Armenian entrepreneur, former MP Artak Sargsyan, has set up companies abroad to support his business in Armenia. The former official used offshore companies to conceal his connection with them, and in one case his mother-in-law was registered as the final beneficiary.

There is nothing about these companies in Sargsyan's financial declarations. Since 2017 such acts have been criminally prosecutable in Armenia, with a maximum penalty of up to four years in prison.

Information about Sargsyan's foreign companies and the correspondence of their representatives appeared in the Pandora Papers. The International Consortium of Investigative Journalists (ICIJ) and its affiliated media outlets, including Hetq, are still examining documents leaked from various offshore zones, which journalists have dubbed the Pandora Papers. More than 27,000 thousand companies and their owners (some 30,000) are listed in the documents that spans more than 200 countries and territorial units. The 2.94-terabyte portfolio, the largest ever published by the ICIJ, includes Armenian owners of companies, including officials, businesspeople, and their affiliates.

The documents were leaked from 14 companies providing services in offshore zones. These are intermediary or agent organizations that help set up formal companies in a variety of offshore tax havens. One of the fourteen is the Cypriot law firm Demetrios A. Demetriades, otherwise known as DADLAW. One of its clients was Artak Sargsyan and his relatives.

Artak Sargsyan, aka “SAS Artak”, is the founder of the SAS supermarket chain in Armenia. He was an Armenian parliamentary deputy from 2004-2007 and 2012-2019. Prior to 2006, Sargsyan was a member of Armenia’s Orinats Yerkir (Rule of Law) party. From 2006-2018, he was a member of the Republican Party.

The Sargsyan family’s main company, SAS-Group LLC, was founded in February 1998 by Artak Sargsyan's older brother Aram. The brothers still run the company on a 50-50 basis.

Artak Sargsyan did not declare his share in the offshore company

In March 2011, a new company, SDA Trade Chain Group Limited, was launched in Nicosia, Cyprus, where DADLAW is registered. Since SAS is named after its founders, Aram/Artak Samvel Sargsyan, SDA Trade Chain Group Limited is named after Artak Sargsyan's eldest son, David (SDA - David Artak Sargsyan). The authorized capital of the newly established Cypriot company was 2,000 euros, which was divided by Artak and Aram Sargsyan on a 50-50 ratio. However, their shares have been transferred to the trust management of two DADLAW affiliates, DADLAW Nominees Limited and DADLAW Secretarial Limited.

One of the documents for opening a bank account for SDA Trade Chain Group Limited states that the company will be a member of the holding company representing the largest retail supermarket chain in Armenia (SAS Supermarkets) and will be used to channel investments and receive and transfer dividends. The expected amount on the bank account was US$5 million. Armenia and Georgia were listed as the countries where the business operations would take place.

One month after its founding, in April 2011, there was a change in SDA ownership. The shares of Artak and Aram Sargsyan were transferred to SADA Holding and Investment Inc., registered in the offshore British Virgin Islands (BVI), which became the sole owner of the Cypriot company. But the appearance of SADA was, in fact, to conceal the participation of the Sargsyans. The brothers were the real owners of SADA Holding and Investment Inc. (50-50 ratio), and the formal owner was John Patrick Murray.

However, according to the Cypriot registry, SDA Trade Chain Group Limited was liquidated in May 2018. Despite this, former MP Artak Sargsyan did not declare his 50% stake in the offshore SADA Holding and Investment Inc. in 2012 and 2017, when he was elected MP, as well as in 2019, when he resigned.

Submitting false information in the declarations post July 2017 or concealing data subject to declaration is punishable by a fine of 2,000,000-3,000,000 AMD or 2-3 years of imprisonment. Those found guilty can also be banned from holding certain government positions or engaging in certain commercial ventures for up to three years. If a particularly large amount of property or income is not declared, the person can face 2-4 years of imprisonment as well.

Who owns the Baldi brand?

SAS-Group LLC, which operates the SAS supermarket chain, imports several well-known brands to Armenia, including food and clothing items. It imports the British Next and Debenhams (the latter no longer operates), as well as the Canadian Aldo brands to Armenia.

The Sargsyans also represent the Baldi brand of shoes, clothes, and accessories in Armenia.

According to the Baldi website, the company began with an Italian shoemaker named Antonio Baldi, whose grandchildren founded a shoe company in 2005. It states that in partnership with a London based investment company, Baldi started taking steps towards entering new markets and expanding internationally. According to the website, Baldi has stores in Armenia (Yerevan) and Georgia (Tbilisi), Kazakhstan (Nur-Sultan, Almaty), Ukraine (Dnipro), UAE (Dubai), Qatar (Doha), and online stores in Armenia, Georgia, Kazakhstan, Russia, and the USA.

The companies representing Baldi in Armenia, Georgia, Ukraine, Russia and the US are connected to the Sargsyans. We can surmise that the owner of this brand is the family of the former MP.

The oldest of the Baldi chain companies is Baldi Retail Ltd registered in London in September 2011. 

The director of the London specialized shoe retailer is Russian citizen Yevgeniya Tumasova, an ethnic Armenian, who is Artak Sargsyan's mother-in-law. The owner of Baldi Retail Ltd, since its establishment until 2020, was Baldi Retail Limited, registered in the British Virgin Islands.

The formal owner of the latter was Palmwood Management Limited, but the real owner was Tumasova. At the end of 2020, Baldi Retail Limited transferred its shares to A. Sargsyan's mother-in-law who became the direct owner of Baldi Retail Ltd in London. It can be argued that all this is in fact the business of the Sargsyans, and 68-year-old Tumasova, who is from Baku, an engineer who graduated from the Azerbaijan Institute of Oil and Chemistry, is just a cover-up.

According to Baldi Retail Ltd financial documents, as of December 31, 2020, it had only one employee - director Yevgeniya Tumasova. The authorized capital was £206,000, the value of fixed (non-monetary) assets - about £950,000. This property includes the subsidiaries of the Sargsyans’ London organization. At the end of 2020, Baldi Retail Ltd's long-term liabilities amounted to approximately £770,000, of which £617,000 was a loan from ASA Investments. (Although no details are available, it is assumed that this is a Brazilian investment firm). 

Yevgeniya Tumasova has not only registered a company of the Baldi network in London. In September 2011, a few days after the founding of Baldi Retail Ltd, Baldosi LLC was established in Tbilisi. Prior to December 2012, Artak Sargsyan's mother-in-law owned 100% of the Georgian company, after which she transferred her shares to the Cypriot Baldi Cyprus Holding Limited. In October 2021 the latter transferred its entire stake to Tigran Zakaryan from Yerevan, who is a member of the family’s inner circle.

Hetq wrote about Artak Sargsyan's Georgian business in 2016. We referred to the Georgian companies representing the Next, Aldo and Debenhams stores in Tbilisi, which belong to the Sargsyans, but have been owned by Virgin, Dutch and British companies in different years.

In September 2011, another company, Belini LLC was founded under Tumasova's name, at 16 Mashtots Ave. in Yerevan. It’s right next to the first SAS supermarket in Yerevan operating since 1997. The director of Belini was Tigran Zakaryan's older brother, Vardan Zakaryan. The sole owner was Yevgeniya Tumasova. Let us note that a year later, in December 2012, Yerevan's Belini LLC was reorganized and became a CJSC, but Tumasova remained the owner and Zakaryan, the director.

In July 2012, Cypriot mediator DADLAW established a new company, Baldi Cyprus Holding Limited, for the Sargsyans at its Nicosia office. This soon became the central company of the Baldi network. The original fictitious owner was DADLAW Nominees Limited, but a few days later the entire share was transferred to Tumasova's Baldi Retail Ltd in London. However, as in the case of SDA Trade Chain Group Limited, in this case too, the Cypriot company was managed by DADLAW. The authorized capital of the company was 5,000 euros. According to the documents in our possession, Baldi Cyprus Holding Limited has opened bank accounts in different years in the Bank of Cyprus, the Maltese Bank of Valletta, and Ardshinbank in Armenia.

In a 2018 questionnaire submitted to the Bank of Cyprus, the Sargsyans' Cypriot company states that it’s engaged in the retail sale of shoes and accessories, and its annual income is 500,000 euros. The United Arab Emirates, Armenia, Austria, Brazil, China, Cyprus, Germany, Spain, France, Great Britain, Georgia, Hong Kong, India, Italy, Kazakhstan, Latvia, the Netherlands and Philippines, Portugal, Romania and the USA were noted as destinations and sources of bank transfers. The partners to whom money was sent were the Russian Amberal jewelry company that operated from 2013-2018, the Georgian Baldosi, the American Baldi USA Inc․,and the Armenian SAS-Group companies.

Documents related to Baldi Cyprus Holding Limited show that the company has over the years purchased footwear from India, China, Spain and Portugal. The products were supplied to Armenia and Italy. The Cypriot company had signed a supply contract with Belini LLC of Yerevan, owned by Yevgeniya Tumasova. In other words, at the initial stage, the Baldi brand was introduced in Armenia through Bellini.

A similar agreement was signed with Balina LLC (Kazakhstan) that was founded in September 2012 in Astana (Nur-Sultan), and later moved to Almaty. Its first owner was Hayk Harutyunyan, who in March 2013 transferred his entire share to Tumasova's Baldi Retail Ltd in London. In May 2018, the British company sold Balina LLC to Kazakhstan resident Talgat Kayshibaev. 

The Sargsyans' ventures were most likely developing successfully, since a new company, Beldiana LLC, was established in Kiev in September 2012. This too was engaged in the retail sale of shoes and leather goods in specialized shops. Beldiana is 100% owned by Baldi Cyprus Holding Limited.

At the end of 2012, the Sargsyans' Cypriot company issued a power of attorney to Hovhannes Nazloyan, a Russian citizen, to establish an LLC called Baldi Russia in Russia. The new company was registered in Moscow in February 2013. 99% is owned by Baldi Cyprus Holding Limited, and the remaining 1% by general director Galina Nazloyan (probably H. Nazloyan's sister). However, in February 2016, the Russian company was deregistered from the register of legal entities.

In March 2013, Y. Tumasova transferred all her shares in Belini CJSC in Yerevan to Baldi Cyprus Holding Limited. Later, the CJSC halted operations. Instead, in April 2013, Artak Sargsyan's mother-in-law founded Baldi CJSC at 16 Mashtots Ave., of which she was the sole shareholder, and the director was the same Vardan Zakaryan. In other words, Baldi started to appear in the Armenia market with this new company, Baldi CJSC. Months after its establishment, Tumasova handed over the company to Baldi Cyprus Holding Limited, which in turn transferred it to Artak Sargsyan's older brother, Aram. In the fall of 2015, the latter sold Baldi CJSC to a resident of the village of Nalbandyan in Armavir.  In 2018, Baldi CJSC was declared bankrupt, and a year later, it was liquidated. Hetq found out that the Baldi chain of stores in Armenia is currently operated by the SAS-Group.

In 2014, another company of the Baldi network was founded in the USA. In May, Aram Sargsyan registered Baldi USA Inc. in Glendale, California, which has a large Armenian population. It then relocated to the Van Nuys district of Los Angeles. According to U.S. documents, the director, CEO and secretary of the company was Aram Sargsyan.

However, in March 2021, the Secretary of State of California suspended Baldi USA Inc. operations because the company hadn’t provided information about it (Statement of Information), a legal requirement. In January 2022, U.S. tax authorities took the same step since Baldi USA Inc. did not fulfill its taxpayer obligations.

Former MP did not declare SAS USA either

Baldi USA Inc. was not the only Sargsyans's American company. Founded in July 2009, SAS USA LLC is a Glendale-based company still operating. Moreover, in 2012, before the parliamentary elections in Armenia, Artak Sargsyan, a parliamentary candidate at the time, stated in a statement to Armenia’s Central Electoral Commission that he had a 50% stake in the American company. After taking office, however, any mention of SAS USA LLC is absent in the financial disclosure he filed with Armenia’s Ethics Committee. It is absent because the shares of the declared companies are in drams and not in dollars. That is, Sargsyan mentioned only the Armenian organizations. The share of the American company was not mentioned in his 2017 and 2019 disclosures as well. The remaining 50% of SAS USA LLC belongs to Aram Sargsyan. Note that in 2018, the Secretary of State of California suspended the activities of SAS USA LLC, but in 2019 the Sargsyans had it revived.

In response to Hetq's inquiry, Armenia’s Corruption Prevention Commission (the successor to the Ethics Committee) confirmed that in 2012-2019 Artak Sargsyan noted only Armenian companies in all his declarations, The commission also said that an analysis of Sargsyan's declarations "has not been carried out yet."

Artak Sargsyan did not respond

Hetq addressed an inquiry to Artak Sargsyan, via the SAS-Group e-mail and Facebook page, asking why he decided to do business with his brother through the offshore SADA Holding and Investment Inc. We also asked if the Baldi brand belongs to his family and why they decided to register that business in the name of his mother-in-law, Yevgeniya Tumasova. Hetq also telephoned his office. Our letters and the calls have gone unanswered.

Photos by Ani Sargsyan, Gagik Shamshyan

Top picture by Tirayr Muradyan