Investigators of the Ministry of Finance, commonly known as the financial police, last week entered the headquarters of Geocell [1], the country’s second largest mobile phone operator, accusing the company of large-scale tax evasion. The allegations against the company are brought just before a reform of legislation on government surveillance will be discussed in Parliament – a topic on which Geocell had taken a strong stance. The case might be seen as a warning by business leaders against speaking out, and might undermine efforts to attract foreign investment.

Over the past year, TI Georgia and Geocell (a subsidiary of Teliasonera [2], which is traded on Scandinavian stock exchanges – the Swedish State is the largest shareholder*) have entered a dialogue [3] on improving the framework governing so-called legal interception – the ability of law enforcement bodies to monitor electronic communication – in law and practice. Currently, the Georgia’s legal framework is vastly out of line with standards established by the European Court of Human Rights, as we have highlighted before [4]. In practice the Ministry of Internal Affairs (MIA) is able to monitor all Internet and mobile phone communication (including location) in real time through a direct access to all major companies’ technical infrastructure, without any effective court oversight mechanism.

Together with TI Georgia, Geocell has contributed expertise to a package of laws that, if passed, would improve oversight over government communication monitoring and better protect the privacy of people who are in no way related to criminal investigations. This effort has been spearheaded a parliamentary working group – the reform package is expected to be discussed in Parliament in the coming weeks. So far, any changes to the status quo [5] that would introduce actual oversight [6] over surveillance have been sharply opposed by the MIA and the Prosecutor’s office.

While Geocell is not the only telecommunication operator in Georgia that has been supportive of better regulation that would allow the Ministry of Internal Affairs to only access telecommunications data when there is a court order, its Chief Executive Officer has been outspoken [7] on the issue. Pasi Koistinen, who has managed Geocell since late 2012, in October publicly described [8] the status quo in Georgia regarding surveillance of electronic communication as “unacceptable”.

The Ministry of Finance said it is pursuing criminal charges against Geocell’s top-level management over alleged large-scale tax evasion, according to Agenda.ge [9], a government-backed website.

If the Ministry of Finance’s tax case against Geocell turns out to lack substance, this high-profile case could have a further chilling effect on foreign investment in Georgia.

We call on the Ministry of Finance to provide the public with all facts concerning the Geocell case. It is important that no further questions arise about the actions of the financial police.

Furthermore, the Geocell case will likely be perceived as a strong warning by large parts of the business community – a message that any activism and statements that could be interpreted as public criticism of the authorities, most importantly of the Ministry of Internal Affairs, are not tolerated. This might result in a similar atmosphere as in the final years of the United National Movement government, when the private sector refrained from any criticism of the authorities, fearing arbitrary retaliation.

*Disclosure: The largest shareholders [10] in Teliasonera, a company listed on Scandinavian stock exchanges, are the Swedish State (37.3%) and the Finnish State (10.1%). The Swedish International Development Cooperation Agency (Sida) is among TI Georgia’s largest donors.

TI Georgia’s activities around monitoring the communication and media sector are funded by the IREX G-Media program, made possible by support from the American people through USAID [11]. The content and opinions expressed herein are those of Transparency International Georgia and do not reflect the views of the U.S. Government, USAID or IREX.