Following the publication of our reader-submitted reports on May 30 and July 7, 2025, regarding Armenia’s new cash rebate scheme and broader developments in the country’s film sector (here and here), the Cinema Foundation of Armenia (CFA) has issued the following official response.

The CFA challenges key claims made in the reports, particularly those regarding the legality of Government Decision 412-N and the alleged conflict of interest involving its Executive Director. The Foundation defends its processes as legally grounded, transparent, and in line with international practice. It also clarifies the nature of its collaboration with international partners such as Netflix.

As always, Film Industry Watch remains open to publishing a range of perspectives, and we welcome further responses, documentation, or commentary from any individuals or institutions with relevant insight. The text of the CFA’s statement appears below:

Dear Editorial Board,

The Cinema Foundation of Armenia, in response to the articles published by you on May 30, 2025, titled “Armenia’s Cash Rebate Plan for Foreign Films Faces Legal and Ethical Challenges” and on July 7, 2025, titled “Armenia: Turbulence in the Local Film Industry”, finds it necessary to clarify a number of facts and to refute the one-sided and unfounded claims made in the publications.

The decision of the Government of the Republic of Armenia No. 412-N of April 10, 2025, “on approving the procedure and conditions for issuing, rejecting and terminating the cash rebate in the field of filmmaking, as well as the list of products, services, and works directly related to filmmaking that are included in the expenses eligible for cash rebate, along with the conditions and standards for defining and calculating the amount of financial expenses subject to rebate” stems from the terms of the Law of the Republic of Armenia “On Cinematography” and has been developed by the RA Ministry of Education, Science, Culture and Sports, the body implementing the sectoral policy, along with the involvement of other state administrative bodies, which have provided their opinions on the draft decision. The version submitted to the government took into account all opinions. The 35% rebate threshold falls within the legally permitted range (10–40%) and is implemented as an incentive mechanism, consistent with international practices.

Second, the article’s assumptions regarding a conflict of interest between the Executive Director of the Cinema Foundation and the company “People of Ar” do not reflect reality. Legally, the above-mentioned memorandums were preparatory and did not confirm any funding or support. Moreover, by the time of the project’s development and implementation, Davit Banuchyan had not yet assumed the position of Executive Director of the Cinema Foundation of Armenia, and therefore, no discriminatory decision was made. Additionally, the Foundation’s decision-making processes are governed by transparent oversight procedures involving independent experts and industry representatives.

Regarding the comments made about collaboration with Netflix, we must clarify that international partnerships are subject to confidential agreements and phased negotiations. Any information is published only upon mutual consent of the parties, with corresponding documentation in place. The Cinema Foundation of Armenia is not a party to those agreements. Therefore, the idea presented in the article that the Cinema Foundation operates through a closed or limited mechanism is fundamentally contrary to our mission and mode of operation. The Cinema Foundation functions based on the principles of open governance, professional assessment, and legal transparency, and will continue to ensure fair, professional, and legally defined funding procedures in the cultural field.

Respectfully,

Department of Public Relations
Cinema Foundation of Armenia
Address: 3A Teryan Street
Email: info@cfarmenia.am / pr@cfarmenia.am
Phone: +374 10522032
www.cfarmenia.am

Analysis of response:

Legality of Government Decision 412-N (10 April 2025)

CFA’s claim: The 25–35% rebate framework in Decision 412-N was developed lawfully, falls within the 10–40% range set by the Law on Cinematography, and incorporated feedback from relevant state bodies.

Analysis:
This is partially true, but slightly evasive.
The issue raised in the original report was not that 25–35% is outside the legal range, but that fixing the rebate within a narrower sub-range by government decision—rather than leaving it to project-specific evaluation—may contradict the law’s intent, which envisages a flexible 10–40% band.

Furthermore, internal Ministry of Finance documents (as cited in the original report) warned against adopting the fixed-range model without a corresponding amendment to the law. CFA’s response does not directly engage with that legal tension—nor with the procedural question of whether a subordinate act (412-N) can supersede the higher-ranking statute without a formal legislative change.

Conflict of interest regarding Davit Banuchyan and People of Ar

CFA’s claim: No conflict of interest exists. The memorandums were non-binding. Banuchyan had not yet taken office when they were signed, and decisions are made with expert input and oversight.

Analysis:
This glosses over key facts without fully resolving the concern.
It is correct that the four-party MoU involving People of Ar was signed in December 2023, and Banuchyan became acting director in May 2024. But the concern raised in the reports is about:

• The continuing public appearance of Banuchyan being listed on People of Ar’s website (as of 2025) as “Co-producer / Tax Rebate Supervisor”;
• The unusual alignment between the memorandum’s terms and the subsequent rebate rules;
• The close professional ties between Banuchyan and Arman Nshanian (People of Ar CEO), reinforced by documented joint appearances at closed-door meetings and site visits.
  

Even if no formal conflict exists under Armenian law, there remains an unresolved perception of overlapping roles that CFA’s statement does not address in detail. Simply asserting “no discriminatory decision was made” doesn’t disprove potential bias.

Netflix collaboration and confidentiality

CFA’s claim: Netflix-related negotiations are confidential; CFA is not a party to those agreements.

Analysis:
This is plausible and largely fair.
International partnerships often involve NDAs and staged negotiations. The original report criticized the vague and premature announcements of such deals, not the existence of confidentiality clauses per se.

Still, the CFA’s distancing itself from the process (“we are not a party to those agreements”) is notable—especially since its own public materials in late 2024 and early 2025 highlighted high-level talks with international streamers, giving the impression of active participation.

Conclusion

The CFA’s reply addresses some technical issues (legal range of rebates, signing dates), but largely sidesteps the core concerns: whether decision-making has been unduly influenced by private interests, whether rules were legally and transparently adopted, and whether public trust in the process has been sufficiently protected.

The post Rebuttal Regarding the Articles “Armenia’s Cash Rebate Plan for Foreign Films” and “Armenia: Turbulence in the Local Film Industry” first appeared on Film Industry Watch.

UPDATE July 31: A response to this article is published here:

Film Industry Watch is publishing the following user-submitted investigative report about potential issues in Armenia’s film industry. This material raises questions about transparency and conflicts of interest that deserve public attention.

In many ways, this case echoes patterns we’ve observed in our investigations into the Israeli and Greek film industries – where questions of transparency, favoritism, and conflicts of interest often arise around the distribution of public film funding. It also reflects a broader trend across parts of Europe, where cultural subsidies are vulnerable to politicization, insider networks, and a lack of independent oversight.

What We Know

Our fact-checking shows that about 75-80% of the basic facts check out – facts like official appointments, company roles, and key dates. Some of the more serious allegations (like specific financial damages and personal relationships) couldn’t be independently verified. Note that this is user-submitted content that we’re publishing as received. Film Industry Watch doesn’t guarantee the accuracy of every claim, the views expressed are those of the submitter(s), not ours.

Have Information? Share It

We encourage anyone with firsthand knowledge, additional evidence, or contrary documentation to post a comment or contact our editors. Constructive corrections and clarifications help strengthen the public record on developments in Armenia’s screen sector.

TL;DR – Combined Summary of Both Armenian Film Industry user submitted Investigation Reports

The paired reports sketch a single narrative: Armenia’s state film architecture was rebuilt in 2024 when Government Decision 618-A dissolved the National Cinema Center and installed producer-turned-official Davit Banujian at the helm of the new Cinema Foundation of Armenia (CFA). The May-2025 brief claims Banujian simultaneously holds a senior role at private outfit People of Ar - the company that signed a four-party memorandum promising cash-rebate support for three Til Schweiger projects in December 2023. It further contends he steered a series of rule changes that shifted Armenia’s statutory rebate range from 10-40 % to 25-35 % without amending the parent law, overriding Ministry of Finance warnings and issuing new funding procedures (Order 57-L) in April 2025 before the Ministry had approved them. The report warns that these moves create legal and corruption risks and market a still-unfinished incentive scheme to international producers.

The July-2025 brief widens the lens to Armenfilm, the once-state studio whose 2005 privatisation (later ruled a USD 10 m loss) was reversed in 2015. It tracks how Armenfilm was folded into the government’s planned Academic City arts cluster, master-planned by Germany’s gmp International, despite its six-kilometre detour from the campus core and suspiciously upbeat e-consultation scores. A closed 9 July 2024 planning meeting – attended by Banujian and People of Ar CEO Arman Nshanian but not the National Cinema Center—illustrates what the authors call preferential access for private allies. Subsequent ministerial tours of the gutted studio and talk of a public-private “revival” are framed as a second-round privatisation in all but name, reinforced by allegations of an unofficial “chief secretary,” data-access abuses, and political ties via Banujian’s MP spouse. Taken together, the documents argue that a tight circle is reshaping Armenia’s screen sector through opaque rule-making, selective partnerships, and repurposing of public assets – developments the authors say demand legal scrutiny and broader public oversight.

Privatization Reloaded: How the Banujian–Nshanian Tandem Gains Access to the Future of Armenian Armenfilm Film Studio

Investigative Report — June 2025 (Written and published by Armenian film industry insiders)

On June 16, 2025, the Minister of Education, Science, Culture, and Sports of the Republic of Armenia, Zhanna Andreasyan, visited the ruins of the once-iconic Armenfilm film studio. She was accompanied by Deputy Minister Daniel Danielyan and David Banujian, Director of the Armenian National Cinema Foundation (hereinafter “the Foundation”). The visit was portrayed as symbolic, yet it unveiled a pattern of decision-making and potential collusion, warranting renewed scrutiny into the Foundation’s leadership and its entanglements with private entities.

Background: Legacy of Privatization and Its Fallout

Armenfilm, formerly a state-owned film production facility, was privatized in 2005 and returned in 2015. According to a report released by the Prosecutor General’s Office on August 7, 2023, the privatization inflicted approximately USD 10 million in damages to the state and contributed to the decade-long stagnation of Armenian film production. Since its return to state ownership in 2015, the property has been administered by the State Property Management Committee — an agency whose appointed managers have lacked expertise in cinema.

Following the Prosecutor’s report, the Committee sought to deflect blame, while state actors quietly began recontextualizing Armenfilm as a “priority site” for a new governmental initiative: the Academic City.

Academic City: A Questionable Shift in Urban Planning

The Academic City program, introduced by the Government of Armenia, envisions the creation of thematic clusters for higher education institutions, including a dedicated “arts cluster.” Notably, the master planning and architectural concept of the Academic City is being developed by the German firm gmp International GmbH Architects and Engineers, raising additional concerns about the influence of foreign stakeholders in a highly politicized and locally sensitive project.

Initially, Armenfilm was designated as the launch site for the entire initiative. However, its geographic distance—approximately six kilometers—from the proposed core area of Academic City raises serious questions about functional integration and project feasibility.

The public consultation period for the Academic City concept formally closed on August 7, 2023, the same day the Prosecutor General’s Office released its report stating that Armenfilm’s 2005 privatization resulted in USD 10 million in damages to the state. Despite widespread opposition from academia, the cultural sector, and civic groups, the project received seemingly favorable ratings on the government’s e-voting platform. Subsequent investigations suggest these ratings were artificially inflated. Armenia’s e-consultation system lacks basic safeguards, and its results have been repeatedly manipulated to legitimize contentious policies — including those related to higher education reform and public film funding regulations which were signed by Banujian on April 18 of 2025 instead of the Ministry. This was against the law “On Cinematography” (art. 8 part 1 (10)).

Academic City concept e-voting

Film Production Financing e-voting

High Education law e-voting

July 9, 2024: The Closed-Door Meeting and the Presence of Private Interests

A particularly telling episode occurred on July 9, 2024, during a closed-door event dedicated to the Academic City project. The session included a discussion of the future of the Armenfilm territory within the framework of this broader government initiative.

According to available press coverage and photographic documentation from the event, David Banujian—formally acting as the Director of the Cinema Foundation of Armenia, which at the time existed only on paper—was present at the meeting. He was accompanied by People of Ar LLC private film producer Arman Nshanian. The two have previously been linked through their involvement in the controversial Cash Rebate program, raising red flags about recurring private interests operating within public policy spaces and promotion of so-called Netflix production in Armenia.

The nature of their relationship, however, appears to predate any formal collaboration through state structures. Numerous photographs publicly available on Banujian’s personal Instagram account tagged document a longstanding personal association with Nshanian—well before Banujian’s appointment as director of the Foundation. These images, some of which depict the two at industry-related events and in social settings, suggest close ties that may call into question the impartiality of subsequent state decisions involving Nshanian or his production ventures.

What makes their presence at the July 9 meeting even more conspicuous is the absence of Shushanik Mirzakhanyan, then Director of the National Cinema Center of Armenia (NCCA), the country’s official authority in charge of national film policy. While no representative of Armenia’s primary state film body was invited, a private producer with visible personal connections to a soon-to-be-appointed government fund director was granted privileged access to confidential deliberations.

According to Electronic Register, Cinema Foundation was reorganised on July 15 of 2024 and according to ESCS website Banujian was introduced to the staff of Cinema Foundation of Armenia only on July 24, 2024 by Minister Andreasyan and Deputy Minister Danielyan.

Instead of ensuring broad institutional representation and professional deliberation over the future of a key national asset, the event demonstrated preferential treatment for individuals aligned with specific private interests—effectively sidelining public institutions.

Banujian has since positioned himself as the champion of a new vision: reviving Armenfilm through public-private partnership. Yet given the legacy of failed privatization and the opaque manner in which recent decisions have been made, this proposal appears less a reform than a return to extractive practices under a different banner.

The Banujian–Nshanian Nexus: Strategic Access

David Banujian has been involved in shaping the cinematic agenda long before the Foundation became operational. His appearances alongside the Minister, coupled with his premature decision-making authority, indicate that his influence extended beyond formal mandates.

This influence is further magnified by political ties. Banujian’s spouse, Sona Ghazaryan, is a sitting Member of Parliament, raising concerns over potential conflicts of interest and preferential treatment in government processes.

Banujian is now promoting a new vision: Armenfilm’s redevelopment through a public-private partnership (PPP). However, given the studio’s traumatic history with privatization and the opacity surrounding current negotiations, this proposal is seen by many as privatization in disguise.

According to our findings, in July 2024 Banujian unofficially appointed an individual to serve as the Foundation’s Chief Secretary—a position that does not formally exist in the fund’s organizational structure. This individual, who was not officially employed for more than six months, nevertheless had unrestricted access to sensitive personnel records and confidential correspondence, including private information concerning both Foundation staff and external applicants. The unauthorized access raises substantial legal and ethical concerns, particularly with respect to data protection laws and administrative transparency.

This pattern reflects a governance model based on informal networks, blurred accountability, and selective access—one that places individuals with personal or political ties in privileged positions, often at the expense of institutional norms and legal safeguards.

Legal and Institutional Implications

The substitution of public institutions with private or semi-private entities in core cultural decisions undermines the principles of good governance, transparency, and cultural sovereignty. The lack of representation from the NCCA at critical planning stages suggests systemic exclusion of institutional expertise in favor of informal arrangements.

The Foundation’s involvement in programmatic rule-making—specifically, its unilateral issuance of state film funding guidelines—is a direct violation of Armenia’s Law on Cinematography. This alone merits legal review and possible revocation of those procedures.

Furthermore, the use of an unsecured e-governance system to simulate public consensus on controversial policies constitutes a breach of democratic process and may qualify as administrative misconduct under Armenian law.

The reappearance of familiar actors—David Banujian and Arman Nshanian—in state-sponsored initiatives demands public oversight. What appears as reform risks becoming a repetition of past failures, only with more sophisticated instruments and political cover.

The Armenian film industry deserves a future defined by professionalism, transparency, and lawful governance—not a return to the patterns that once crippled it.

In light of the facts presented, we urge the following:

• The Prosecutor General’s Office is encouraged to examine whether administrative misconduct, abuse of access to confidential data, and potential conflicts of interest occurred in the operations of the Foundation and its affiliated actors.
• Civil society, industry professionals, and the press must remain vigilant and demand transparency in cultural policymaking—especially where public assets and private profit intersect.
  
  

The future of Armenian cinema is not a private matter. It belongs to the public—and it is the public’s right to know how it is being shaped.

Supporting visual and documentary evidence available.

Press coverage and photos of July 9. 2024

https://escs.am/am/news/23362

https://www.youtube.com/watch?v=Z5JxqHKfECk

https://www.youtube.com/watch?v=Px02DGv0IS0
https://www.youtube.com/watch?v=lc17p2yJ2M0

Academic City concept e-voting

https://www.e-draft.am/en/projects/6013

High Education law e-voting
https://www.e-draft.am/en/projects/7684
Film Production Financing e-voting
https://www.e-draft.am/en/projects/8325
David Banujian Instagram
https://www.instagram.com/davidbanuchyan/

Published by Armenian Film Industry Insiders.

The post Armenia: Turbulence in the local Film Industry first appeared on Film Industry Watch.

The Armenian Government’s new promise to refund up to 35 percent of a producer’s local spending is being greeted at home not as a success story but as a textbook case of how public film money can be bent out of shape. Legal analysts say the Cabinet decree that launched the rebate clashes with the country’s own Cinematography Law, while watchdog groups point to a revolving door between the state body handing out the money and a single private production company that helped design the system.

The rebate was unveiled on 10 April, when Decision 412-N sailed through the Cabinet in a single sitting. It fixes a base refund of 25 percent and adds up to ten further percentage points for projects that market Armenia on screen, bringing the total to 35 percent. Yet Article 18 of the Cinematography Law already pegs the rebate corridor at 10 to 40 percent and stipulates that only Parliament may alter it. Government lawyers insist the narrower band merely “operationalises” the statute, but constitutional specialists consulted by Film Industry Watch say a decree cannot override primary legislation. If that view prevails in court, any rebate contracts signed under the decree would be void from day one.

Fiscal concerns surfaced even before the measure was adopted. According to a briefing note published this month by the Council of Europe’s European Audiovisual Observatory, the Ministry of Finance warned that the new rules expose the budget to open-ended liabilities. The objections were set aside; the decree was passed unchanged and will enter into force on 11 May.

A new agency, an old relationship

Responsibility for vetting rebate applications rests with the Cinema Foundation of Armenia (CFA), a public body created last year to replace the National Cinema Center. Its executive director, David Banuchyan, is also listed on the website of production-services outfit People of Ar LLC as co-producer and “tax rebate supervisor” and is credited there with having “played a crucial role in creating film laws and cash rebate programs.” In effect, the man who drafted the incentive now decides who receives it, while holding an active position in a firm that intends to use it.

That alignment is not accidental. Sixteen months before the CFA existed, the Ministry of Education, Science, Culture and Sport, several parliamentarians, the National Cinema Center and People of Ar signed a four-party memorandum of understanding pledging to secure rebate support for three English-language features involving German actor-director Til Schweiger. The document, dated 18 December 2023, promised cooperation on “all necessary sub-legislative acts” long before those acts were drafted.

Promises to Netflix, silence from Netflix

In selling the programme ministers have repeatedly cited an imminent “Netflix series” as evidence that the rebate is working. No such project appears in Netflix’s public newsrooms, investor filings or trade-press databases as of 30 May. The streaming platform declines to comment on productions that are not formally announced, but the absence of any reference after more than a year raises doubts about the government’s headline claim.

Potential fallout

Civil-society groups in Yerevan have filed complaints with the Corruption Prevention Commission and are preparing a constitutional petition aimed at suspending Decision 412-N. If the decree is struck down, the CFA would have no legal basis to reimburse foreign producers, leaving applicants in limbo. Even if the decree survives, any production company linked to foundation staff could face a conflict-of-interest investigation.

For international producers courted by the 35 percent headline figure, the message is unchanged: Armenia’s landscapes and crews may be attractive, but until the rebate’s legal footing and governance are secured, the scheme carries a risk premium that producers will have to price in.

Different Country, Same Story

From Tel Aviv to Mexico City, and now to Yerevan, Film Industry Watch keeps seeing the same playbook: a pot of public money meant to nurture filmmaking is ring-fenced by a tight circle of insiders who write the rules to suit themselves and then police their own compliance. Wherever public money is poured into filmmaking, we keep finding the same closed loop: insiders draft the rules, sit on the selection panels, and ultimately benefit from the very funds they oversee. In Greece, our September 2024 investigation revealed how senior figures at the Greek Film Center approved grants for films in which they themselves held stakes. In Israel, we traced a revolving door between the country’s two largest public film funds and private production companies, with executives switching seats while deals stayed in the family. In North Macedonia, whistle-blower director Milcho Manchevski documented what he called a “film-mafia” network inside the National Film Agency that sidelined outsiders. And in Ukraine, we showed how a million-dollar Netflix donation fell under the control of the same academy officials tasked with distributing it fairly. Armenia’s cash-rebate controversy follows the identical pattern: public money placed under the watch of a tight circle determined to guard both the purse strings and the keys to the door.

Film Industry Watch thanks the whistle-blower who supplied the documents behind this investigation. If you have credible information about how public film funds are being misused in your own country, contact us here.

Sources:

https://www.arlis.am/DocumentView.aspx?docid=202462
https://www.arlis.am/DocumentView.aspx?DocID=205494
https://merlin.obs.coe.int/article/10300
https://peopleofarproductions.com/about
https://escs.am/files/files/2023-12-19/131017682109f9c53a61ab33d06fbc1a.pdf
https://about.netflix.com/en/news

The post Armenia’s cash-rebate plan for foreign films faces legal and ethical challenges first appeared on Film Industry Watch.