Key Findings

Transparency International Georgia (TI Georgia) studied the issue of municipal election campaign finance from August 2 to September 12, 2021. 13 electoral subjects who either are getting public funding or who received donations of at least GEL 100,000 during the year were selected for the report. The findings of the report are mainly based on the analysis of the financial declarations submitted by these electoral subjects and the relevant pre-election processes.

On June 22, 2021, the Parliament of Georgia amended the Organic Law on Political Associations of Citizens. The changes will come into force on February 1, 2022. According to them, the Labor Party of Georgia, which refused to take an allocated parliamentary seat, will lose the right to receive public funding. This legislative amendment was negatively assessed by the Venice Commission and the OSCE / ODIHR, as well as by local civil society organizations working on electoral issues.

The ruling Georgian Dream - Democratic Georgia party had 70% of all electoral subjects’ total revenues and expenditures (each amounting to about GEL 11-12 million), which shows an extremely unequal distribution of finances between the parties.

Only 17% of the total revenues received by election subjects came from public funding, while the rest came from private funding (donations and bank loans). The relatively small share of public funding was due to the fact that the reporting period was less than two months and eligible parties receive equally divided portions of annual public funding on a monthly basis. As for the private funding, it is mainly concentrated during the election period.

As in other years, the alleged cases of political corruption and the lack of adequate response to them were still relevant. As it turned out, in 2021 (January 1 – September 12), the companies connected with the donors of the ruling party had won public tenders worth about GEL 122.2 million and simplified public procurement contracts of GEL 4.5 million. During the same period, the donors directly or indirectly affiliated with these companies, contributed over GEL 2 million for the benefit of the Georgian Dream - Democratic Georgia.

Over the years, several major groups had been formed among the ruling party's donors who have been contributing large sums of money to the Georgian Dream – Democratic Georgia in almost every election. All such groups have a common characteristic - a large part of its members donate money to the ruling party on the same day or 1-2 days apart, which raises doubts about whether such collective action is organized by someone in advance and whether the donations are made through third persons. The Georgian legislation prohibits third-party donations. In 2021, among such large groups there still were persons associated with Bidzina Ivanishvili, the founder of the Georgian Dream - Democratic Georgia party, the former chairman of the same party and former Prime Minister.

In August, there were reports that the government representative in the region of Samtskhe-Javakheti and the regional heads of the State Security Service and the Investigation Service of the Ministry of Finance allegedly tasked local businesspeople to make financial contributions to the ruling party. When the reports were checked, it turned out that, in the period between 2 and 16 August, 87 individuals and five companies from Samtskhe-Javakheti made donations to the ruling party amounting to the total of GEL 714,000. This amount of donations made from this single geographic area in such a short time period is quite unusual and may be considered to be indirect evidence backing the aforementioned reports. Furthermore, on 4 September, TV Pirveli aired a story in which some of the persons, who had made the donations, effectively confirmed in conversation with journalists that the meetings and circumstances mentioned above had indeed occurred. According to our information, the prosecutor's office has not launched an investigation into this case.

The largest expenses of electoral subjects fell under the following categories: a) advertising; b) rental costs; d) office expenses and; e) salaries. The advertising expenses (GEL 6.7 million) accounted for a substantial share (61%) of total expenditures of electoral subjects. Of the other categories, the largest were rental costs (6% of total expenditures) and salaries (4%). Georgian Dream - Democratic Georgia spent the most - GEL 5.3 million on advertising, which is the largest part (79%) of the total advertising expenses of the studied 13 electoral subjects.

During the reporting period, the State Audit Office have not published any report on its oversight activities of the election campaign, therefore, the public was not informed about this issue. However, TI Georgia has identified several cases that should have come under the scrutiny of the State Audit Office. In particular, in September, billboards against the leaders of opposition parties and representatives of two TV stations with critical editorial policies were placed in several cities of Georgia. The content of the billboards contains pre-election campaigning directed against specific political parties and money was spent on that. According to the law, the regulations for donations apply to the monetary expenses incurred for negative campaigning.

In August, one of the leaders of the election subject Girchi said that the party was selling the seats in the precinct election commissions through an auction. The amount received by the party from such action must be considered as a donation, therefore, according to Georgian law, it is subject to declaration. Nevertheless, donations to the party have not been officially reported at all this year. In September, the same party bought a car worth more than $ 100,000 and will run it for the upcoming elections. As another party leader said the aim of the rally was to encourage higher voter turnout. Girchi has not indicated the cost of buying this car in any of the three-week financial declarations, which is a violation of the law.

Recommendations

• The Prosecutor's Office should launch an investigation into the alleged facts of pressure on local businessmen in Samtskhe-Javakheti, and study whether similar cases have taken place in other regions of Georgia;
• It is necessary to amend the Organic Law of Georgia on Political Associations of Citizens so that a political party does not lose its public funding regardless of whether it uses parliamentary seats or not, as party funding should depend on its election results and not on parliamentary activities;
• The State Audit Office should identify the source of funding for the billboards placed in various cities featuring opposition party leaders and journalists, and take appropriate action if the law is violated;
• The State Audit Office should investigate the possible undeclared revenue and expenses of Girchi and, if confirmed, take the measures required by law.

The English version of the full report will be published soon.