The public procurement contract with Kvareli Eden raises questions - საერთაშორისო გამჭვირვალობა - საქართველო

The public procurement contract with Kvareli Eden raises questions

11 June, 2020


Following the spread of the Covid 19 virus in Georgia, the National Tourism Administration has started arranging quarantine spaces in hotels. To this end, the Tourism Administration has signed contracts with dozens of hotels through simplified procurement. Transparency International Georgia is monitoring public tenders and direct procurement, including the terms of hotel agreements, made during the state of emergency.

Due to the increased corruption risks, the agreement signed with Kvareli Eden LLC attracted special attention. Georgian citizens from the regions declared as high risk zones should be accommodated in the hotel. According to the agreement, the hotel must allocate 45 rooms for a period of 2 months.

On March 20 and 23, 2020, the owners and directors of Kvareli Eden LLC donated a total of GEL 65,000 to the ruling Georgian Dream party and within a few days this company got a contract worth GEL 277,300 through a simplified procurement from the Georgian National Tourism Administration.

The hotel has also signed simplified public procurement contracts worth GEL 400,000 in 2013 and 2019, although it has received a maximum of GEL 76,000 under one contract so far.

Alexander Maghradze, Director of Kvareli Eden LLC, donated GEL 5,000 to the Georgian Dream on March 20, 2020. Zimo LLC, a 50% shareholder of Kvareli Eden LLC., is  a donor of the Georgian Dream too. In September 2019, Zimo contributed GEL 100,000 to the Georgian Dream. The owners of Zimo have also donated money for the Georgian Dream in various years:

  • Zurab Kiknadze, director and shareholder of Zimo LLC, donated GEL 25,000 on March 20, 2020, and GEL 60,000 - in May 2019.
  • Ilia Kavtaradze, another co-owner of the company, donated a total of GEL 13,000 on March 20 and 23, 2020.
  • Levan Marshania, another shareholder, donated GEL 5,000 on March 23, 2020.
  • Gia Urotadze, another shareholder, donated GEL 17,000 on March 20 and 23, 2020. Moreover, in March 2019, he also donated GEL 10,000.

In 2019-2020, persons related to Kvareli Eden LLC donated a total of GEL 235,000  to the Georgian Dream. As for Zimo LLC, in 2012-2019, the company got 49 simplified public procurement contracts worth GEL 19 million.

Zimo LLC actively participated in the relocation of Bidzina Ivanishvili's trees, and fulfilled its obligations under public procurement with delays. In 2013-2017, 65 amendments were made in 16 public procurement contracts signed between budgetary organizations and Zimo.1

The simplified public procurement contracts given to large donors of the ruling political party remains a major corruption problem in Georgia. In such cases, procurer organizations should take more responsibility and clearly state the objective criteria for how to select potential suppliers. The relevant investigative agencies should take appropriate measures on the facts of alleged corruption.