GEO

The process of disposal of land parcels in the Botanical Garden of Tbilisi and in the area adjacent to it reveals signs of corruption

06 June, 2016

 

In recent days, the public’s attention has been drawn to the issue of disposal of several land parcels in the Botanical Garden of Tbilisi and in the area adjacent to it. Decisions taken by the city authorities regarding these land parcels raise a number of questions.

Chronology of events

April 12-20 – With the consent of the Tbilisi authorities, a land parcel in the Botanical Garden and that adjacent to it were exchanged. Specifically, the Finservice XXI company – which is linked to the former Prime Minister, Bidzina Ivanishvili, and which has owned a ten-hectare parcel adjacent to the Botanical Garden since 2007 – transferred a parcel of four hectares to the Botanical Garden and, in return, received a territory with the same area which had previously been a part of the Botanical Garden.   

April 22 – The Property Management Agency of the Tbilisi City Hall announced an auction for privatizing a 29-hectare land parcel in the recreational zone adjacent to the Botanical Garden. The condition for privatization was that the buyer was supposed to build a hotel with at least 80 rooms on the purchased parcel.

May 3 – After the auction was over, it became known that the auctioned land parcel adjacent to the Botanical Garden had been purchased by the Georgian Co-Investment Fund – which was founded on Bidzina Ivanishvili’s initiative – for GEL 6,326,495. 

It should be noted that the land parcel with an area of four hectares – which the company linked to Bidzina Ivanishvili received as a result of the territorial exchange in April this year – is conveniently located close to the territory that the same company has owned since 2007 and to the 29-hectare parcel which another company linked to Mr. Ivanishvili purchased later (on May 3). As a result of these transactions, the companies linked to Mr. Ivanishvili received a consolidated territory whose total area considerably exceeds that of the territory they had owned before April 2016 (see the map).   

In the view of NGOs Tiflis Hamkari and the Georgian Young Lawyers’ Association, the decision to concede a part of the territory of the Botanical Garden “was made opaquely and without participation of interested parties”. The organizations also emphasized that there is reasonable doubt that the adjustment of boundaries was carried out in the area of protection of cultural heritage, which raises questions regarding the lawfulness of the process.

It should be noted that the decision-making by the Tbilisi City Hall regarding the Botanical Garden and the areas adjacent to it in the past several weeks involved a number of suspicious circumstances.

 

Suspiciously short time frames of the privatization process

According to documents in the database of the Architecture Service of Tbilisi, the process of auctioning the 29-hectare land parcel adjacent to the Botanical Garden on the condition of building a hotel was initiated by a letter that Nodar Chichinadze, head of the Municipal Service of Economic Policy, wrote to Karlo Laperadze, head of the Property Management Agency of the Tbilisi Municipality, on April 18, 2016.

As the aforementioned parcel was put up for auction on April 22, it follows that it took an incomplete five days to complete an entire process that involved consideration of this issue by the Property Management Agency, selection of the relevant territory and submitting the issue to the Architecture Service for consideration, consideration of the issue by the Architecture Service and submitting it to the Zoning Council (as construction of a hotel in the aforementioned zone requires a special zoning permit), making a decision by the Zoning Council and, finally, preparatory work for the auction by the Property Management Agency (which, along with other procedures, involves determining the starting price of the land intended for privatization). It is clear that this period is too short for the process that involved taking important decisions related to both disposal of state property and urban planning. Therefore, an impression is made that the consideration of the issue in the relevant bodies and the procedures performed had a formal character.

It should also be mentioned that the period of the auction – which started on April 22 and ended on May 3 – only lasted for six working days. Considering the high price of the land parcel to be privatized and important investment obligations, it is unclear why the Property Management Agency decided to complete the auction within such a short period if the city government aimed at attracting as many potential buyers as possible and selling the parcel in as competitive an environment as possible.

Further Questions arise because of the fact that the decision to issue a special zoning permit (required for building a hotel in a recreational zone) that the Zoning Council took on April 21 on the basis of an application of the Architecture Service implied issuance of a unified permit for several land parcels, of which two were already owned by the company linked to Bidzina Ivanishvili and one was under state ownership at that time and was only purchased by the said company on May 3. Such a decision raises doubts that the city authorities knew the identity of the future owner of the parcel before the announcement of the auction.

Incompatibility of the decision on privatization and further development of the land parcel adjacent to the Botanical Garden with the concept of the General Plan of Land Use in Tbilisi

The aforementioned letter, which the head of the Municipal Service of Economic Policy sent to the head of the Property Management Service on April 18, says that there is an increasing demand for hotels in Tbilisi and that “the construction of new road infrastructure throughout the capital city creates new opportunities in terms of development”. A similar opinion was later expressed by Irakli Lekvinadze, Deputy Mayor of Tbilisi, who stated when commenting on the results of the auction of May 3 that the construction of the new road created an opportunity for developing territories in Tbilisi that are still unsettled.  

It is noteworthy that the arguments put forward by the representatives of the Tbilisi City Hall contradict the basic principles and goals of the city’s development envisaged in the Pre-design Opinion (Vision) which won the competition announced for elaboration/renewal of the General Plan of Land Use in Tbilisi and which is supposed to serve as the basis of the future General Plan. Specifically, according to the Pre-design Opinion (Vision), Tbilisi should be a “compact” and “resource-saving” city. The document gives a negative assessment to the fragmented and unconcentrated structure of the city and to the creation of new development centers in areas that lack well-developed networks of public transportation (mainly the underground). Therefore, the development of the unsettled areas adjoining the new Krtsanisi-Shindisi road essentially contradicts the vision of the city’s development that the Tbilisi City Hall itself approved in 2015.

Expansion of the city to undeveloped areas outside the built-up core is a decision with a far-reaching impact whose benefits should be examined in the general context of urban development and urban planning. The short time frames of the decision-making, which we mentioned above, indicate that such examination has not taken place in the case of the area adjacent to the Botanical Garden.

Correction of the route of the Krtsanisi-Shindisi road

The privatization of the land parcel adjacent to the Botanical Garden has caused correction of the route of the road connecting Krtsanisi and Shindisi, which is currently under construction. This was also confirmed by the head of the Municipal Improvements Service. The Tbilisi City Hall had already incurred expenses for preparing the territory in accordance with the initial route (which involved cutting trees and moving a gas supply network). As a result of privatization of the said land parcel and correction of the route, the budget expenses will presumably increase and it will become necessary to cut hundreds of additional trees.

Links between decision-makers in the Tbilisi City Hall and the Ivanishvili family

It is noteworthy that the head of the Municipal Service of Economic Policy, Nodar Chichinadze, whose letter started the process of privatization of the aforementioned land parcel, worked in the GDS TV station (which is owned by Bera Ivanishvili, a son of Bidzina Ivanishvili) in 2014-15. Givi Kublashvili, head of the Municipal Improvements Service, whose agency is supervising the construction of the Krtsanisi-Shindisi road, worked in Elita Burji (a company linked to Bidzina Ivanishvili) in 2014-15. It should also be noted that Grigol Liluashvili, Deputy Mayor of Tbilisi, worked in various companies linked to the Ivanishvili family in the years 2004-2016.  

Conclusion

Thus, the Tbilisi City Hall’s disposal of the land parcels in and adjacent to the Botanical Garden was accompanied by several suspicious circumstances. Specifically: 

  • Considerable parts of the land parcel that Finservice XXI – a company linked to Bidzina Ivanishvili – has owned since 2007 and the territory the same company received as a result of the exchange carried out on April 12-20, 2016, are separated by the land parcel that the Georgian Co-Investment Fund purchased in the auction announced on April 22, which raises doubts that, at the moment of the exchange, the management of Finservice acted with the belief that the third parcel would also become the property of the company (or of a company linked to it), despite the fact that the auction for this parcel had not yet been announced by the time of the exchange. The April 21 decision by the Zoning Council on issuing the unified zoning permit for the construction of a hotel on these parcels also reinforces the doubts that the identity of the future owner of the parcel to be auctioned was known in advance.
  • The decision of the Tbilisi City Hall regarding the privatization of the 29-hectare land parcel in the recreational area adjacent to the Botanical Garden – with the aim of building a hotel – is not appropriately substantiated and contradicts the Pre-design Opinion (Vision) on the General Plan of Land Use in Tbilisi that the City Hall itself approved last year.
  • The process of privatization of the said parcel, which involved important decisions in terms of disposal of state property and urban planning, was conducted within a suspiciously short time frame, which allows us to assume that these decisions were nor preceded by appropriate examination of the issue. In addition, the illogically short time frame of the auction also raises doubts that the city authorities did not aim at selling the territory in as competitive an environment as possible.   
  • The privatization of this territory made it necessary to correct the route of the Krtsanisi-Shindisi road, which presumably increased the state’s expenses and made it necessary to cut more trees.
  • The links between high-ranking officials of the Tbilisi City Hall and Bidzina Ivanishvili – who turned out to be the ultimate beneficiary of the disposal of the land parcels in the Botanical Garden and in the area adjacent to it – raises questions. 

The circumstances described above allow us to assume that the process of privatization of the 29-hectare land parcel in the recreational zone adjacent to the Botanical Garden, as well as the issuance of the special zoning permit for building a hotel on this and adjoining land parcels, had, in fact, a fictitious character and served to legitimize earlier informal decisions. This means that in this case, the Tbilisi City Hall – which is a public institution and is supposed to serve public ends determined by law – was guided by private interests, which, in its turn, reinforces doubts about the existence of an informal influence on the City Hall’s activities.      

As using public powers for private ends is essentially a corruption-related crime, we call on the relevant investigative bodies to take an interest in this case and to study the circumstances related to the disposal of the said land parcels. 

Author: TI Georgia
corruption