Tens of thousands are employed in Georgia’s Legal Entities of Public Law (LEPLs^[1]) and hundreds of millions of GEL[2] are spent by the state.^[3] 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^[4] 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.^[5] 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.^[6]

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^[7] 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".^[8] 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.^[9] Despite this, the government has not submitted the draft law to the parliament, thereby violating the obligation defined by the law for 5 years. ^[10]

The government of Georgia should develop and submit to the Parliament the draft law on Legal Entity of Public Law as soon as possible.