GEO

The work of Partnership Fund: An overview of ongoing and completed projects

11 July, 2019

Transparency International Georgia (TI Georgia) studied projects funded by LLC Partnership Fund (PF). The PF is a state-owned investment fund that was founded in 2011.The PF is split into two separate business units: a) Asset management and b) investment capacity. 

The main source of PF’s revenue is the assets of five state-owned enterprises. Total value of projects in PF’s portfolio is over USD 2.5 billion, out of which GEL 330 million is a share of PF’s investment. In 2014-2017, the PF's total assets grew by 16% and total equity decreased by 13%. The PF completed the financial year 2017 with a loss of GEL 482 million. In 2014-2017, a total loss amounted to GEL 528 million. This loss stemmed from depreciation and impairment losses (GEL 633 million) of Georgian Railway and Georgian State Electrosystem. 

In 2017, the PF received GEL 27.3 million from dividends. In 2016, this number stood at GEL 12.7 million. The PF gets dividends when a beneficiary company remains profitable. Since the main sources of PF’s revenues are the assets of several state-owned enterprises and dividends obtained from the projects financed by it, PF’s financial conditions is unstable and unpredictable. This makes PF largely dependent on loans.

As of 2019, The PF’s 14 projects have been completed and five are ongoing. Some projects raise certain questions in terms of alleged corruption. 

Two projects supported by PF, mountain pig farm and ceramic brick factory, have the same beneficiary. More specifically, Vasil Babluani owns shares of companies participating in both projects. Moreover, in 2013-2018, persons connected with beneficiary companies of these two projects in total donated GEL 200 000 to Georgian Dream and Salome Zurabishvili.    

Hotel Radisson Collection is one of the projects funded by PF. Silk Road Group S.A. implemented this project. Giorgi Ramishvili is the Chairman of the supervisory board of this Company. Silk Road Group is a company registered in the offshore zone of the British Virgin Islands. 

One of the beneficiaries of the PF funded project – YTONG Caucasus LLC – is connected with the MP Ivliane Tsulaia. Tsulaia and his business partners are large donors of the ruling party. In 2016-2018, in total, they donated GEL 700 000 to Georgian Dream and Salome Zurabishvili. 

In order to ensure PF’s stable investment activities, its funding should be sustainable and predictable. Therefore, it would better if PF does not depend on the profits of state-owned companies and it is directly financed by the state budget within certain limits. 

Additional regulations for ensuring more transparency of PF’s projects should be introduced. More specifically, it would be good if legislation bans funding of such legal entities, which are registered in offshore zones or legal entities, whose owners or shareholders are offshore companies