Armenia’s Court of Cassation has thrown out the suit filed by Ostinvestor CEO Stefan Laxhuber against the Yerevan Ararat Brandy-Wine-Vodka Factory (YABWV) owned by Prosperous Armenia MP Gagik Tsarukyan. Ostinvestor argues that it was swindled out of its 3.5% shares in YABWV through a 2008 stock consolidation. The company had spent 184 Euros per share and thus wound up paying 279,680 Euros for its original 1,520 shares. On March 27 of this year, a lower court in Yerevan ordered YABWV to pay Ostinvestor, 14.8 million AMD ($36,662) in compensation.
Hetq caught up with Ostinvestor CEO Stefan Laxhuber for comment on the court’s decision.
The Court of Cassation has thrown out your suit. What is your next step?
It is not my decision. Of course, I discussed this with our investors, but I and especially our investors are not very happy about the way things have gone. We hoped, that there would be some signal, that the judge at least or the court would say, ‘Ok, this is so unreasonable. This story is far removed from this planet; this appraisal from the MultiGroup is from another universe. So, that they at least say, ‘Ok, we value the independent appraisers, but not even they were allowed to be heard. So we are very disappointed that it was this way. We had expected a little bit more.
Now we will have to go to the European court to have the matter independently looked at. Of course, it will take more time.
You were familiar with the way things are in Armenia. Did you really expect to win in the courts?
I did not expect to have really a full recovery or a full evaluation. No, I am not dreaming. I am not dreaming even 50 % of being valuated. But at least, I had a hope to get a signal; that the court would say - This is a really ridiculous valuation. You buy a new Mercedes and here comes MultiGroup and say - This Mercedes is worth 10 drams. This is so far from reality. And I expected the court to say, OK, it is worth 100,000 drams, or something close to reality. But no signal at all. And the funny thing is that we have received a serious signal that independent valuator (that the courts have selected, not we) was put under the pressure. But despite that, they said, this valuation is so extremely ridiculous.
What do you expect from the European Court?
Our first goal will be that the whole process is canceled and that we get back our 3.5 % of Noy. Not questioning any valuation, but to prove and say that the whole process was violated.
Who will take your case to the European Court?
Ara Zohrabyan, and we will take some experts as well. And there will also be a German lawyer. They’ll follow up the case from our side. This will cost some money, much more money that the valuation is. But as I said a few years ago, it is matter of principal. I think it is a type of litmus test, and I am responsible towards our investors as well as to prove and show that we don’t give up the case.
I feed so sad about this, because I see Armenia really is moving. I have had positive feelings on this country for years, but now these steps are starting to happen I expected 5-6 years go already. I think the country is moving in the right direction. And it is so sad that on the other side we have this case, which is giving bad feelings not only to me, but also to our investors.
Have you noticed any changes during this time?
Yes, some small changes. You might love it, but for me, for example, it is very important, very easy, to have more visa requirement. It makes traveling much more easy, because when we have business conversation like here now, I just hope on the plane, go there and that’s it. No more hassling with the papers. I noticed changes on the border, at the passport control. People are smiling, they tell me, welcome to Armenia. Small things, they don’t cost a penny, but it gives you a very different impression of the country. It says, wow, people are realizing from wherever, that you have to welcome foreigners, you have to open up the country. I noticed something in increasing business activity from small and medium sized. I see the younger generation taking a bit more steps, there are always political demonstrations. This is normal procedure.
Don’t you want to enlarge your business in Armenia? For example, don’t you want to invest in mining, as it is profitable and large industrial field in Armenia?
As you know we have some investments here. But to enlarge at this stage? You know, we were burnt a bit with this case. We are looking and waiting to see how things will continue. But at least, on the positive side, things are improving. They could move much-much faster. But it is not my decision. You have your government, you voted for them. And of course it is a process of education.
I noticed and see that there are quite some foreign investors and companies going into the mining business, even Lydian Resources, for example, gold mining industry. I highly appreciate that, it is good. That also brings Armenia more on stock market, the international stock market of the investors. From our side, at this stage, we are watching the process, but we are ready for the future and if the things change for the better. We started our investments in Armenia eight years ago mainly as minority investors. We realized this was a bit too early, the legal and minority rights protection and everything had not been ready yet. We were a little bit too fast, but we hope this will change. In general, I am always optimistic about Armenia. Let’s see. I have the feeling that it is time to improve the Armenian economy, government and regulations to show there is a real process and not just words.
You know the Armenian public is not very happy with this mining project. They say the project will harm the environment.
Of course, you have to take care of the process, and this is where officials and government regulations come into force. You have the opportunity to say no to this process, make it the other way. It costs more, but it harms the environment less. It has to be regulated by the government, not by the investors. Investors and the mining company will take the cheapest way. That is normal. The government should stop them.
Have any changes been made to your Armenian investments portfolio?
We have pulled out of one minority investment in the Armenian Development Bank. We sold our stake (I think we had close to 10 %). It was just a matter of reducing our investment portfolio in Armenia to see and take the opportunity just to take out some of the risk exposure we have in this country, because we didn’t know in which direction it would be going.
How much money have you invested in Armenia?
We have invested approximately 10 million dollars.