Golden Com's bid to manage airwaves raises questions - საერთაშორისო გამჭვირვალობა - საქართველო

Golden Com's bid to manage airwaves raises questions

02 August, 2011

The Ministry of Economy and Sustainable Development has disclosed that the company Golden Com is the winning bidder for the 4-year management rights of Alpha-Com, the state-owned entity that manages all of Georgia's broadcasting stations that transmit signals for radios, television stations and telecom companies. Golden Com was the only entity that submitted a bid and won the contract for GEL 110,000 (starting price: GEL 100,000). As we described in our previous blog, we found the auctioning process to be problematic, as no supporting documentation was provided to potential bidders, and the bidding period of 11 workings days was inappropriately short. What do we know about Golden Com? It is a Limited Liability Company (LLC) that was registered on July 11th, 2011, according to public records – one week before the bidding process of Alpha-Com's management rights was initiated on July 18th. To our knowledge, there was no prior public announcement from the Ministry of Economy or any government agency regarding an eventual auctioning of Alfa-Com's management rights before the actual online-bidding process was launched. Thus, it is striking that the name of Golden Com is somewhat similar to that of Alfa-Com, although Golden Com cannot have officially known of the upcoming auction. Golden Com is fully owned by an individual entrepreneur, Mr Vasil Bolashvili, who also acts as the company's CEO. The company's official adress is Davit Akhmashenebelis kheviani (lane) Nr. 158 in Tbilisi, where the Golden Place hotel is located. This hotel is not officially owned by Mr. Bolashvili, but by Mr. Vasil Gejadze. The only other business registered on Mr. Bolashvili's name, besides Golden Com, is the Hotel Pirosmani, which is registered under the same business id-number as Mr. Bolashvili, and located at km 7 of Aghmasheneblis kheviani. In 2010, Mr. Bolashvili made a GEL 2,000 donation (line 26 in this document) to the ruling United National Movement party, according to official party financing records. In the next four years, Golden Com is obliged to invest USD 12 million into Alfa-Com, which will remain fully state-owned, and to "maintain" its "profile". Where does Golden Com have the necessary money from for operating Alfa-Com? Actually, for these kind of privatizations that the Georgian government uses fairly frequently – the winning bidder is required to pay a fairly moderate purchasing price but commits to making a large investment over several years – the successful bidder does not necessarily need much cash to begin with. Golden Com will be able to pay the first of four tranches (GEL 27,500 of the total of GEL 110,000) from the cash flow earned from operating Alfa-Com because the first payment to the Georgian Government is only due by August 2012. In the same way, it might also be able to accumulate the necessary USD 12 million that it is required to reinvest over four years. But which government entity will be in charge in 2015 to verify that promised investment has been actually made? And in case Golden Com fails to make the investment, what tools will the Government have available to hold this limited liability company accountable?

Author: Mathias Huter, Mamuka Andguladze