Zestaponi City Hall tenders are won by a company owned by local high-ranking officials
One of the largest contractors of Zestaponi City Hall – a company called Zestaponproekti – is affiliated with local high-ranking officials Davit Meskhishvili and Teimuraz Tsitsilashvili. Davit Meskhishvili's father Nodar Meskhishvili is the director and 30% shareholder of the company, while Teimuraz Tsitsilashvili is a 40% shareholder. Zestaponproekti’s success in winning local tenders raises questions about conflict of interest and corruption risks, and calls for appropriate response.
On February 19, 2018, Transparency International Georgia published an investigative report about the undeclared business ties of Zestaponi municipal officials, which also mentioned tenders won by Zestaponproekti.
Of the 41 total tenders that Zestaponproekti has taken part in, it won 28, of which 27 were announced by Zestaponi Municipality, and the remaining one by the National Archives of Georgia. Zestaponproekti was the only bidder in 19 of the 28 tenders it won; in 2 of the 9 remaining tenders with more than one bidder, the competitors were disqualified due to their technical documentation (CNT170000072, SPA170007513).
In 2011-2018, the company received a total income of GEL 313,603.28, including GEL 166,620 from electronic tenders and GEL 146,983.28 from simplified procurement contracts. Simplified procurement contracts received by Zestaponproekti are signed in most cases by public schools in Zestaponi Municipality or municipal organizations, such as Union of Pre-Schools, Sports School, Union of Museums, Central Library, Zestaponi Municipality itself, etc.
Teimuraz Tsitsilashvili, a 40% shareholder of the company, is currently head of the Zestaponi Municipality Infrastructure Department. According to his asset declaration filed in November 2016, his son Kakhaber Tsitsilashvili worked as an architect in Zestaponproekti.
According to an official letter received from Zestaponi City Hall, both persons associated with Zestaponproekti have been working in Zestaponi Municipality for years: Davit Meskhishvili since January 2013; and Teimuraz Tsitsilashvili since 2007. In addition, Tsitsilashvili is a shareholder of Zestaponproekti, and Davit Meskhishvili's father Nodar Meskhishvili its director since the company was set up.
Zestaponproekti won its latest tender on February 14, 2018. This tender (SPA180001485) was also announced by Zestaponi Municipality and involved the procurement of engineering services.
Transparency International Georgia believes that the above tender points to possible restriction of competition and corruption. According to Paragraph Article 3.1 of the contract signed between Zestaponproekti and Zestaponi City Hall, the subject of procurement was the drafting of cost estimate documentation for infrastructure projects. According to the Statute of Zestaponi City Hall, preparation of tender documentation related to infrastructure projects is the responsibility of the Department of Infrastructure, Amenities and Public Services, the head of which since November 17, 2017 has been Davit Meskhishvili, the son of Nodar Meskhishvili, the director and 30% shareholder of Zestaponproekti. Therefore, the above tender documentation was supposedly prepared by the department headed by Davit Meskhishvili.
Kakhaber Tsitsilashvili was a member of the tender commission in the February 14 tender and did not participate in procurement procedures due to conflict of interest.
According to the Statute of Zestaponi City Hall, tender documentation should have been prepared by the Infrastructure Department, since the subject of procurement was the drafting of cost estimate documentation for infrastructure projects.
Furthermore, according to Paragraph 8.4 of the contract signed between Zestaponi City Hall and Zestaponproekti, contract implementation is to be controlled by Zestaponi City Architecture, Construction, Infrastructure, Amenities and Public Services Departments. In other words, contract performance will be controlled by a department that is headed by Davit Meskhishvili, and where Teimuraz Tsitsilashvili is also employed. According to Article 8 of the Law on Public Procurement, this circumstance creates a conflict of interest, since Davit Meskhishvili and Nodar Meskhishvili are relatives, and Davit Meskhishvili, as head of the Infrastructure, Amenities and Public Services Department, is obligated to control the activities of a supplier, Zestaponproekti, the director and shareholder of which is his father – Nodar Meskhishvili.
Finally, in its tender Zestaponi Municipality required participants to have three years of experience in 2015, 2016 and 2017. 2015 was the year when Zestaponproekti won its first tender on drafting cost estimate documentation from Zestaponi Municipality. The company won more tenders of the same kind in 2016 and 2017. Therefore, this eligibility requirement could unjustifiably restrict competition and prevent efficient disposal of public funds.
We call on:
- The State Procurement Agency and the State Anti-Corruption Agency – to look into tenders that were announced by Zestaponi Municipality and won by Zestaponproekti, in order to identify possible violations.
- The State Audit Office – to examine all tenders announced by Zestaponi Municipality where Zestaponproekti was a participant.
- Tender Commission of Zestaponi City Hall – to ensure that tender conditions are elaborated in a way that allows more companies to potentially take part in tenders and avoid tailoring them towards specific companies, which carries the risk of corruption.
 Decree N1 of January 18, 2018 of Zestaponi Municipal Council on the Approval of the Statute of Zestaponi City Hall, Article 11, Paragraph 5.
 According to Article 8, Paragraph 1 (c) of the Law of Georgia on Public Procurement, the conditions for avoiding conflicts of interest shall apply to the following activities related to the conduct of public procurement: monitoring and supervision of the performance of a contract. According to Paragraph 2 of the same Article, a natural person carrying out the activity of monitoring and supervision of the performance of a contract shall be considered to have a conflict of interest with the bidder or the supplier if their relations fall within Article 19 of the Tax Code of Georgia. Article 19 of the Tax Code defines being relatives as one such relation.
The publication was prepared with the financial support of the Norwegian Ministry of Foriegn Affairs