Illicit Party Financing: How Civil Contract Circumvents the Law Without Consequences

By Tatev Ghazaryan

 

The Anti-Corruption Committee recently closed a criminal investigation into alleged illegal donations to the ruling Civil Contract (CC) party in 2022. The case, which had been opened on the grounds of large-scale unlawful campaign contributions, was terminated without any prosecutions. This decision, coupled with clear violations in CC’s financing process, raises serious concerns about the transparency of political party funding and the impartiality of Armenia’s state institutions.

 

The scandal was first exposed last year by CivilNet in collaboration with the Organized Crime and Corruption Reporting Project (OCCRP). Investigators revealed that dozens of individuals – many of them CC candidates in local elections – had made large, identical contributions to the party. In at least ten towns, ten different candidates each transferred the exact same amount of money on the same day. Journalists spoke with more than thirty donors, about half of whom said they did not even recall donating to Civil Contract.

 

Similar concerns resurfaced in January 2024, when Infocom.am scrutinized the party’s fundraising for the September 2023 Yerevan municipal elections. Civil Contract reported raising 506.5 million drams (about $1.25 million) for the campaign — an unprecedented amount. Infocom found that much of this total came in the form of donations r ranging from $2,500 to $5,000 each, often attributed to individuals with modest means or apparent ties to senior officials and businesspeople close to the government. Some of those listed as donors told journalists they were unaware that such large sums had been transferred to Prime Minister Pashinyan’s party in their name.

 

A review of the party’s 2022 and 2023 financial reports points to a systemic pattern of circumventing Armenia’s transparency laws. Some donors exceeded the maximum contribution allowed by law, while others appear to have been used as intermediaries without their knowledge – suggesting possible laundering of funds through “straw donors.”

 

Weak Oversight and Delayed Accountability

 

The seriousness of the issue was recognized by three separate state institutions, which launched investigations.

 

The Prosecutor General’s Office opened a case following reporting by Infocom on Yerevan’s municipal elections, but no public updates have been provided since. Based on Civil Contract’s 2022 annual report and the negative conclusion from an independent audit, the Corruption Prevention Commission submitted a report to the Prosecutor’s Office. Although the Anti-Corruption Committee initially opened a criminal case, it was later closed without any indictments. This sequence of events highlights that, while legal frameworks exist on paper, their enforcement appears selective, with cases involving the ruling party often stalled or prematurely closed.

 

Prime Minister Nikol Pashinyan publicly admitted there was a “problem,” but insisted it had not crossed the threshold of criminal liability, claiming investigative bodies “found no elements of a crime.” He made these remarks before judicial bodies had published any conclusions, effectively preempting their findings and exerting public pressure on supposedly independent institutions.

 

Legislative Gaps and Risky Reforms

 

This scandal also highlights structural weaknesses in Armenia’s legal framework for party financing. Party annual reports are published with significant delays – often a year after elections – meaning that voters learn of violations long after they could have influenced electoral outcomes. Public oversight is therefore too little, too late.

 

Moreover, recent changes to Armenia’s Electoral Code risk further weakening transparency. In December 2024, the individual donation cap to political parties was raised from 2.5 million to 10 million AMD per year, which reduces the need to use proxy donors but does not solve the problem of tracing the origin of funds. Another concerning change allows only parties themselves – not individual citizens – to contribute to pre-election campaign funds, meaning that all money must first flow through party accounts, further obscuring the financial trail until the following year’s reports.

 

In practice, this means elections are held first, and only months later do investigators and the public gain access to the financial data that could reveal violations – at which point the results are already politically irreversible. The examples of the 2021 and 2023 Yerevan elections demonstrate how such delays render accountability toothless.

 

Conclusion

 

The handling of the Civil Contract party’s financing scandal is symptomatic of a deeper problem: Armenia’s political finance system is designed in a way that shields political parties from timely accountability. Investigations are slow or quietly closed, reporting is delayed until after elections, and recent legal changes risk making campaign financing even less transparent.

 

For Armenia to consolidate its democracy, it must urgently strengthen institutional independence and reform its party finance system. Real-time disclosure of donations, timely audits, and genuinely impartial investigations are essential to restore public trust. Otherwise, Armenia risks sliding toward a model where elections remain competitive on the surface but ruling parties enjoy structural advantages that tilt the playing field – eroding both accountability and faith in democratic governance.

 

Democracy Watch is a joint initiative of CivilNet and the Regional Center for Democracy and Security.


This material has been funded by UK International Development from the UK government; however, the views expressed do not necessarily reflect the UK government’s official policies.