The corruption risks related to former officials’ transition to the private sector remain a problem in Georgia. The reason, on the one hand, are the flaws in the corresponding legislation and, on the other, the absence of mechanisms to enforce this legislation in practice.

What is “revolving door”?

The movement of individuals between positions of public office and the private sector (referred to as “revolving door”) can involve the risks of the conflict of interests and corruption when such movement occurs within the same sector. For example, an official who participates in regulating a given sphere could take advantage of his or her position in favour of a private company expecting to receive a highly paid job in that company later. Furthermore, a former public official who moved to a private company could use the connections and influence maintained in the government for lobbying and securing an unfair advantage for that company.

To prevent such threats, it is important to monitor and record such cases. In addition, many countries use a mechanism of so-called “cooling-off period” which prohibits public officials from taking jobs of some categories in the private sector after they leave public service.

What does the Georgian legislation say?

According to the Law on the Conflict of Interests and Corruption in Public Institutions, “A dismissed public servant may not, within one year after dismissal, start working in the public institution or carry out activities in the enterprise which has been under his [or her] systematic official supervision during the past three years. Within this period, he/she also may not receive income from such public institution or enterprise.”

How the law is enforced

Applying the law in practice is problematic since it does not contain a definition of “systematic supervision” and it is not clear to which cases this restriction could be applied.

According to the Civil Service Bureau’s definition (which, according to the Bureau, is recommendatory), for the purposes of this article, an enterprise under a public servant’s official supervision is the same as a person under a public servant’s official supervision, therefore, official supervision is a “means to provide for the function of the hierarchical control of administration.”¹According to this definition, a former public official, for one year, will be prohibited from working only in the institutions operating within the system of the public service which he officially supervised before. That is to say, based on the Bureau’s definition, this provision does not prevent a public official from moving to the private sector (while the goal of such a provision should be precisely the reduction of risks created by the transition from the public to the private sector).

The wording of the phrase about “systematic official supervision during the past three years” is vague: it is unclear whether it implies continuous supervision for the past three years or supervision of any length of a period in the course of the past three years (the provision would be mostly useless if the former were the case).

Furthermore, the law does not establish which agency is responsible for supervising the enforcement of this provision. According to the Civil Service Bureau, the Bureau has no information about violations of this provision or the practice of its application.

Thus, if we accept the definition of the provision suggested by the Civil Service Bureau at this point:

• The flaws of the legal framework render virtually useless the provision of the law which should reduce the risks related to the “revolving door” problem since there is no clear definition of what categories of cases are covered by this provision;
• There are no mechanisms of enforcing this provision in practice since no agency is responsible for supervising the enforcement.

Noteworthy cases in recent years

Due to the flaws of the regulatory system mentioned above, there has been no response to the cases of former public officials’ employment in the private sector which indicates the possible existence of the conflict of interests. Noteworthy among such cases which took place in recent years are the following:

• The appointment of former Deputy Minister of Energy Mariam Valishvili as an advisor to the general director of Socar Energy Georgia;
• Former Tbilisi Deputy Mayor Nato Kitiashvili’s appointment as deputy general director for permits, licencing and legal issues in m2 Real Estate;
• The move of Givi Chochia, former deputy head of the Roads Department, to the Turkish company POLAT YOL & MAPA which won a GEL 329m tender for building the Batumi bypass road;
• The move of Zaza Simonia, former deputy head of the Roads Department, to the Chinese company Sinohydro which is building a Samtredia-Grigoleti highway section for GEL 253m (according to the reports in the media Simonia was a member of the tender group which awarded the contract to Sinohydro);
• The move of Irakli Khergiani, former deputy head of service at the Roads Department, to the company Dohva Engineering which monitors the implementation of the road construction works.

Issue of state-owned enterprises

It is noteworthy that the relevant provision of Georgian legislation does not apply to state-owned enterprises and people who work there. Correspondingly the likelihood of "revolving door" cases and the corruption risks they entail are quite high there. Especially in the conditions when such cases are not recorded and monitored.

For example, according to the media, on 22 May 2019, the Electricity Market Operator [ESCO], in accordance with the Electricity (Capacity) Market Rules, registered Inter Rao Georgia, LTD as a wholesale electricity supplier participating in the wholesale trade. The director of Inter Rao Georgia is Vakhtang Ambokadze. He registered the company at his own flat in Bagebi. Before Ambokadze assumed this position, for years, he was the general director of ESCO. Partnership Fund, JSC owns 100 percent of shares of ESCO. ESCO exclusively trades in balancing electricity and guaranteed capacity, depending on seasonal needs, imports, and exports electricity, inspects the metering nodes engaged in wholesale trade; it is also a guaranteed buyer of electricity generated by newly constructed power stations.

What should be done to improve regulation?

To effectively regulate the risks of the conflict of interests and corruption related to the “revolving door” issue, the following actions are required:

• Definition of relevant terms must be added to the law (alternatively, the existing wording of the corresponding provision must be changed) in order to eliminate ambiguity as to what types of cases are covered by the restrictions envisaged by the law;
• The law needs to clearly define which agency would monitor whether former public officials are abiding by the legal requirements;
• The restrictions envisaged by the law must apply to former managers of state-owned enterprises in cases involving the risks of the conflict of interests and corruption.