Armenian President Robert Kocharian has ignited controversy by dismissing a judge who defied state prosecutors by setting free two businessmen embroiled in a corruption-related dispute with the government.

Local lawyers and civil society advocates say the move makes a mockery of the Kocharian administration's commitment to promote an independent judiciary in Armenia. They also regard it as an indicator of government tolerance of corruption.

Kocharian formally relieved Pargev Ohanian, a district court judge in Yerevan, of his duties on October 16, citing a recommendation made by the Council of Justice, a presidentially appointed body overseeing the judicial system. The council made the recommendation on October 12, following a two-day hearing. The council convened the hearing after another government body, the Judicial Department, claimed to have uncovered serious violations of law in Ohanian's handling of two dozen criminal and civil cases.

The disciplinary proceedings against Ohanian were formally launched on September 4, less than two months after he sensationally acquitted the owner and a senior executive of the coffee packaging company Royal Armenia. They had been held for two years on charges of tax evasion and fraud. The arrests came after they publicly accused senior customs officials of corruption.

"This is a pure coincidence," Justice Minister Gevorg Danielian insisted on September 24, denying any connection between the Royal Armenia verdict and Ohanian's dismissal. Danielian and other officials contended that none of the violations alleged by the Judicial Department related to the Royal Armenia case.

Nonetheless, the judge's sacking is being widely linked with what was apparently the first-ever court defeat suffered by the National Security Service (NSS), the Armenian successor to the Soviet KGB and the agency that handled the Royal Armenia probe. Ohanian himself has made clear his belief that the acquittal cost him his job. "I think we can say that," he told reporters.

"It was definitely retribution," Tigran Ter-Yesayan, a prominent lawyer, told EurasiaNet. "I directly link it with Ohanian's ruling on the Royal Armenia case."

Armenian courts are notorious for their lack of independence, rarely making decisions going against the government's and prosecutors' wishes. That is seen as a key reason for the weakness of the rule of law in the country. The Armenian authorities admit the problem but say they are doing their best to increase judicial independence. They point to an ongoing structural reform of the judiciary and, more importantly, the passage in late 2005 of Western-backed amendments to Armenia's constitution. [For background see the Eurasia Insight archive].

One of those amendments relates to the formation of the Council of Justice, which has the exclusive authority to nominate judges and initiate their removal by the president of the republic. To date, Kocharian has headed the council and has appointed all of its members, effectively giving him unrestricted control over the courts. Under the amended constitution, Armenian judges themselves will elect nine of the 13 council members by secret ballot. But that will happen only after the current council members, who were handpicked by Kocharian, complete their terms in office. That process will take years.

For legal experts and other government critics, Ohanian's sacking is proof that incumbent authority has no intention of relaxing its grip over the judiciary. The pro-opposition daily Haykakan Zhamanak called the development a "deadly blow" to judicial independence. Ter-Yesayan, whose non-governmental organization, Forum, helps Armenians file lawsuits at the European Court of Human Rights, agreed. "They want to make sure that the judicial system is not independent," he said. "Any positive precedent [of judicial independence] is dangerous for them."

Ohanian, for his part, predicted that his colleagues will now be even more careful not to challenge the government. "My dismissal will have very negative consequences for the judicial system, which is already in a bad shape, both in terms of the audacity of judges and their enforcement of law," he said.

But Hovannes Manukian, chairman of Armenia's highest Court of Cassation who also presides over Council of Justice meetings, claimed the opposite. "I don't think this is the kind of decision that will affect the judicial system," he told journalists.

Ohanian's fate and the Royal Armenia case raise fresh questions about the sincerity of government pledges to combat corruption. In the months leading up to their October 2005 arrest, Gagik Hakobian, the embattled coffee company's main shareholder, and its deputy director, Aram Ghazarian, repeatedly and publicly alleged that Royal Armenia was being illegally penalized by the State Customs Committee (SCC) for its refusal to engage in a fraud scam with senior customs officials. The SCC is reputed to be one of the country's most corrupt agencies and is a major source of complaints from local entrepreneurs. Royal Armenia was the first company to go public with such complaints.

The SCC, which is headed by a close confidante of Prime Minister Serzh Sarkisian, flatly denied the corruption allegations before having the NSS open a criminal case against Hakobian and Ghazarian. The two men went on trial in late 2006 on what they characterized as trumped-up charges of evading $3 million in taxes and defrauding a US businessman of Armenian descent. They were cleared of the accusations and walked free in the courtroom on July 16. Kocharian reportedly expressed outrage at their unexpected acquittal during a meeting with senior judges held several days later.

Not surprisingly, trial prosecutors were quick to challenge Ohanian's verdict at the Court of Appeals. In mid-September, the court issued an arrest warrant for Hakobian, citing his failure to attend its first hearings on the case and ignoring his assurances that he is undergoing medical treatment in Spain and will soon return to Armenia. In what his supporters view as an act of civic courage, the businessman flew back to Yerevan on October 3 to be again arrested by police and face the possibility of a 12-year imprisonment sought by prosecutors.

"The whole thing shows that corruption has an institutionalized character in Armenia," Varuzhan Hoktanian, deputy chairman of the Armenian affiliate of the international anti-graft group Transparency International, told EurasiaNet. "The authorities are not only doing little to tackle corruption, but are punishing people who really fight against it."