Companies of former high-ranking officials and donors of the Georgian Dream are winning construction tenders in Shida Kartli and Samtskhe-Javakheti - საერთაშორისო გამჭვირვალობა - საქართველო
GEO

Companies of former high-ranking officials and donors of the Georgian Dream are winning construction tenders in Shida Kartli and Samtskhe-Javakheti

13 October, 2020

The Road Building Management N1 was established in Gori in 1998 and it is currently owned by three shareholders. Nugzar and Nukri Abalaki own 25%-25% of the company, while the remaining 50% is held by Shota Abuladze. From 2011 till today, the company received a total of 205 178 478 GEL in construction tenders and simplified procurements from the state budget. The company received a little over half (50,2%) – 103 002 020 GEL – from January 2018 to September 2020. The Road Building Management N1 received a total of 56 431 099 GEL from state tenders in 2019 alone.

In 2015, the owners of this company, along with the former deputy Governor of Samtskhe-Javakheti Avtandil Kachkachashvili, and his friend and former director of Akhaltsikhe Municipality’s LLC Ketilmotskoba Giorgi Baliashvili, founded Road Building Management N2. The company operates mostly in Samtskhe-Javakheti. From the beginning of 2017 until September 2020, this company received 13 607 970 GEL from state tenders.

Shareholders

Nugzar and Nukri Abalaki are major donors of the Georgian Dream. Both of them donated 60000 GEL to the ruling party in August and October 2016, respectively. The third shareholder of the company, Shota Abuladze, donated 60000 GEL to the United National Movement prior to the parliamentary elections in 2012. The company also donated money directly to the former ruling party. In 2011, the Road Building Management N1 donated 100 000 GEL to the United National Movement.

Businessman Shota Abuladze is considered to have a close connection with the United National Movement. His son, Giorgi Abuladze, served for years under the previous government as the Head of the Regional Development Department of the Ministry of Regional Development and Infrastructure. Moreover, his son in law, Giorgi Kvitsinadze, served as Deputy Governor in Shida Kartli. According to Gori Community Radio “Mosaic” and the Information Centre of Shida Kartli, Shota Abuladze is a friend and a family relative of Ioseb Makrakhidze, who is a Georgian Dream majoritarian candidate for Gori.

Nugzar and Nukri Abalaki are long-time business partners of Shota Abuladze. They are currently running four businesses. These are the companies:

LLC Dgvrisi

Nugzar Abalaki - 25%

Nukri Abalaki 25%

Shota Abuladze - 50% (Director)

LLC Georgian Fish

Nugzar Abalaki - 25%

Nukri Abalaki 25%

Shota Abuladze - 50% (Director)

LLC Road Building Management N1

Nugzar Abalaki - 25%

Nukri Abalaki 25%

Shota Abuladze - 50% (Director)

LLC Road Building Management N2

Nugzar Abalaki - 17.5%

Nukri Abalaki - 17.5%

Shota Abuladze - 35%

Tenders

From 2011 till today, LLC Road Building Management N1 received a total of 205 178 478 GEL from state tenders. Out of this, 195 214 666 GEL was received from tenders while the company received the remaining 9 963 812 GEL from simplified procurements.

From 2011 till today, the company won 139 out of 267 tenders. Out of these, the company was the sole bidder in 64 cases. Moreover, there were 27 tenders where the company that offered a lower bid than Road Building Management N1 was disqualified. Therefore, the company received 43 495 702 GEL (22,2% of the total money received through tenders) in uncompetitive tenders. Moreover, the company received 49 812 910 GEL from tenders where their competitors were disqualified. It should be noted that more than two companies participated in some of the tender competitions, however disqualification was issued only to those companies that bids lower than those of Road Building Management N1.

Municipality of Gori, the Road Department of Georgia and Municipal Development Fund of Georgia are the main procurers of the company’s services. However, the company is also winning tenders announced by the Municipalities of Kaspi, Adigeni and Akhaltsikhe, as well as by different state N(N)Les and LEPLs.

The following is data of the tenders won by LLC Road Building Management N1 from 2011 till August 2020:

The Report of the State Audit Office published on November 22, 2019, states that 33 tenders were announced in 2017-2018 for the purpose of constructing, rehabilitating and maintaining roads in the Gori Municipality. LLC Road Building Management N1 secured 22 of those tenders, while the others were won by LLC Shara and LLC Ibolia, both of which are owned by the family of Ioseb Makrakhidze, Georgian Dream’s Majoritarian MP in Gori. Transparency International Georgia wrote about the business interests of Ioseb Makrakhidze’s family in September 2019. Out of these tenders, 21 were held without competition. As a result, LLC Ibolia received an income of 4 126 498 GEL, LLC Shara made 2 695 359 GEL, and LLC Road Building Management N1 – 12 712 254 GEL.

Similar trends are observed from 2019 till today. These three companies win most of the “big” tenders announced in these fields. LLC Road Building Management N1 secured 21 tenders in this field. In most cases, this company was the winner of the tender competition without competition, and in some cases LLC Shara was its competitor. LLC Shara was losing the tender competition because they made higher bids to the Gori Municipality City Hall. LLC Road Building Management N1 secured 14 387 449 GEL from the aforementioned tenders during this period, while LLC Ibolia received 3 073 444 GEL. It is in fact LLC Road Building Management N1 and the companies of the family of Ioseb Makrakhidze that divide amongst themselves expensive tenders related to the construction and rehabilitation of roads in Shida Kartli.

The Report of the State Audit Office published on November 22, 2019, also states that the tender commission frequently disqualified the competitor companies of LLC Road Building Management N1, which made lower bids in the tender competition. The State Audit Office brings the disqualification of LLC Orbita as an example of this.

Road Construction Department N2

On December 10, 2015, the LLC Road Building Management N1 along with partners in Akhaltsikhe registered LLC Road Building Management N2. 70% of this company was initially owned by LLC Road Building Management N1, while 15%-15% were held by the former deputy Governor of Samtskhe-Javakheti, Avtandil Kachkachashvili, and Giorgi Baliashvili, his friend and former Head of Akhaltsikhe Municipality’s LLC “Ketilmotskoba”, who at the same time was the company’s director.

The shares of LLC Road Building Management N2 are distributed as follows today: Avtandil Kachkachashvili – 30% (director), Shota Abuladze – 35%, Nukri Abalaki – 17.5%, Nugzar Abalaki – 17.5%.

Avtandil Kachkachashvili and Giorgi Baliashvili became public officials in 2013 after the Government of Georgia transferred Akaki Machutadze from the position of Head of the Regional Department of the State Security Service in Samtskhe-Javakheti to the position of Governor of Samtskhe-Javakheti. Machutadze appointed Kachkachashvili as his deputy in 2014. Afterwards, Giorgi Baliashvili, who is a friend of the Governor, became the Head of the Municipal LLC “Ketilmotskoba”. Baliashvili and Kachkachashvili left their positions at the same time in July 2015. They became business partners afterwards and have been actively participating in state tender competitions.

Prior to his appointment as the Governor, Avtandil Kachkachashvili was the head of Georgian Dream’s headquarters in Adigeni.

Giorgi Baliashvili’s name is connected to several widely known cases. In 2015, he was accused of assault by a former inmate. Moreover, representatives of the National Movement exposed him of partaking in physical violence in 2016-2017. Giorgi Baliashvili, who is a friend of the Governor, has not been indicted for his connection to these incidents by the law enforcement.

Giorgi Baliashvili’s mother, Zoia Baliashvili, was elected as Georgian Dream’s Majoritarian MP in the Akhaltsikhe Sakrebulo during the local self-government elections in 2017. In March 2018, his sister’s husband, Koba Kurtanidze, was appointed as the director of Akhaltsikhe Municipality’s LLC “Ketilmotskoba”.

Road Building Management N2 participated in 95 tender competitions and won 47, including in 19 tenders (38.7%) without competition, from July 2017 until September 2020. Its main procurers are the municipalities of Samtskhe-Javakheti. The largest procurer was the Adigeni Municipality City Hall, which procured a total of 5.5 million GEL.

The Road Building Management N2 received a total of 13 607 970 GEL from tenders, out of which 3 952 231 GEL (29%) were won without competition.

Participation of Road Building Management N2 in tenders  

The Road Building Management N2 received 7367 GEL from 6 simplified procurements in the same period, including three procurements (a total of 4465 GEL) from Akhaltsikhe’s LLC “Ketilmotskoba”

During the past three years, the company signed state procurement contracts worth a total of 13 615 337 GEL.

It is noteworthy that Road Building Management N1 became active in state procurements in Samtskhe-Javakheti after it had founded Road Building Management N2 along with Avtandil Kachkachashvili and Giorgi Baliashvili. Prior to that, the Road Building Management N1 had won only 5 tenders in the region, to a total value of 5 056 920 GEL. Afterward, it won 23 tenders out of 46 and received a total of 27 374 099 GEL. Here as well its procurers were the Road Department and the regions municipalities.

In total, Kachkachashvili and Baliashvili and the companies of their partners, Road Building Management N1 and Road Building Management N2, received a total of 40 989 436 GEL in projects completed from December 2015 to today.

Transparency International Georgia calls on the Anti-Corruption Agency of the State Security Service and the Prosecutor's Office of Georgia to investigate the procurements of Road Building Management N1 and Road Building Management N2 to determine if there was an instance of corruption between them and the procuring organizations.

Tenders