GEO

Since the nomination of Ioseb Makrakhidze as the majoritarian MP candidate for Gori, companies connected with him have received more than GEL 91.8 million from tenders

09 September, 2019

 

Since the nomination of Ioseb Makrakhidze as the majoritarian MP candidate for Gori,[1] companies owned by him and his family members have received more than GEL 91.8 million from public procurements. The companies connected with Makrakhidze and his family members mostly won tenders without any competition, and, in most cases, the procurers were the Municipality of Gori and other municipalities of Shida Kartli.

Ioseb Makrakhidze was also involved in business before being elected as an MP: in the years 2014-2016, his companies received up to GEL 43 million from state orders. However, from the time the Georgian Dream nominated Makrakhidze as the majoritarian candidate for Gori in July 2016 up to May 2019, the revenues that his companies received from tenders increased by about 1.7 times (to GEL 75 million). It is also noteworthy that the MP and his family members are large donors of the Georgian Dream – in 2016-2018, they donated GEL 120,000 to the ruling party.

From a defendant’s seat to the Georgian Dream

The Georgian Dream’s nomination of the businessman Ioseb Makrakhidze as the majoritarian MP candidate for Gori in the parliamentary elections on 31 July 2016 was preceded by a court ruling which terminated criminal prosecution against Makrakhidze.

According to information published on Factcheck, Ioseb Makrakhidze had been indicted for appropriation of funds: the Prosecutor’s Office had charged him for appropriation of GEL 79,450 from the state and several episodes of fraud in the years 2012-2014. In April 2016, the court imposed a bail of GEL 10,000 on him.

At the court session of July 22, 2016, nine days before Ioseb Makrakhidze was nominated as the majoritarian candidate for Gori, his lawyer demanded the termination of the criminal prosecution of the businessman on the basis of the Law on Amnesty, with which the Prosecutor’s Office agreed.  

The companies of Ioseb Makrakhidze and his family members

According to the Public Registry data, Ioseb Makrakhidze and his family members (daughters and spouse) own stakes in 10 companies.[2]

In our study, we will discuss three companies: Ibolia and Shara, as well as Arkmshenstudia 2002, which is owned by Aleksandre Makrakhidze, Ioseb Makrakhidze’s brother. 

All the three companies receive considerable revenues from participation in public tenders without competition: Ibolia, Shara, and Arkmshenstudia 2002 won 69 tenders from the time Makrakhidze was nominated as the majoritarian candidate up to May 2019, and in 41 of these tenders they were the only bidders. In total, the companies received GEL 91,827,289, including more than GEL 45 million from non-competitive tenders.  

Tenders won and simplified procurements obtained by companies connected with Makrakhidze from July 2016 up to May 2019

 

Procurements obtained by Ibolia LLC since the nomination of Makrakhidze as a majoritarian candidate

The highest revenues were received by the road construction company Ibolia, in which Ioseb Makrakhidze owns a 40% stake. Makrakhidze has transferred this stake to another person on the basis of a trust agreement as required by law. Fifteen percent stakes in the same company are owned by his daughters: Opelia Makrakhidze and Mariana Makrakhidze.  

This company also participated actively in public tenders before Ioseb Makrakhidze’s election as an MP, although after Makrakhidze’s nomination as the majoritarian candidate for Gori, the company’s revenues from tenders and simplified procurements increased significantly. For example, in October 2016 Ibolia LLC won the largest tenderwith a value of GEL 30,256,380 – during the company’s existence. In total, Ibolia LLC has won 24 tenders announced by the municipalities of Gori, Kareli, and Kaspi, the Roads Department of Georgia, and other public agencies and concluded 18 simplified procurement contracts with these agencies since the nomination of Makrakhidze as a majoritarian candidate, receiving GEL 74,974,449 in total.   

Ibolia took part in 15 out of the 24 tenders without any competition, and in 10 out of the 15 cases, the procurer was the Municipality of Gori. Ibolia received more than GEL 41 million in total from non-competitive tenders. 

Public procurements obtained by the Ibolia company since the nomination of Ioseb Makrakhidze as a majoritarian candidate    

Tenders won by Shara LLC since the nomination of Ioseb Makrakhidze as a majoritarian candidate

The second company connected with Ioseb Makrakhidze which often wins public tenders is Shara LLC, in which the daughter of MP Makrakhidze, Opelia Makrakhidze,[3] owns a 33% stake. Opelia Makrakhidze received this stake free of charge from her mother, Tsitsino Kalandadze, in May 2018. Similarly to Ibolia, Shara is also a road construction company.

From the nomination of Ioseb Makrakhidze as the majoritarian candidate for Gori up to May 2019, Shara LLC received up to GEL 16 million from 26 public procurements, including GEL 3,236,363 from 8 procurements of the municipalities of Gori, Kareli, and Borjomi in which Shara was the only bidder.   

Public procurements obtained by the Shara company since the nomination of Ioseb Makrakhidze as a majoritarian candidate 

Company owned by Ioseb Makrakhidze’s brother – Arkmshenstudia 2002 

One more company connected with Ioseb Makrakhidze is Arkmshenstudia 2002, which is owned by his brother, Aleksandre Makrakhidze. It should be noted that Aleksandre Makrakhidze is a public official – after Ioseb Makrakhidze was elected an MP, his brother was appointed as the deputy head of the Municipal Improvements Service of the Gori City Hall.

Arkmshenstudia 2002 LLC also actively participates in tenders announced in Gori which concern the laying and rehabilitation of roads. During the past four years, since Makrakhidze was nominated as a candidate, the company has won 19 tenders with a value of GEL 882,505 and, also, received GEL 4,550 from simplified procurements in the Municipality of Gori. Eighteen out of the 19 tenders announced by the Municipality of Gori in which Aleksandre Makrakhidze’s company won were non-competitive. Consequently, up to 70% of the total revenues – GEL 613,945.94 – was received from non-competitive procurements. 

Public procurements obtained by the Arkmshenstudia 2002 company since the nomination of Ioseb Makrakhidze as a majoritarian candidate    

 

Funding of political parties

Ioseb Makrakhidze and his family members have been actively transferring funds to the accounts of the ruling parties since 2011. In total, they have transferred GEL 253,000 to the United National Movement and the Georgian Dream.    

Conclusion and recommendations

The companies connected with Ioseb Makrakhidze, majoritarian MP of Gori, also participated in  public tenders before he was elected to the Parliament, although the study by TI Georgia has found that the companies owned by the MP and his family members became privileged in public tenders precisely after he was nominated as a candidate – from July 2016 up to May 2019, three companies connected with them won in 69 tenders, obtained 26 simplified procurement contracts, and received an income of GEL 91.8 million in total from the budgets of municipalities and other public institutions.

It is especially noteworthy that non-competitive tenders which are won by the companies connected with the majoritarian MP of Gori are conducted by administrative institutions of Gori, Kareli, and other municipalities of Shida Kartli.

Therefore, TI Georgia calls upon:

  • the State Audit Office to study the contracts concluded by the Municipality of Gori and other procuring organizations with the companies owned by Ioseb Makrakhidze and his family members;
  • the Anti-Corruption Agency of the State Security Service to study the participation of the companies connected with Ioseb Makrakhidze, a member of the Parliament of Georgia, in public tenders with the aim of identifying possible corrupt deals and responding in the relevant manner.   

 


[1] According to a study conducted by TI Georgia, Ioseb Makrakhidze did not use his right to give a speech in the Parliament on a single occasion in 2018. http://tiny.cc/kih9bz

[2] Limited liability companies: Ibolia, Shara, E.I.L.G., Imedi, Makmari, ZM, MSG+, Horizonti, Ioni, MSG.

[3] In addition to Ibolia LLC and Shara LLC, several other companies are also connected with the MP’s daughter, Opelia Makrakhidze – in September 2017, her father transferred a 50% stake in Mata LLC to her free of charge. Opelia Makrakhidze also owns stakes in the following companies: MSG LLC (100%) and Ioni LLC (65%). These companies do not take part in public procurements. 

Another daughter of Ioseb Makrakhidze, Mariana Makrakhidze, also owns a number of companies. Similarly to Opelia Makrakhidze, she owns a 15% stake in Ibolia LLC, although the other companies – except for Ibolia – do not take part in public procurements. Mariana Makrakhidze is the owner of a 100% stake and director of Makmari LLC, and owns 50% stakes and is the director of Imedi LLC, ZM LLC, and MSG+ LLC; she also owns a 50% stake in Horizonti LLC.

MP Ioseb Makrakhidze’s spouse, Tsitsino Kalandadze, is also involved in business. At present, she owns a 33% stake in E.I.L.G. LLC. This company does not take part in public procurements.