The government changed the terms of privatization of Vano Chkhartishvili's offshore company, the details are unknown - საერთაშორისო გამჭვირვალობა - საქართველო
GEO

The government changed the terms of privatization of Vano Chkhartishvili's offshore company, the details are unknown

16 January, 2024

According to the decree issued on December 4, the Government of Georgia made changes to the terms of privatization for the property transferred to the family company of Bidzina Ivanishvili's business partner, Vano Chkhartishvili. The government administration does not disclose the details of these changes. Considering that the privatization of state assets is an area vulnerable to corruption, especially when the assets are transferred to offshore companies, it is necessary to maintain the highest standard of transparency.

In 2014, the state sold Somgos Company LLC a 35,000 sq m plot of land in Sighnaghi at a symbolic price of 1 GEL, with the terms of building a hotel, planting a vineyard, and employing local people. The company failed to meet the investment obligations within the initially agreed 3-year period, leading to two subsequent extensions in 2016 and 2018. The December 4, 2023 decree likely pertains to another extension of the investment period for the project. This privatization case had previously attracted the attention of investigative journalists at TV Pirveli.

Changing the investment terms of privatization is a common practice and is not a problem in itself. Questions arise when the government alters terms for an individual close to the ruling party and withholds information about it.

We call on the Administration of the Government of Georgia to act in accordance with the legislation of Georgia, to abandon the unlawful practice of concealing decrees of the Government and orders of the Prime Minister and make these documents public.

The privatization links to offshore

 

ICIJ, Offshore Leaks

Founded on August 9, 2007, Somgos Company LLC is owned by the offshore company Sonata Alliance Inc., registered in the Seychelles, whose 100% owner and director since 2014 is Vano Chkhartishvili's daughter Natia Chkhartishvili. The director of Somgo Company LLC is Levan Skamkochaishvili, who at the same time holds the position of director in Vano Chkhartishvili's company Tbilisi Tobacco. Somgo Company LLC, whose economic activity is indicated as Holding companies business, is inactive according to the data of National Statistics Office of Georgia.

The shares and the director of Sonata Alliance Inc. changed over the years between the children of Vano Chkhartishili and persons connected with offshore companies, but according to the latest data available in the public registry, remained in the possession of Vano Chkhartishvili’s daughter, Natia Chkhartishvili.

Vano Chkhartishvili is one of the wealthiest businessmen in Georgia, with the majority of his business interests being managed through offshore companies. This information was substantiated by documents known as the Panama Papers, which were leaked in 2016. Chkhartishvili served as the Minister of Economy of Georgia from 2001 to 2004 and later as a member of the Parliament during the 6th convocation from 2004 to 2008. His name has been associated with various corruption scandals, including the prominent Omega Group case, and an alleged instance of undue judicial influence, as revealed in a 2023 RFE/RL investigation.

On September 5, 2022, the National Agency on Prevention of Corruption in Ukraine recommended imposing sanctions on Vano Chkhartishvili. According to the recommendation, the reasons for the sanction include his business connection with the Russian energy sector and his ties with Bidzina Ivanishvili, who, according to the agency, lobbies for the interests of Vladimir Yevtushenkov, one of the richest people in Russia.

In general, the privatization of state property by offshore companies is particularly problematic, as it is often unclear who is behind these companies and who benefits from people's property and under what terms. The case of privatization related to Vano Chkhartishvili's offshore company serves as a good illustration that the owner of an offshore company can be a person close to the ruling party.