Business Interests of MPs in the 4th Convocation of Adjara Supreme Council
On 8 October 2016, along with the members of the Parliament of Georgia, the population of Adjara elected members of the Supreme Council.
By his order issued on 22 November 2016, the President of Georgia appointed the first meeting of the newly elected Council. The fourth convocation of the legislative body of the Autonomous Republic of Adjara embarked upon performance of its duties on 28 November 2016.
In short order, Transparency International - Georgia will present assessment of the work for the 3rd convocation of the Supreme Council (2012-2016). This time, we are pleased to offer the information we’ve managed to retrieve from the Public Registry, State Procurement Agency, tender monitoring, political contributions and similar databases. The study covers business interests of the Supreme Council members, party donations, participation of the companies related to the Council members in state procurement, conflict of interests of some members of the Council.
Preparation of the survey was delayed due to the fact that the website of the Civil Service Bureau was not duly functional for a few weeks. As a result, we could not use the official source to compare the data with the information we had collected.
Following the study, we’ve made the following findings:
- After being elected in the Council, several members of the Council, involved in management of different companies, quitted the executive position in accordance with the requirements of the law; apart from resigning from the office of a Director, several members of the Council handed over their shares to family members;
- Although 28th of January (2 months from the recognition of authority) was defined as a deadline for submission of property declarations, some of the Council members have not fulfilled the obligation within the timeframe specified by the law;
- There is conflict of interests between the following members of the Supreme Council: Zaza Okruashvili and Davit Tevdoradze.
- Companies related to several members of the Council were actively participating in state procurement announced by the local authorities and other procuring entities. A number of direct procurement agreements have been signed with the limited liability companies, which are related to Nugzar Surmanidze, Giorgi Tsintskiladze, Khvicha Sharashidze and Gia Abuladze.
- Representatives of the companies, which are related to the Supreme Council members, have made political donations in the period of 2012 parliamentary elections - in 2016, entities related to the Supreme Council members have not made political donations.
Khulo, Shuakhevi and Keda majoritarian member of the Supreme Council from the party “Georgian Dream – Democratic Georgia” – Khvicha Sharashidze submitted his property declaration to the Civil Service Bureau on 30 January 2017, thus violating the timeframe stipulated by the law.
According to the Public Registry data, Sharashidze is involved in several construction companies: the member of the Supreme Council holds 50% of shares in „Duplex – construction company”, “Duplex”, „Vox”, „My Home”. The given companies focus on construction of residential houses in Batumi. As the property declaration runs, Sharashidze generated GEL 143 675 from “Duplex” in 2016.
In 2012, one of the listed companies - „Vox” was actively concluding direct sale agreements with the Ministry of Finance and Economy of Adjara. In exchange of rendering restaurant services 21 times, the Ministry paid more than 36,000 GEL to the company.
The biography of Zaza Okuashvili has not been posted on the website of the Supreme Council of Adjara yet. The Supreme Council recognized his authority on 27 December 2016, when Davit Tarkhan-Mouravi, the first number of the proportional list of the “Alliance of Georgian Patriots” in Adjara declined the mandate of the legislative body of the Autonomous Republic. Accordingly, the deadline for submission of property declaration by Zaza Okruashvili falls on 27 February. Zaza Okuashvili is the owner of “Omega Group”, which is comprised of several companies and is engaged in production and distribution of cigarettes.
On January 20, “Transparency International – Georgia” applied to the Supreme Council of Adjara regarding the conflict of interests of Zaza Okuashvili: incompatibility of interests stems from the fact that the company „Bemonti” owned by Zaza Okuashvili and his spouse Nato Chkheidze is 100% shareholder of TV company “Iberia”. Congruent to Article 37 of the Law on Broadcasting, a license holder/authorized person in the field of broadcasting may not be an official of an administrative agency. It should be noted that, like Zaza Okuashvili, the given requirement of the law is violated in case of Okuashvili’s wife, who, following the parliamentary elections in 2016, was included in the legislative body of the country through the proportional list of the “Georgian Patriots Alliance”.
In response to the letter of January 20, the Supreme Council clarified that once Okuashvili presents his property declaration, it will examine the circumstances mentioned in our letter regarding the conflict of interests.
TI Georgia also contacted the National Communications Commission. As they noted, administrative proceedings on ownership of TV Company “Iberia” have already begun and the issue will be discussed at the forthcoming session of the Commission.
Member of the Supreme Council Giorgi Tsintskiladze submitted his property declaration in violation of the timeframe established by the law. According to the Public Registry data, up to 12 December 2016, Tsintkiladze acted as a Director of “Khelvachauri Road” Ltd. Currently, Levan Sharashidze holds the office of the director. In his declaration submitted on January 30, Tsintskaladze has not reported the fact of holding executive position in the company, neither has he specified the revenues generated there, which constitutes conflict of interests and neglect of requirements imposed by the Law on Corruption.
With Giorgi Tsintskiladze holding office of the director, “Khelvachauri Road” took part in 34 state procurement tenders; eventually, it won 25. “Khelvachauri Road” had no competitor in 19 tenders - all contracts were signed with the subordinate agency of the Autonomous Republic of Adjara - Roads and Melioration Systems Management Department. In total, the company received 1 782 642 GEL through electronic tenders.
In the period between September 2012 and August 2015, the given department signed 9 contracts with “Khelvachauri Road” for direct procurement. In total, the company received GEL 384 206 for construction works.
Chairman of the Health and Social Affairs Commission of the Supreme Council owns 10% of shares in „Vitapharm”, a company importing drugs and medical equipment. In his property declaration filed on 20 January 2017, Surmanidze indicated that he generated GEL 2850 from the given company in 2016.
Vitapharm won 48 tenders announced by the medical institutions and received more than 3 million GEL; It refers to the period of 2012-2016, when Nugzar Surmanidze was the Minister of Health and Social Affairs of the Autonomous Republic of Adjara. Before that, Surmanidze held the office of a Deputy Minister in the same agency. It is noteworthy that out of 48 tenders, “Vitapharm” had no competitor in 27.
Medical and other public institutions operating in Adjara were actively concluding e direct procurement contracts with “Vitapharm”: from April 2012 to December 2016, the company received more than 73 000 GEL through 44 direct sales agreements. It is noteworthy that only 5 out of 44 contracts included rendering of services, with the value exceeding GEL 5,000.
Among the contractors of “Vitapharm” Ltd, Batumi Republican Clinic Hospital is holding a leading position, to be followed by the Central University Clinic, Batumi Regional Center for Infectious Diseases, AIDS and Tuberculosis, National Center for Mental Health and etc.
Ilia Verdzadze - member of the Supreme Council of Adjara, majoritarian MP of the “Georgian Dream” from the 69th majoritarian constituency of Batumi, still holds the position of the Chairman of Adjara Trade Union. Meantime, he is a Deputy Chairman of the Georgian Trade Unions Confederation. In his interview to the media, Ilia Verzadze confirmed that he gets remunerated for the above-mentioned position. However, in the declaration filed on 27 January 2017, he has not indicated the salary received in the previous year. It constitutes conflict of interests and neglect of requirements imposed by the Law on Corruption. The case of Ilia Verdzadze has triggered certain questions among the public. Transparency International - Georgia will shortly present its legal opinion on the issue.
Ilia Verdzadze held office of Director at “Prof Plus” Ltd as well, which was founded in 2006 by the Trade Union Confederation of Adjara. Since 2012, Darejan Mekvabishvili, Board member of the Union, is holding the position.
Verdzadze is related to another company – member of the Supreme Council of Adjara holds 15% of shares in „Tsda - 2008” ltd.. Construction is the primary field of its activity. According to the State Procurement Agency, neither “Prof Plus” nor “Tsda 2008” has participated in electronic simplified or direct procurement.
Following Supreme Council elections of 8 October 2016, Davit Batsikadze became member of the Supreme Council of Adjara for the 3rd time, but now not as a member of the Conservative Party of Georgia but as a candidate in proportional list of the ruling party “Georgian Dream - Democratic Georgia”. On 29 July 2014, together with 2 partners, Batsikadze founded Royal Batumi ltd, with construction and renovation being primary field of operation. The director of the company is Nana Bajelidze, spouse of Batsikadze. As for the member of the Supreme Council himself, he owns 25% of shares. The company has not taken part in any state tender. According to the property declaration filled on 5 January 2017, neither Batsikadze nor his spouse has received income from “Royal Batumi”.
Prior to 2012 parliamentary elections, Davit Batsikadze twice transferred funds to his party’s account: “Conservative Party of Georgia” received 16 500 GEL on 24 May 2012 and 11 000 GEL - on 2 July.
By the information posted on the official website of the Council, Gia Abuladze, member of the Supreme Council of Adjara from the proportional list of the “United National Movement”, served as a director of „Dream” ltd. from 20 November 2012 to 14 March 2014. The given company was founded in 1996. It sells agricultural commodities and conducts commercial activities.
Currently, Raul Gabaidze is the director of “Dream” and owns 100% of shares. On 30 August 2012, he donated GEL 15,000 to non-commercial (non-entrepreneurial) legal entity “Georgia not for Sale”. Zaur Gabaidze, another person related to “Dream” also transferred money to the political party - being director of “Dream” at that time, Zaur Gabaidze donated GEL 5 000 to the ruling political union “United National Movement” on 11 July 2012.
According to Procurement Agency, “Dream” ltd participated in 7 electronic tenders. By winning two tenders, it received 10 880 GEL. Much higher is the number of the contracts, which were concluded with the company through the rule of direct procurement: from 26 March 2012 to 18 November 2016, “Dream” ltd concluded 62 contracts for direct procurement. In total, it received 44 026 GEL. During directorship of Gia Abuladze, 19 direct procurement agreements were signed, worth of 11 438 GEL. None of the direct procurement agreements envisaged services with value exceeding GEL 5,000.
It is noteworthy that in 2010-2012, Gia Abuladze was Minister of Education, Culture and Sport of the Autonomous Republic of Adjara. The majority of direct procurement contracts with “Dream” envisaged rendering of services to sports and art schools. For all 19 direct procurement contracts concluded with “Dream” in the period of Gia Abuladze directorship, signatories are the heads of the above mentioned schools, as well as heads of Batumi Maritime Academy, Adjara Education Foundation, College “Black Sea”.
Gia Abuladze was director of another company as well – prior to engaging in active pre-election campaign, on 19 July 2013 he resigned from the executive office held at the company „GIMG Apartment”. Austria-based company GIMG owns 100% of stock in the given limited liability company, which was registered on 19 July 2013. The company is primarily engaged in organization of entertainment events. On 29 August 2014, in the period of Gia Abuladze’s management, Culture Center of Batumi signed a direct procurement agreement: in exchange for 1500 GEL “GIMG Apartment” was asked to serve invited guests with dinner a la fourchette.
It is not clear how much money Gia Abuladze received while holding office of a Director at “GIMG Apartment” till 1 August 2016, as the declaration filled on 23 January 2017 includes no record on generated income. Just like the previous cases, requirements of the law are neglected.
Prior to being appointed as the Chairman of the Supreme Council of Adjara, Davit Gabaidze was Head of the Legal and Human Resources Management Department of the Government of the Autonomous Republic of Adjara. Even earlier, he was deputy head of the same department.
In 2010, together with his colleagues, Davit Gabaidze founded a legal consultancy firm “Gabaidze and Partners”. In December 2016, in a few days from being appointed as Chair of the Supreme Council, Davit Gabaidze transferred his share management title (25%) to Edvard Bolkvadze, director of the firm.
According to the declaration , which the Chairman of the Supreme Council filled on January 30 in violation of defined timeframe, the chairperson did not receive any income from “Gabaidze and Partners” in 2016.
Giorgi Manavelidze, who was elected in the Supreme Council through the proportional list of the “Georgian Dream-Democratic Georgia” was a director of “I-G” ltd, founded in 2012. He owned 50% of shares. However, within a few days from recognition of Manvelidze’s authority in the Supreme Council, his business partner Irakli Abuseridze took over as a director of the company. In his declaration filled on 27 January 2017, Giorgi Manvelidze has not specified the income generated in the given company; neither has he reported 50% ownership, which is a violation of the law on conflict of interests and corruption.
According to the data of the State Procurement Agency, companies related to Giorgi Manavidze and his business partner have not participated in any state procurement.
Until November 2016, Giorgi Romanadze, Chairman of the Financial-Budget and Economic Issues Commission of the Supreme Council of Adjara served as a director of G.T. Group. He held 100% of shares in the company, which was registered in 2013. Currently, all the assets of the company as well as its management are in the disposal of Giorgi Romanadze’s wife Teona Namunishvili. G.T. Group has not taken part in any state procurement.
Prior to recognition of the authority in the Supreme Council (28 November 2016), Romanadze conceded his position of a director to his wife in another company as well. Teona Namunishvili is now heading the company „Gora +” while initially, it was Giorgi Romanadze who owned 100 % of the stock and held the position of a director. Similar transfer took place in case of „GMT Company” as well.
The last property declaration filled by Giorgi Romanadze is dated by 4 November 2017. Thus, information about the revenues generated by the member of the Supreme Council in 2016 will be available after 4 November 2017.
Following publication of an article in March 2015 by TI-Georgia on undeclared commercial activities of members of Batumi Sakrebulo, Irakli Cheishvili, former Chairman of Sakrebulo, currently serving as a Chairman of the “Georgian Dream” faction in the Supreme Council of Adjara, handed over his 50% share in the company "„H&M” to Archil Labadze, who was also given office of the Director. The company did not participate in any state procurement either in the period of Irakli Cheishvili’s directorship or afterwards.
According to the Entrepreneurial Registry, Elguja Bagrationi does not hold office in any enterprise nor does he own shares in any company. Before being elected in the Supreme Council through the proportional list of the “National Movement”, Bagrationi transferred to the party 5 thousand GEL on September 8. In 2014-2016 he was Chair of the faction “United National Movement” in Kobuleti municipality Sakrebulo; now he is heading faction of the same party in the Supreme Council of Adjara. The last property declaration submitted by Bagrationi to the Civil Service Bureau is dated by 26 September 2016.
According to the official website of the Supreme Council, Davit Tedoradze, elected through the proportional list of the “Georgian Dream - Democratic Georgia”, is the Chairman of the editorial board of the magazine “Chorokhi”. According to the property declaration filed by MP in January of this year, Tedoradze generated 4,000 GEL in 2016. In his interview to the newspaper “Batumelebi”, member of the Supreme Council confirmed that he is still compensated for serving as a deputy editor of the newspaper. The “House of Adjara Writers” is financed from the budget of the Autonomous Republic of Adjara - from 130 000 GEL allocated for 2017, the House of Writers will spend 87 000 GEL on salaries of employees, including Davit Tedoradze. The given circumstance is a violation of Article 13 (3) of the Law on Conflict of Interest and Corruption in Public Service, which states that an official is not entitled to perform any paid work, other than scientific, pedagogic or creative activities, or hold any position in another treasury institution or treasury enterprise.
Transparency International – Georgia:
- With respect to Zaza Okuashvili and Davit Tedoradze, TI Georgia calls on the Constitutional, Judicial and Procedural Issues Commission of the Supreme Council to consider the detected facts of conflict of interests at the forthcoming meeting and provide the relevant recommendations to the given members of the Council;
- TI Georgia calls on the following members of the Supreme Council: Giorgi Tsintskiladze, Giorgi Manvelidze, Gia Abuladze, Ilia Verdzadze to shortly adjust presented property declarations and reflect the income generated from commercial activities / other paid work in last year;
- TI Georgia calls on the Head of the Civil Service Bureau – to start administrative proceedings and impose sanctions on the members of the Council, who have not submitted their property declarations /or submitted them in violation of defined timeframe.
1 Following publication of the survey, the member of the Supreme Council Gia Abuladze contacted the organization and said that he had sent the information on the revenues received in 2016 from business activities to the Civil Service Bureau, although the Bureau did not consider it necessary to disclose the data. Accordingly, as MP said, he had not violated the law. Later on, Gia Abuladze sent us the page of the declaration wherein the data were actually reflected. Thus, before publication of the declaration, the Bureau had removed revenues of Abuladze. As it turned out, the Bureau resorted to the Article 19 of the Law on Conflict of Interest and Corruption in Public Service, which states that commercial activities conducted by a person before his first appointment cannot be publicized.
TI Georgia built its survey upon the fact that before being elected in the Supreme Council in 2016, Gia Abuladze held high rank positions in public service – he was Minister of Education, Culture and Sport in Adjara government in 2010-2012, although at that time, he was not obliged to submit his property declaration. By the amendments moved in subsequent years and new resolutions enacted by the Government, ministers of Adjara government are already obliged to submit property declarations. In fact, Gia Abuladze held position in civil service before 2016 as well, although he was not required to file a declaration.
The organization could not be aware of the fact that Gia Abuladze had included revenues from commercial activities in his declaration and it was the Bureau that removed them. Consequently, our statement, whereby Gia Abuladze had neglected requirements of the law, is not correct.