Recommendations for the reorganization of legal entities of the Municipality of Zugdidi - საერთაშორისო გამჭვირვალობა - საქართველო

Recommendations for the reorganization of legal entities of the Municipality of Zugdidi

30 April, 2019


The process of reorganization of the municipal legal entities of Zugdidi, which started in January this year, has yet to be completed. The task force studying the work of the legal entities has not yet sent its final proposals regarding the reorganization to the Zugdidi City Hall. TI Georgia is presenting its recommendations for the optimal and effective completion of the process to the task force and other stakeholders. The task force was set up on the basis of a study published by our organization in December 2018 which found out that the operation of various legal entities cost the Municipality of Zugdidi GEL 14 million.

It should be noted that after the creation of the task force, the municipality started the process of reorganization of N(N)LE Center for Management of Sports Institutions, establishing sports schools subordinated to the legal entity and decreasing the number of positions provided for by the staff list by 32. Formation of the football school as a separate legal entity, which is being discussed at this stage, will only be justified if its existence as a separate entity does not increase the expenses to be incurred on sports.

The situation also changed in N(N)LE Center for Management of Botanical Gardens, where the number of employees decreased from 29 to eight.

Despite the aforementioned changes, several problems remain, whose resolution will ensure the effective work of the municipal legal entities and reasonable spending of budgetary funds in the years to come. These problems include: 

  • a high number of deputy directors and administrative employees in the municipal legal entities;
  • cases of duplication of functions between different legal entities, as well as between different divisions of the same legal entities;
  • non-transparent employment practices.   

Recommendations regarding the reorganization of individual legal entities

Center for Management of Municipal Improvements

The main function of N(N)LE Center for Management of Municipal Improvements of Zugdidi is to tend and take care of territories and buildings. We think that the Zugdidi City Hall should procure this service through a tender from the next budget year, which will save expenses and ensure quality control and effectiveness of the service.

Public Healthcare Center    

N(N)LE Public Healthcare Center exercises the powers delegated by the Ministry of Health. The Ministry gives the municipality a targeted transfer of GEL 100,000, while the municipality spends an additional GEL 170,000 from its own revenues, which is not in conformity with the requirements of law. Whereas the budget of Zugdidi is scarce, the exercise of delegated powers should not be an additional financial burden for the City Hall. TI Georgia has already published a study on this issue. Accordingly, the municipality should apply to the Ministry, so that the latter will give it the necessary amount of money for the exercise of the delegated powers.

Zugdidi Agro Service LLC

Representatives of the limited liability company failed to present information on the benefit the company brings for the municipality. The Head of the City Council, Mamuka Tsotseria, stated that the said limited liability company is in fact without a function. Whereas the relevant ministry and its territorial body, the Information, and Consultation Center, work actively to support agriculture and the development of agriculture is not a direct competence of the self-government body, the municipality should substantiate the necessity of the existence of the limited liability company. Otherwise, the company should be liquidated.

Municipal Transport of Zugdidi

The most problematic issue in Municipal Transport of Zugdidi LLC is the method of collecting the bus fare. The bus drivers accept the bus fare in cash and at the end of the working day take the accumulated sum to the office of the limited liability company where a payroll check is concluded between the driver and the company – 25% of the amount is given to the driver as remuneration and 75% constitutes the income of the company. There is no mechanism of controlling the amount of money. We believe that it’s necessary to install pay boxes in the buses, which will create a more transparent mechanism of turnover of money. 

Zugdidi Cleaning Center

Ninety-eight of the 512 employees of N(N)LE Zugdidi Cleaning Center are employed in the management, including three deputy directors. The director has one deputy in the area of control and supervision, and this deputy, in his turn, has the head and deputy heads of supervision under his subordination, who also have seven supervisors and 32 controllers under their subordination. When the task force was discussing the activity of the legal entity, representatives of Zugdidi Cleaning Center failed to substantiate the necessity of creating such a large bureaucratic apparatus of control and supervision.

In addition, it is necessary to introduce transparent hiring practices in the municipal legal entities – the legal entities should only be able to select staff through open competitions because openness and competition will contribute to the recruitment of qualified staff and help decrease risks related to nepotism.

Author: Transparency International Georgia