In the Shadow of Corrosive Capital: Yerevan Park Leaseholders Owe Nearly $2.6 Million

By Gevorg Tosunyan, Hayk Ghazaryan, Siranush Adamyan

Leaseholders of public parks in Yerevan have accumulated close to $2.6 million in unpaid debts. Experts warn this reflects not only administrative mismanagement but also the influence of “corrosive capital”- a term used to describe opaque, corruption-prone business practices. City Hall says it is pursuing a strategy of negotiations and contract revisions to address the problem.

Since 1998, private businesses leasing land in Yerevan’s parks have amassed large debts. CivilNet’s investigation reveals that the total debt consists of over $1.96 million in overdue rent and around $634,000 in fines and penalties, amounting to nearly $2.6 million. The findings are based on a review of more than 180 lease agreements, with a focus on the largest debtors.

The data suggests that these debts are often a manifestation of corrosive capital, which typically operates in two ways: companies lease or privatize public land without developing it, and simultaneously stop paying rent- leaving the municipal budget to absorb the financial losses.

What Is Corrosive Capital?

Corrosive capital, a concept defined by the Center for International Private Enterprise (CIPE), has several defining traits:

• Secretive deals with unclear terms
• Undermines laws and decreases opportunity
• Feeds corruption and cronyism
• Often originates from authoritarian regimes
• Avoids usual business responsibilities.

In the case of Yerevan’s parks, this model enables private entities to occupy public green spaces without fulfilling basic responsibilities such as rent payments or site development, while depriving the city of revenue and hampering urban improvement plans.

The Hrazdan Gorge Example

The Hrazdan River Gorge, one of the city’s most popular recreational zones, is a prime example. Stretching 2.5 kilometers from the Kievyan to Davtashen bridges, it is an ecologically sensitive area that has long attracted interest from large private investors. Starting in the 1990s, various plots were leased or privatized- but many remain undeveloped or neglected.

At least ten companies leasing land in the gorge have accumulated substantial debts to the Yerevan municipality. CivilNet found that several city efforts to improve the area or revise land use designations have failed, largely due to legal or bureaucratic resistance from leaseholders. As a result, parts of the gorge have deteriorated significantly. 

One such case involves Haykanush Sargsyan LLC, which signed a lease in 2019 for two plots totaling 2,375 square meters. The company owes around $15,500. Half of its shares are now owned by a Russian citizen, Hayk Boryan, while the rest are held by Suren Ulikhanyan, a shareholder in several other companies. The land remains abandoned and in poor condition.

Another major debtor is “Mheri Hrashq” LLC, which leased two plots exceeding 2,000 square meters in the early 2000s. These were once the locations of cafés but are now derelict. As of August 2024, the company owed nearly $77,700. The city filed for bankruptcy against the company, citing a total claim of $111,400 (including fines). However, the court rejected the claim, ruling that the debt is not uncontested and that the city lacks legal ownership over the land.

Victoria Concern, which owes over $77,700, is partly owned by Viktor Mnatsakanyan, a former head of Yerevan’s Kentron district. The city sued for bankruptcy in 2023, claiming $126,200 in unpaid dues. The company responded that it had paid rent according to the original contracts. The court dismissed the city’s claim, and the case is currently on appeal.

The single largest debt, however, belongs to the Children’s Railway, which reportedly owes more than $1.8 million.

CivilNet reviewed dozens of other leaseholders and has highlighted the nine companies with the largest debts in a visualized dataset.

Top Debtor Companies

Click on a bar to see detailed information about the company.

Governance Failures and Corruption Risks

Experts say the longstanding lack of oversight over lease agreements has led to systemic financial and governance issues. Public finance expert Artak Kyurumyan believes the situation reflects either severe mismanagement or entrenched corruption. “If authorities allow debts to accumulate over one or two years without action, it’s natural for people to suspect corruption,” he said.

Kyurumyan recommends revising lease contracts based on current cadastral values and applying consistent terms. He argues that allowing such debts to grow is an institutional failure.

Aram Torosyan, head of the opposition National Progress faction in Yerevan’s City Council, blames the problem on flawed municipal policy. “Ineffective decisions were made, and now businesses refuse to pay their debts. Instead of structural reforms, we see piecemeal approaches,” he told CivilNet. He called for unified rules across all lease agreements.

Deputy Mayor Armen Pambukhchyan told CivilNet that the city discusses the issue monthly and prefers negotiation over legal confrontation. “Our authorized commission reviews problematic contracts regularly. If negotiations fail, we initiate legal steps. We have the tools to resolve these cases,” he said.

Pambukhchyan also said the city has adopted new approaches in drafting lease agreements, including adjusting rent to reflect usage and collaborating on landscaping and public works.

In early 2025, Yerevan launched a working group to review lease contracts. The initial phase includes three administrative districts and around 50 contracts. Recommendations for contract revision or termination have already been drafted, and the review process is ongoing.

Alongside lease debts, a previous CivilNet investigation revealed that the city is failing to collect nearly $36 million in property taxes, while still receiving $25.9 million annually from the national budget.

The findings suggest Yerevan’s municipal financial system requires a fundamental overhaul with clear standards for accountability, oversight, and long-term management.

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