Revolving door and alleged corruption in Borjomi municipality - საერთაშორისო გამჭვირვალობა - საქართველო
GEO

Revolving door and alleged corruption in Borjomi municipality

06 May, 2022

When Piran Gogichaishvili, the owner of Mshenebloba da Proektireba LLC (Construction and Design LLC), was appointed to a position in the Borjomi City Council in 2018, he transferred his company to Vasil Mchedlidze for free. However, in 2022, after his term of office expired, the former City Council member reclaimed the company. As it transpired, Mshenebloba da Proektireba LLC and a sole entrepreneur, Vasil Mchedlidze, received GEL 2,203,460 through 52 public procurement contracts awarded by the Borjomi municipality over the period between 2018 and 2021. 

Transparency International Georgia periodically looks into the practice of “revolving door” in Georgia. “Revolving door” refers to the movement of individuals between public-sector and private-sector jobs, that involves risks of corruption and conflicts of interest. This time around, we have exposed such fact in the Borjomi municipality.

The company of a former high official of Borjomi City Council

Piran Gogichaishvili founded Mshenebloba da Proektireba LLC in 2009 and was the director of the company since its inception. Until July 2021, this company was called “Water and Sewerage Operation Service.” The core business of the company is the installation of rainwater drainage and sewerage systems.

In the 2017 municipal election, Piran Gogichaisvhili was elected to the Borjomi City Council from the political party, Alliance of Patriots. On 25 May 2018, he became a chairman of “Majoritarian” faction.

When sitting on the City Council, in May and June 2018, Piran Gogichaisvhili personally entered into two procurement contracts worth GEL 5,287 with two non-entrepreneurial (non-commercial) legal entities of the Borjomi City Hall. In October of the same year, he transferred the company for free to a Borjomi-based developer, sole entrepreneur Vasil Mchedlidze.

In 2018-2021, Mshenebloba da Proektireba LLC was awarded the contracts with the total value of GEL 880,192 in 11 Tenders announced by the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities. These included the contracts worth GEL 487,787 (55.4%) awarded to the company in seven tenders in which it was either the only bidder or all other bidders were disqualified. Furthermore, the deadline for the completion of works was extended to the former company of the City Council member as many as six times and the value of contracts was increased also six times, by an additional GEL 36,628 in total.

Over the same period, the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities signed 22 direct procurement contracts worth GEL 467,086 with the Mshenebloba da Proektireba LLC.

Public procurements by Mshenebloba da Proektireba LLC in 2018-2021:

During his term of office in the Borjomi City Council, Piran Gogichaishvili’s company got 34 public procurement contracts with the total value of GEL 1,347,278 from the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities.

In January 2022, that is one and a half months later of the expiry of his term in the Borjomi City Council, Piran Gogichaishvili took the company he had transferred to Vasil Mchedlidze back.

Procurements by the sole entrepreneur related to the former public official

During those three years when Piran Gogichaishvili held a position in the Borjomi City Council, the sole entrepreneur, Vasil Mchedlidze, was awarded 19 public procurement contracts worth GEL 1,040,562. All contracts were awarded by the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities save one, worth GEL 184,380, which the company signed after winning in a tender announced by the National Forestry Agency.

Public procurements by Vasil Mchedlidze in 2018-2021:

In 2019-2021, Mchedlidze won in 13 tenders announced by the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities and got the contracts worth GEL 757,644. These included the contracts worth GEL 283,833 (37.4%) awarded to him in five tenders in which he was either the only bidder or all other bidders were disqualified

It is worth noting that until Piran Gogichaishvili was appointed to the position in the City Council, Vasil Mchedlidze had only two direct procurement contracts worth GEL 15,731 with the Borjomi City Hall.

In total, over the period between 2018 and 2021, the company of Piran Gogichaishvili and Vasil Mchedlidze received GEL 2,387,840 through 53 public procurement contracts.

In his asset declarations filed in 2018 and 2019, Piran Gogichaishvili did not declare the income received from his LLC. Nor did the public official indicate in the documents that he was the owner and director of the company at that time.

In 2011-2017, i.e. until Piran Gogichaishvili was appointed to the position in the City Council, his company had been awarded the public procurements contracts valued at around 3 GEL million while Vasil Mchedlidze had been awarded the contracts worth GEL 1 million.

Transparency International Georgia calls on the State Security Service to study the public procurement contracts awarded to Mshenebloba da Proektireba LLC and Vasil Mchedlidze by the Borjomi City Hall and its non-entrepreneurial (non-commercial) legal entities over the years between 2018 and 2021 and in the event of detecting signs of crime, to act in accordance with the law.