition of the clients and participants of public procurement, the procurement process and stages. According to her, public procurement in addition to procurement of goods is procurement of services as well. Further, the expert provided an in-depth and comprehensive reference to the OGP marked (exemplary) commitments in the field of public procurement, as well as the OGP proposals in the mentioned field, aimed at the fight against the epidemic. “The main problem is that no matter how much the RA procurement system improves and becomes more transparent; all the same, in some reports the RA indicators in this regard remain low. The problem is that the published data is not user-friendly and does not meet the standards of open data and open source, i.e. not in machine readable format. This means that it becomes almost impossible for investigative journalists or other stakeholders to analyze data, as many of them are only available in pdf format.”
Ms Ani Varderesyan, an expert at the “Centre for Legislation Development and Legal Research” Foundation of RA Ministry of Justice, made a report on “Presenting the OGP commitments undertaken by the Republic of Armenia in connection with the process of beneficial owners and the process of their implementation.” Within the framework of the report, reference was made to the draft law put up for public discussion, which envisages the creation of a register of beneficial owners in the Republic of Armenia.
Ms. Syuzanna Soghomonyan, an expert at the Armenian Lawyers’ Association, presented an “Overview from the international practice on OGP commitments in the field of beneficial owners”, explaining its essence and significance to the participants of the discussion, as well as revealing the risks and problems arising during the creation and use of the register. “Although the introduction of the institution of real owners in the OGP action plan was an important step, the law did not oblige companies to disclose information about their beneficial owners, except in the mining sector.” The expert also presented an assessment of the commitment made by the OGP independent review mechanism and recommendations for improvement.
The reports were followed by an active discussion aimed at including possible proposals in the new action plans.
Mr. Arkady Sahakyan, Chairman of the Governing Board of the CSOs Anti-Corruption Coalition of Armenia, noted that the problem is the inconsistency of the Law on Procurement with the country at war, especially in the military-industrial sphere. “The problems here remain unresolved, especially in the stages of pricing, creation of special goods and their procurement by the state. There should be at least 5th and 6th stages after the signing of the contract to be able to resolve the issue of liability for poor quality of the service or product. Businesses, when they apply to our union, mainly complain that our state refuses the service. As a result, the company is incurs costs. Will we have legislative changes in this prism in the near future through the prism of a country at war?” he said.
Mr. Movses Aristakesyan, President of the “Centre of Economic Right” NGO and a member of the Governing Board of the CSO Anti-Corruption Coalition of Armenia said that the goal of the procurement process is the efficiency of spending state funds on quality services. “Even after the Velvet Revolution, there are cases of corruption, such as corruption in the road construction process. Mr. Shahnazaryan, in 2016 we wrote and presented to the Government a strategy on the public procurement process in the field of healthcare. There is a need to change the way medicines are purchased by the state, as they are often specific to only one or two patients. It is necessary to review the insurance sector as well. It is wrong to give the social package to different companies, as if organizing a competitive process. They should be concentrated in the hands of the State Health Agency, which will leave the Ministry and become a third party. There is no mentioning of this in either the 2020 or 2021 budget results. It is also necessary to define the cost of services, their quality assessment mechanisms. This has also been talked about for many years, but it has not been implemented. Another possible question. According to the law, preference is given to those who present a lower price, but the lowest price is not always the most effective, especially in the field of healthcare,” Movses Aristakesyan said.
Ms. Anush Aslanyan, President of the “Equal Rights, Equal Opportunities” NGO for people with disabilities, noted that within the framework of OGP it is also important to increase the participation of women, the disabled and other vulnerable groups and social enterprises led by them in public procurement. “For that, it is necessary to publish those indicators. The state must understand its priorities, for example, in case of equal conditions, give preference to vulnerable groups.”
During the discussion, Ms Ani Varderesyan, the representative of the RA Ministry of Justice, in response to the questions raised about the institute of beneficial owners, presented the issue of verification of credibility and application of measures of responsibility by the register of real owners.“From the point of view of credibility testing, we tried to do the following: We envisage two separate special regulations. First, the companies conduct a proper study of their beneficial owners: and second, we have added administrative proceedings for the state register to check the reliability of the data. Regarding the second part, the state register can request and receive information from both the company and other state bodies. Regarding the means of responsibility: the draft proposes to increase administrative financial responsibility and criminal liability for the company or the beneficial owner who submitted false information. Taking into account that this is still at the design stage, we believe that there is a need to fix one more commitment aimed at the full implementation of the institute of beneficial owners in Armenia,” Ms Varderesyan said.
The participants of the discussion reached agreements on further work.