Chamber of Control vs. Management Service - A rushed trial over illegal party donations - საერთაშორისო გამჭვირვალობა - საქართველო

Chamber of Control vs. Management Service - A rushed trial over illegal party donations

08 June, 2012

The dispute between the Chamber of Control and Management Service LLC, the company that had renovated and rented offices across the country to the opposition movement Georgian Dream and was accused of having provided illegal party donations and contributions has been taken to court. TI Georgia was there.  

Background: Accused of illegal party financing

The Georgian Chamber of Control’s (CCG) Finance Monitoring Service established that Management Service Ltd had illegally donated to political parties. According to a May 14 decision of the supreme audit institution that is also charged with monitoring compliance with party financing rules, Management Service had rented offices from individual landlords, renovated them in cooperation with a partner company, Burji, supplied them with furniture and other necessary items, and then subleased the offices to different political parties that are part of the opposition Georgian Dream coalition.

The CCG concluded that the company’s costs for for renting, renovating and furnishing the offices exceeded the income it received from renting them out to political parties, arguing that its activities were thus not profit-oriented. In order to calculate the company’s cost structure, the CCG added up the total floor space of the offices and multiplied it by 150 GEL, assuming this to be the repair cost per square meter, based on the information supplied by Levan Samkharauli from the National Forensics Bureau. The resulting amount of  of The Chamber of Control deemed the amount ensuing from the above calculation as Management Service’s donation to political parties and fined it tenfold 476,619.51 GEL.  

Management Service challenged this decision, arguing that it engaged in commercial activities and that its collaboration with political parties was profit-oriented, saying that it was expecting to generate a profit of GEL 400,000 within 11 months from the deal. The company also disagreed with the CCG’s calculations and maintains that the actual cost for the renovation was significantly lower because only basic repair work was carried out. It also remained unclear how the CCG arrived at a square meter renovation cost of GEL 150, as neither the Chamber of Control nor the expert of the Forensics Bureau did any sight visits to evaluate the repair works in the party offices.

The court hearing

The hearing on the case, presided by judge Dimitri Gvritishvili at the Tbilisi City Administrative Court was held on 28 May. A TI Georgia lawyer attended the hearing to monitor the procedures.

On 28 May, Judge Dimitri Gvritishvili, who typically reviews two to five cases on an average working day had freed his agenda for this case. The trial began at 13.00 and was completed at 18.00 sharp, interrupted only by a 15 minute and a 1-hour break. TI Georgia’s monitor had the impression that the judge was in a hurry and intended to bring the case to an end within the same day. The judge did not grant the plaintiff’s repeated petitions to postpone the trial and delivered his judgement the same day.

One of the key issues at dispute was the size of the total office floor and the cost of the repaired offices. Management Service asked to postpone the hearings until 8 June in order to allow for a private expertise of floor area and renovation costs to be finalized. Judge Gvritishvili declined this notion on the grounds that the plaintiff had already submitted financial estimates of its costs, stating that the company had spent GEL 154,000. A calculation of the costs by an expert could not result in new evidence and there was no need to waste time on that, the judge argued. He also declined the plaintiff’s motions to subpoena as witnesses people who had carried out the repiar work and who could testify on the value of their services.

Representatives of Management Service also asked the court to postpone the trial at least for one day in order to be able to familiarize himself with the minutes of an administrative complaint examination proceedings held at the Chamber of Control on May 14, which were submitted to the court by the CCG during the session. The judge allowed only one hour for taking a look at the 48-page-long document. Having returned from the break, the representatives of the plaintiff declared that they were able to read only a small part of the document and found certain discrepancies even in that small part that had read. In spite of this, the judge once again declined Management Service’s petition regarding the postponement of the hearing and the trial continued.

When making his exposition speech, Giorgi Amiranashvili, the CCG’s representative, referred to findings on an audit report to support his argumentation. The plaintiff challenged the reference to circumstances not brought in evidence in the case. Although the judge indicated that he would not accept the noted audit in evidence, the respondent was still allowed to refer to it in his speech on the exposition stage.

Amiranashvili went on citing the audit findings and discussed the specific case of a Kaspi office, stating that after rent, renovation and subsequent sub-leasing, Management Service had suffered a loss of GEL 9,706. The plaintiff challenged this data and petitioned to verify its accuracy.

A quick ad hoc calculation in the courtroom showed that renting the Kaspi office was costing Management Service GEL 8,250, while the company sub-leased it for as much as GEL 22,772, i.e. its viable profit would amount to GEL 14,522. In spite of the fact that the CCG representative failed to specify how the Chamber audit came up with the allegedl loss of GEL 9,706, the judge did not make further inquiries into the issue and this time concurred with Management Service’s defence that since the above audit outcomes had not been brought in evidence in the case it was not worthwhile wasting time on that.

With the approach of 6 pm, the judge tried hastily to bring the trial to an end. He gave the plaintiff 10 minutes to make his closing speech, due to which Eka Beselia, one of the Management Service’s representatives, was precluded the opportunity to make her own statement. The judge maintained that Alexandre Baramidze, another representative of the company, had used up all the allotted time.

At exactly 6 pm, the judge concluded the trial and adopted the decision having held an on the spot counsel without leaving the room. Management Service’s appeal was not granted. According to company representatives, they are going to appeal the decision, stating that Management Service cannot afford to pay a fine of that amount and faces insolvency.

Although timeliness is an important principle while administering justice, it is of primary importance to have the court decision drawn as a result of profound, comprehensive and impartial inquiry.  The fairness of the given decision leaves grounds for suspicion as the circumstances under dispute had not been examined completely and thoroughly due to the speeded up trial.

TI Georgia will continue monitoring the case, hoping that the hearings in the court of appeal will be more profound leaving fewer questions open.

Author: Zurab Gvelesiani