As a result of analysis of financial declarations of 2022 submitted by 16 political parties, Transparency International Georgia (TI Georgia) has arrived at the following main findings:

Revenues and expenditures of political parties

• The 16 political parties studied received total revenues of GEL 16,927,785 (budget funding, donations, bank loans) and incurred expenditures of GEL 16,047,245, which is 2.5 times less compared to the election year of 2021; 37% of the total revenues of all the parties (GEL 6,191,423) went to the Georgian Dream and 39% of the expenditures (GEL 6,281,984) were incurred by the same party. 
• 76% of the total revenues received by the political parties (GEL 12,925,153) came from public funding, and 24% (GEL 4,002,632) came from private sources (donations, bank loans). More than 90% of the revenues of 8 of the 16 parties was received from the State Budget.  
• Only 8 of the 16 parties received donations (2 of these – less than GEL 1,000). The parties received donations of GEL 2,656,066 in total, 39% of which (GEL 1,036,000) went to the Georgian Dream.  

Problematic trends

• Facts of obtaining multi-million lari public procurement contracts (tenders, direct procurements) by donors of the ruling party are still a problem that gives rise to doubts about corrupt deals. 
• Another problem concerns possible third-party donations, when the source of the donated amount is not the donor but rather another natural or legal person. Such an act is prohibited by the legislation.
• The financial inequality between the ruling party and the other parties is still substantial. The dependence of the parties on large donors is problematic. Approximately 50% of the amounts received by all the parties came from a small number of large donors. 
• Yet another problem is the legislative change on the basis of which the budget funding of Lelo and the Labor Party was terminated (on the ground of their members’ leaving the Parliament). As a result of the change, the total revenue of the Labor Party decreased by 75% in comparison to the previous year.
• As a result of a legislative change, from September 1, 2023, the monitoring of the financial activities of political parties will be carried out by the newly created Anti-Corruption Bureau instead of the State Audit Office. Giving the anti-corruption functions envisaged by the Law on the Anti-Corruption Bureau to one institution should be welcomed and is in compliance with international practice, although the centralized model works only in the event of granting this institution real independence and investigative powers.
• The legislative change that halved the ceiling of the total expenditures to be incurred by a party during a year and decreased it from 0.1% of the country’s GDP of the previous year to 0.05% of this figure – although it is still inadequately high – is not going to have a desired effect. No party is Georgia has ever reached this limit.  

Cases of alleged corruption

• Gza LLC, which is connected with two donors of the Georgian Dream (they donated GEL 40,000 to the Georgian Dream in 2022), won 12 tenders with a total value of GEL 118 million in the period from January 1, 2022, to December 1, 2023. This company has won tenders worth GEL 245 million since 2011, while persons connected with it have donated GEL 220,000 to the ruling party.  
• Donations given to the Georgian Dream by Joni Jincharadze and Marina Dekhtiarevi (GEL 40,000 in total) contained high risks of corruption. Seventeen days after the donation was made, the Khelvachauri City Council unanimously approved a Detailed Development Plan (DDP) for a company connected with them (whose owners are citizens of the Russian Federation) which plans to construct a residential complex on an area of 16,000 sq. m on Salibauri hill near Batumi.  
• Seven individuals directly or indirectly linked with Bidzina Ivanishvili donated GEL 250,000 in total to the Georgian Dream in 2022. The same individuals have donated more than GEL 1.8 million to the ruling party since 2011.  
• Among the donors, there are several small groups that have donated money to the ruling party on the same day or one or two days apart and, as a rule, are connected with one another in various ways (business, kinship). These circumstances give rise to doubts about whether this collective action was organized by someone in advance and whether the donations were made by other persons.

Recommendations

• The Anti-Corruption Bureau should be equipped with relevant investigative powers. To ensure political neutrality, the head of the Bureau should be appointed by the Parliament; opposition parties should also take part in the appointment.
• It is necessary that the Anti-Corruption Agency of the State Security Service study the fact of obtaining the permit for the construction planned on Salibauri hill by H Group Development by an allegedly corrupt method.
• The Anti-Corruption Agency of the State Security Service should study the links between the donations made by the ruling party’s donors and large public procurement contracts obtained by them, in order to rule out a possible corrupt deal.
• A political party should not lose public funding, which it is entitled to, regardless of whether it uses its parliamentary mandates. Public funding should depend on electoral support a party gets rather than its parliamentary activities.   
• Those political parties that receive a gender-based supplemental funding from the State Budget should fully comply with the rule of filling out the declarations and indicate the amount received in the appropriate field.
• The State Audit Office should add a separate form to the annual financial declaration template where parties will be able to indicate the specific origin of the amount (if any) in the “other monetary revenues” category. 
• Political parties should do more to raise donations through events and campaigns. In such a case, parties are usually less reliant on a handful of key donors, and the risk of possible corrupt deals is also smaller.