The legislation regulating legal entities of public law still cannot mitigate the risks of corruption and nepotism
Tens of thousands are employed in Georgia’s Legal Entities of Public Law (LEPLs) and hundreds of millions of GEL are spent by the state. However, due to the incompleteness of the legislative reform, the same standards of accountability and transparency as in the public service are still not applied to LEPLs.
The Law on Legal Entity of Public Law has existed in Georgia since 1999, however, in 2015, the government committed to initiating a new law, when the Parliament adopted a new law on Public Service. The transitional provisions of the Law on Public Service prescribed the government to prepare and submit a new law on Legal Entities of Public Law to the Parliament by September 1, 2016. The new law should have considered the division of LEPLs into categories. However, this obligation has not yet been fulfilled, thus the law remains violated.
The main goal of the new law should be to divide LEPLs into categories. According to the current legislation, LEPLs belong to the public service system. The legal documents related to the work of the public service, its transparency, accountability, or possible conflict of interests, as a rule, make a reservation that the norms do not apply to certain institutions, including cultural, educational, scientific, research, sports, and religious LEPLs. Accordingly, without categorizing LEPLs, it is often unclear which organizations should belong to one or another category, which may unreasonably widen the circle of LEPLs to which the above laws do not apply.
In addition to such categories of LEPLs, the new law should regulate and define which LEPLs are part of the public service system. According to the Law on Public Service, the work of certain categories of LEPLs, which must be listed in the Law on Legal Entity of Public Law, is not considered public service. However, these provisions do not exist in the law to date. This kind of categorization is necessary since in practice there are LEPLs of a radically different nature. For example, it is impossible to uniformly regulate the activities of the LEPLs such as Public Broadcaster, Revenue Service, and "Produce in Georgia".
In addition to the fact that the new law has not been adopted, the relevant regulations of the Law on Public Service are still not fully applied to LEPLs. In this regard, there is a transitional period, which was supposed to last only until December 31, 2017, but since then the Parliament has been extending this period every year, and according to the current formulation, it lasts until December 31, 2022.
The complete non-application of the law on Public Service to LEPLs means that the operation of such an important anti-corruption mechanism as the Law on Conflict of Interests and Corruption does not spread over a large number of LEPLs. Consequently, many LEPLs, which perform public functions and are formally recognized as part of public service, during the transition period remain outside the restrictions and obligations imposed on public institutions.
The absence of anti-corruption mechanisms creates a favorable environment for nepotism and the use of employed persons for electoral purposes. Furthermore, it creates perverse incentives to artificially increase the number of LEPLs. For example:
- According to the study by Transparency International Georgia, 45 LEPLs were subordinated to 12 state agencies in 2017, while by the end of 2020, the number of LEPLs functioning under the same agencies increased to 54.
- In 2017, there were 9,288 non-staff temporary workers employed by 41 LEPLs, while in 2020, this number increased by 45.5% and amounted to 13,517 workers;
- In 2017, 42 LEPLs paid GEL 73,826,398 in salaries to non-staff temporary workers, while in 2020, this expense increased by 108.1% to GEL 153,645,554.
Therefore, the non-adoption of the new law on Legal Entity of Public Law significantly worsens the standards of transparency and accountability of LEPLs, hinders the reform of the public service, and increases the risks of corruption.
According to the 2019 activity report of the Civil Service Bureau, the Bureau has prepared draft amendments to the Law of Georgia on Legal Entities of Public Law, which "provides for the LEPL categorization, defines the grounds for their establishment, and addresses the issues of application of civil service regulatory legislation towards them". In a similar report of 2020, we read that the Civil Service Bureau forwarded the bill of relevant amendments to the government on October 1, 2020. Despite this, the government has not submitted the draft law to the parliament, thereby violating the obligation defined by the law for 5 years.
The government of Georgia should develop and submit to the Parliament the draft law on Legal Entity of Public Law as soon as possible.
 A Legal Entity of Public Law is a separate organization from legislative and state government bodies, established under an appropriate law, an ordinance of the Government of Georgia or an administrative act of a state government body based on law, which independently carries out political, state, social, educational, cultural and other public activities under state control; it is also a separate organization from state government bodies, established under a normative act of a supreme executive body of an autonomous republic, which independently carries out social, educational, cultural and other public activities under state control.
 Georgian Lari
 As of 2020, more than 20,000 people were employed by the 41 LEPLs studied by Transparency International Georgia, and their total annual remuneration exceeded GEL 300 million. In full see the study: Corruption Prevention Mechanisms for State LEPLs and N(N)LPs Remain Weak, while Expenditures Continue to Rise, 22.11.2021, https://bit.ly/3QSuUI3
 Here first of all the laws "On Public Service" and "On Corruption and Conflict of Interests in Public Institutions" are meant.
 See subparagraph "c" of Article 3 of the Law "On Public Service".
 Ibid, paragraph 1 of Article 1261.
 See the full study: Corruption Prevention Mechanisms for State LEPLs and N(N)LPs Remain Weak, while Expenditures Continue to Rise, Transparency International Georgia, 22.11.2021, https://bit.ly/3QSuUI3
 2019 Activity Report of the Civil Service Bureau, pg. 21, https://bit.ly/3kx45fV
 2020 Activity Report of the Civil Service Bureau, pg. 44, https://bit.ly/3Bu5s5p
 In addition, the deadline set by the 2019-2020 Action Plan of Public Administration Eeform was violated, according to which the draft law was to be initiated in the IV quarter of 2019, see "On the approval of the 2019-2020 public administration reform action plan" Resolution N274 of the Government of Georgia dated June 10, 2019, Appendix 2, Activity 3.1.2., https://matsne.gov.ge/ka/document/view/4586360?publication=0