The Georgian Asset Declaration System is in Need of an Update - საერთაშორისო გამჭვირვალობა - საქართველო
GEO

The Georgian Asset Declaration System is in Need of an Update

29 September, 2020

 

The mechanism for the monitoring of public officials’ asset declarations went into force in Georgia in 2017. Prior to that, information disclosed by public officials related to their assets, connections, and finances was not subject to verification. Given these circumstances, it didn’t come as a surprise that the new monitoring mechanism in its inaugural year revealed violations in 80% of the asset declarations that had been selected for verification.

The analysis of the results of the first 3 years shows that the monitoring mechanism fulfills only half of its officially assigned functions. The monitoring system is focused entirely on verifying the accuracy and completeness of the declarations and does not aim to reveal a conflict of interest and instances of corruption. It is important for monitoring to fulfill both functions in the future.

Moreover, it is noteworthy that the number of violations decreased (to a total of 45%) in the third year of monitoring only after the publication of the instructions for filling in the asset declarations. This demonstrates that simplifying and updating the declaration mechanism is the first step towards guaranteeing accuracy and completeness of the information provided in asset declarations.

As this process is already underway in the framework of the National Anti-Corruption Strategy, we hope that the Civil Service Bureau and other participating stakeholders take into account the findings and recommendations of this report. Transparency International Georgia is open to any form of collaboration in this regard.

Key Findings

  • The monitoring system for asset declarations is focused entirely at verifying the accuracy and completeness of the data provided in the declarations. By law, the monitoring system should also reveal and prevent conflict of interest and corruption-related offenses.
  • International recommendations in this area have not been fulfilled. In particular, these are the recommendations of the Organization for Economic Co-operation and Development Anti-Corruption Network (OECD-ACN) on the assessment of the effectiveness of the Asset Declaration Monitoring System and the consideration of imposing effective sanctions for the prevention of unjustified enrichment and instances of conflict of interest.
  • According to the monitoring results in 2019, the absolute majority of the violations were related to the accuracy and completeness of the data provided in the declarations. More than half of the public officials that were fined (257 officials) provided incomplete or incorrect data on their income or the income of their family members (68.4%) and information on their bank accounts (57%). Nearly a half of the public officials provided incomplete data on ownership of real estate (46.5%), while a quarter didn’t disclose complete information related to their contracts (28.9%) and entrepreneurial activity (26.3%).
  • In 2017-2019, the Civil Service Bureau checked 1347 asset declarations and revealed a total of 9 violations that were forwarded to investigative bodies for further review. However, even in the case of forwarded cases, the Civil Service Bureau does not provide detailed information on the essence of the violation and the public official that committed it. Due to this, the nature of the violation and the outcome of the forwarding of the case to investigative bodies remains unknown.
  • In 2019, 89 declarations were checked both by Transparency International Georgia and the Civil Service Bureau. The Bureau was unable to detect violations in nearly half (39 cases) of the declarations, most of which were connected to conflict of interest.
  • The rules for the selection and work of the independent commission that selects declarations for monitoring should be improved. Due to the shortcomings in this regard, the Commission failed to form twice in three years’ time. As a result, only a half of the declarations slated for review were subject to verification.
  • According to current practice, a new declaration isn’t selected as a replacement for a declaration that for various reasons cannot be subject to verification or if the same declaration has been selected by the independent commission and the random selection method.
  • A number of legislative amendments were implemented after a large number of public officials were fined during the first year of monitoring. These amendments weakened the responsibility of the declarants through the introduction of the concept of a minor violation, amendments to the minimum value threshold of assets subject to declaration and the decrease in the size of monetary fines. Some of the changes, such as lifting the obligation to declare companies that have not been operational for the last six years, also impedes the ability of civil society to effectively carry on the monitoring of public officials' asset declarations.
  • A number of legislative shortcomings make it impossible to reveal instances of revolving door activity through the monitoring of asset declarations. For example, information on paid work carried out by public officials prior and after their tenure in office is not public, despite it being a requirement by the law to include this information in the declaration form. Moreover, in most cases, the last declaration filed upon leaving the office contains information for a period of less than a year of the public official leaving office. Finally, the monitoring of a declaration is cancelled if upon the selection of the declaration more than a year has passed from the public official leaving office.
  • The results of monitoring show that there has been a decline in the number of violations after the publication of the instructions for filling in the asset declarations. This points to the necessity of simplifying and improving the process of asset disclosure.
  • The data provided in the asset declarations is published in PDF format instead of machine readable format (such as in CSV). This restricts the capacity of this data to be read and processed by a computer in an automated manner.

What is an asset declaration and why is it important

Asset declarations filed by public officials are one of the most important anti-corruption instruments. In this regard, public officials in Georgia are obliged to disclose their connections, interests, assets and finances on an annual basis. The process is electronic and the filed declarations are accessible on a special website – declaration.gov.ge. The transparency of the data is aimed at preventing the public office from being used for private gain, as well as for revealing other violations by public officials, such as illicit enrichment. As such, it is important for the asset declaration system to be continuously refined and improved on.

Assessment of the asset declaration monitoring

Following the digitization of asset declarations in 2010, the main shortcoming of the system was the absence of a mechanism for verifying the data provided in the asset declarations. For years, both local non-governmental organizations and international organizations have noted the importance of implementing a monitoring system for asset declarations. As such, the launch of the monitoring mechanism in 2017 was a significant step forward.  The results of the monitoring in the first year, which revealed violations in 80% of the declarations checked,[1] was a clear demonstration that the mechanism for the verification and enforcement of the asset declaration system had been weak and ineffective.

The mechanism for the monitoring of asset declarations works as follows: the Civil Service Bureau has a special monitoring department, which is tasked with reviewing selected declarations and revealing any violations in the data provided therein. The monitoring is carried out through a special electronic system that has direct access to the public database, such as: public registry, revenue service electronic database, etc. No more than 10% of the total number of declarations are selected for verification every year. 5% of the declarations are randomly selected (electronically), while the remaining 5% is selected by the 5-member independent commission, which is composed of members of non-governmental organizations and academia. Moreover, the Bureau is obliged to launch a review of a declaration based on a substantiated written appeal.[2]

Three years after its launch, it is possible to assess the effectiveness of the monitoring mechanism and to identify the necessary steps to resolve its shortcomings. In fact, the assessment of the effectiveness of the monitoring mechanism should have been conducted by the Civil Service Bureau. According to the recommendation of Organization for Economic Co-operation and Development Anti-Corruption Network (OECD-ACN), an assessment should have been carried out on the effectiveness of the asset declaration verification system and the impact of the asset declarations on the spread of conflict of interest and illicit enrichment. However, the organization’s latest report (March 2019) states that this recommendation has not been fulfilled.

Commission for the Selection of Declarations

The following shortcomings related to the work of the independent commission and the selection of its members should be resolved to improve the monitoring mechanism:

The possibility that the commission is not established – The Civil Service Bureau is allowed to make a single three-day extension when there are not enough applicants to fill in the membership positions in the commission. If there is still an insufficient number of applications after this extension, the commission is not established. Due to this shortcoming, the commission was not established twice within a three-year period. It is essential to rule out any possibility that could lead to the commission not being established. Furthermore, if the commission is not established, the 5% that would have been selected by it should instead be randomly selected. As of today, this doesn’t happen. As such, when the commission was not formed in 2018, instead of 10% of declarations, only 5% were randomly selected for verification instead of 10% of declarations. The commission was not established for the year 2020 either.

Duplication issue – Existing legislation states that a new declaration is selected only if necessary when a declaration randomly selected by the electronic system matches the declaration selected by the independent commission.[3] According to the Civil Service Bureau, such duplication does not occur in practice due to the way the electronic system is set up.[4] While this is encouraging, the obligation to select a new declaration in case of duplication should be guaranteed by law as well.

Limited composition of the commission – The commission consists of three members of non-governmental organizations and two representatives academia. The commission should also include journalists working on anti-corruption issues and representatives of trade unions. This will allow the commission to better reveal high-risk declarations based on the diversity of experience of its members.

Restrictive criteria for commission membership – Only non-governmental organizations that have carried out monitoring/verification of public asset declarations for at least five years since their establishment can have their own representative in the commission. As the commission has already failed several times to be established due to a lack of applicants, these specific membership criteria should be replaced by a broader requirement, such as experience in anti-corruption work.

Random selection of commission members – If the number of applicants for commission membership exceeds the total available membership openings (3 representatives of non-governmental organizations and 2 researchers), then the selection of the members happens on a random basis. It is necessary to write out in detail the procedures that the Civil Service Bureau will adhere to for the random selection method.

Insufficient freedom of the commission – According to the current rules, the commission is obliged to select half of the declarations that belong to state-political officials. It is unclear why this rule is required. For example, the monitoring results in 2019 show that fewer violations were found in declarations selected by the commission (43.55%) than those selected through the random selection method (47.14%).[5] This might suggest that there is a higher frequency of violations in the declarations of non-political officials. Due to this, the commission should have complete freedom in determining the risk factors that will be the basis for selecting its 5% of declarations.

Analysis of the monitoring results

Easing responsibility instead of improving the system

The monitoring of asset declarations began in 2017. According to the results of the first year, violations were found in 80% - 280 declarations (see Chart #1). A number of legislative amendments were carried out after these troubling findings. However, most of these amendments were aimed at the easing of sanctions for the declarants, such as:

  1. Introduction of the concept of a minor violation, which lifted the accuracy requirement for a number of different data provided in the declaration;
  2. Increasing of the monetary thresholds that oblige the public official to declare their finances;
  3. Changing the rules for the calculation of fines, which has resulted in the reduction of the volume of fines for public officials;
  4. It is no longer a violation if a public official doesn’t disclose the ownership of a company that has not had a turnover in the last 6 years;

The last amendment is particularly problematic, as it increasingly complicates the capacity of civil society organizations, media and interested citizens to monitor business connections. This is due to the fact that they are unable to verify if a company has been operational in the last 6 years – this information is not public as it constitutes tax secrecy that is open only to official agencies. This amendment undermines the transparency of the public officials’ entrepreneurial activity and is not in line with the aims and purposes of the current Georgian legislation, as well as with the country’s international anti-corruption commitments. It also makes it impossible to verify and assess the effectiveness of the results of the monitoring carried out by the Civil Service Bureau.

The negative results revealed by the monitoring should have resulted in the updating of the declaration system instead of easing the responsibilities for public officials. In spite of the easing of responsibilities, the number of violations didn’t go down in the second year of monitoring – in 2018, there was at least one violation in 79.45% of the declarations checked. Furthermore, there were minor violations in an additional 7% of the declarations and the declarants were issued warnings. In other words, the introduction of the concept of a minor violation did not decrease the number of violations. This clearly demonstrates that the policy of easing of responsibilities does not ensure that public officials act with greater integrity when filing declarations.

Actual improvement was observed in the third year of monitoring when the number of violations decreased to 45.16% for the declarations checked. While this is still a high figure, a 35 percentage point reduction over a period of one year is still noteworthy and reassuring. The reason behind this drop is more important: the Civil Service Bureau has named the instructions for the filling in of declarations as one of the reasons for the successful drop in violations in 2019. This clearly points to the fact that the process of disclosure can be complicated even for good-willed officials who want to accurately and completely declare their assets, finances and business interests. If a 35 percentage point reduction in violations was possible by bringing more clarity to the declaration process, then it is not hard to imagine what other successes may be achieved by further simplifying the declaration process. (See Chapter: Asset Declaration – Version 2.0)

Table #1 – Asset Declaration Monitoring Results (2017-2019)

Year

Verified

Violations

Warnings

Positive result

2017

280

80%

(224)

 -

20%

(56)

2018

438

79.45%

(348)

7.1%

(31)

13.47%

(59)

2019

569

45.16%

(257)

13.18% (75%)

41.65% (237)

Source: Civil Service Bureau - Annual Reports for Monitoring Asset Declarations 2017, 2018 and 2019

The monitoring reports of the Civil Service Bureau have also shown a new declaration isn’t selected as a replacement for a declaration that for various reasons cannot be subject to verification. The reasons for a declaration not being subject to verification are as follows: death, more than a year of leaving office and the removal of the obligation to declare for a particular position. In 2017-2019, monitoring was cancelled for 4.5% (60) of the declarations selected for verification.

This practice of non-replacement can be viewed as an attempt to ease the responsibilities of the public officials. As it is expected that a number of declarations will not be subject to verification for various reasons, it should be possible to select additional declarations to form a waiting list during the electronic selection method. Declarations from this waiting list can be used as replacements without the need to carry out the selection process each time the need arises.

Lack of focus on identifying conflict of interest and corruption

According to current legislation[6], the monitoring of declarations has two purposes: 1. Verifying the accuracy and completeness of the declarations; and 2. Revealing and preventing conflict of interest and instances of corruption. It is clear from the official monitoring results that all available resources are focused on fulfilling the first purpose.

In the 2019 Civil Service Bureau monitoring report, which provides more detailed information on the substance of violations in comparison with the reports released in the previous years, there are 7 main categories of violations (see Table 2), all of which are related to incomplete or incorrect filling in of declarations.

According to the 2019 monitoring results, more than half of the public officials that were fined (257 officials) provided incomplete or incorrect data on their income or the income of their family members (68.4%) and information on their bank accounts (57%). Nearly a half of the public officials provided incomplete data on ownership of real estate (46.5%), while a quarter didn’t disclose complete information related to their contracts (28.9%) and entrepreneurial activity (26.3%).

Table #2 – Frequency of types of violations revealed as a result of monitoring of asset declarations (2019)

Incomplete or inaccurate declaration of income and remuneration

68.4%

Incomplete or inaccurate declaration of bank accounts

57%

Incomplete or inaccurate declaration of real estate

46.5%

Incomplete or inaccurate declaration of contracts

28.9%

Incomplete or inaccurate declaration of entrepreneurial activity

26.3%

Failure to submit documentation required by the Civil Service Bureau

6.1%

Incomplete or inaccurate declaration of movable property

0.4%

Source: Civil Service Bureau - 2019 Annual Report on Asset Declaration Monitoring

The monitoring results revealed only 1 case of violation in respect of movable property, which could be a sign of the weakness of the monitoring process in this respect.

It is worth mentioning that in most cases the officials report several types of violations in a single declaration. In 2019, 3 out of 4 fined officials committed at least 2 types of violations (see Table 3). Most frequently (30.3%), officials committed 3 types of violations at the same time.

Table #3 – Officials by the number of consecutive violations (2019)

1 violation

26.8%

2 violations

26.3%

3 violations

30.3%

4 violations

12.7%

5 violations

2.2%

6 violations

1.8%

Source: Civil Service Bureau - 2019 Annual Report on Asset Declaration Monitoring

According to the monitoring results in 2019, the absolute majority of the violations were related to the accuracy and completeness of the data provided in the declarations. There were nearly no cases of the Civil Service Bureau revealing violations on corruption, conflict of interest and incompatibility of duties, illicit enrichment and/or unjustified real estate ownership, violation of restrictions after leaving office (so-called revolving door) and other similar violations.

In 2017-2019, the Civil Service Bureau checked 1347 asset declarations and revealed a total of 9 violations that were forwarded to investigative bodies for further review (7 cases out of 280 in 2017, 1 case out of 438 in 2018 and 1 case out of 569 in 2019). This is a very low figure and points to the fact that monitoring efforts are not focused on revealing violations that should be investigated by law enforcement agencies. However, even in the case of forwarded cases, the Civil Service Bureau does not provide detailed information on the essence of the violation and the identity of the public official that committed it. Due to this, the nature of the violation and the outcome of the forwarding of the case to investigative bodies remains unknown.

It is important for the monitoring of the asset declarations to also review the public officials’ compliance of the restrictions established by the law, the purpose of which is to prevent conflict of interest and corruption.

Transparency International Georgia has been reviewing public officials’ asset declarations for years. Our experience shows that violations related to conflict of interest are not rare and that it is possible to identify such instances by checking asset declarations.

In 2019, there were 89 declarations that were checked both by Transparency International Georgia and the Civil Service Bureau. The Civil Service Bureau was unable to detect violations in nearly half (39 cases) of the declarations, most of which were connected to conflict of interest:

  • Public officials in Georgia are obliged by law to transfer management rights of company shares to third parties. The Civil Service Bureau didn’t identify 20 such cases as violations;
  • Public officials are prohibited from holding the position of director in a private company – this constitutes incompatibility of duties. The Civil Service Bureau didn’t consider three such cases as violations;
  • According to the instructions on correctly filling in asset declarations, public officials are obliged to provide information on companies that were owned in the declaration’s reporting period (preceding year) and not in the moment of filling in the declaration. The Civil Service didn’t identify 11 such cases as violations;
  • The Civil Service Bureau failed to identify as violations 15 cases of public officials failing to mention specific companies in their declarations. This probably is due to the fact that these companies were not operational in the last 6 years, the disclosure of which isnot obligatory. This is a good example of how such exceptions impede the civil society in the monitoring of declarations.

According to the official position of the Civil Service Bureau, all 39 cases involved companies that did not have turnover in the last 6 years.[7] This is a clear illustration of just how damaging the legal exemption to declare non-functioning companies is to monitoring conducted by civil society.

Bearing in mind that it has been four years since the launch of the monitoring mechanism, it is time for it to begin revealing violations related to conflict of interest and corruption. A methodology should be written out and implemented. For example, the following components should become part of the declaration monitoring process:

  • Monitoring the lifestyle of a public official in order to identify inconsistencies with the property and finances provided in the declaration;
  • Finding ways to carry out inspection of property and businesses owned abroad;
  • Checking the identity of persons in permanent residence with the public official;
  • Monitoring year-to-year income and expenses to detect cases of illicit enrichment;
  • Identifying incompatibility of duties (for example: identifying cases of a public official holding a management position in a company or failing to transfer management rights to a third party, as well as checking areas of activity of companies connected to public officials);
  • Checking activities of a public official after he/she has left office;
  • Using the State Audit Office's political donor database to check the public officials’ contributions to political parties.

In addition, the response of the Civil Service Bureau upon identifying violations related to conflict of interest and other similar offenses should be defined on the legislative level. In 2016, Georgia received a recommendation by anti-corruption organizations, namely in the framework of the Istanbul Action Plan of the Organization for Economic Co-operation and Development Anti-Corruption Network (OECD), to consider imposing effective sanctions for the prevention of conflict of interest and illicit enrichment. This recommendation is yet to be fulfilled.

Publication of the monitoring results

As of today, the Civil Service Bureau publishes an annual report on the monitoring results of the asset declarations. We welcome the fact that the 2019 monitoring report had an annex that included a list of all public officials whose declarations were checked, as well as a short description of their violations. However, more can be done with the publicity of the monitoring results in order to simplify the work that other actors carry out in this regard. More specifically, the following amendments should be carried out:

  • A reasonable deadline should be established for the proactive publication of information on declarations that have been checked (for example, a month after the completion of the monitoring).
  • Declarations that have been selected for monitoring should be tagged as verified on the official website of the declarations;
  • If a violation is identified, a protocol-like record should be attached to the declaration. This page should describe in detail the violation identified and if the public official was issued a warning;
  • Public officials should be obliged to correct violations / minor violations identified in their declarations in a reasonable time as to guarantee that accurate and complete information is provided in the declaration. Moreover, it is necessary for this type of correction to show up with the old record. This should be done to make it clear what information was provided incorrectly in the initial submission.

Asset Declarations – Version 2.0

With the launch of the monitoring mechanism the asset declaration system has all the components to duly fulfill its function of preventing corruption and identifying conflicts of interests and illicit enrichment. It is now necessary to begin work on improving the system as to timely resolve all of its shortcomings and to transform it into its best possible version.

This is precisely the process that is underway in the framework of Georgia’s National Anti-Corruption Strategy. According to this strategy’s action plan, the Civil Service Bureau should implement a number of amendments in the declaration system by the end of 2020. However, the Bureau has not made public their plans in this regard (furthermore, there was a delay of launching the new electronic declaration system that was planned for March 1, 2020). We hope that the Bureau takes our opinions and ideas on the improvement of the asset declaration system outlined below into account.

Scope of declarants

The current asset declaration system in Georgia covers a large scope of public officials – over 6000 declarations are filled in every year. Nevertheless, it is important to continue the expansion of the scope of declarants and for it to cover all public officials, or public servants, which have powers delegated to them. Expansion of the scope of declarants in this manner will strengthen the prevention of corruption-related offenses, as well as support the civil society and respective public institutions in revealing and preventing such violations.

The submission of asset declarations should also become obligatory for the following positions:

Regular Prosecutors – As of today, only high-ranking prosecutors are obliged to submit asset declarations. Bearing in mind that prosecutorial work entails increased risks for the abuse of power, it is important for all prosecutors to be obliged to submit a declaration. Anti-corruption organizations, such as the Organization for Economic Co-operation and Development Anti-Corruption Network (OECD-ACN), issued a recommendation on making it obligatory for all prosecutors to submit declarations.

City / Municipal Council Faction Deputy Chairpersons – After the amendments to the Local Self-Government Code in December 2017, the Deputy Chairperson of a city / municipal council faction is considered to be a public official. However, following the amendments to the Law on Conflict of Interest and Corruption in Public Institutions in April 2019, Deputy Chairpersons of factions are no longer obliged to submit a declaration and avoid incompatibility of interests related to commercial activities (such as transferring management rights to a third party). This decision should be reversed and these officials should again be obliged to disclose their interests and assets.

The Civil Service Bureau should also consider obligating certain categories of budgetary organization employees to submit a simplified declaration form, in which they will disclose only their interests, property and connections (and not their finances). This type of a simplified declaration form already exists – parliamentary candidates are obliged to fill it out.

The obligation to submit a simplified declaration form can be extended to:

Regular members of City / Municipal Councils – Members of city / municipal councils make important decisions and hold significant powers in their respective municipalities. Regular (non-public official) council members are not obliged to submit asset declarations and have unrestricted rights to participate in private business. This lack of transparency related to commercial interests entails serious risks for conflict of interest and abuse of authority.

The public should be informed about the commercial interests of every person – regardless of the position – that is elected to its local government legislature body. It is therefore advisable for the obligation to submit simplified declarations to extend to ordinary members of city / municipal councils.

Heads of cultural, educational, scientific, research and sport nonprofits – The obligation to submit a declaration doesn’t extend to the heads of cultural, educational, scientific, research and sport related nonprofit organizations (N(N)LEs) that were established by state or local self-government bodies. For the purposes of revealing and preventing conflict of interest, the heads of N(N)LEs should also submit simple declaration forms.

Ministerial Advisor – The legislation does not explicitly define the role and functions of the ministerial advisors. In order to alleviate any suspicions of conflict of interest related to ministerial advisors and to approximate the Georgian asset declaration system with international standards, the obligation to submit simplified declarations should extend to ministerial advisors.

Content of the Asset Declaration

The current asset declaration system in Georgia collects information on the connections and interests of public officials, as well as their assets and financial standing. The scope of the information made public by the declarant is quite extensive. Nevertheless, monitoring efforts are complicated by the fact that the information provided in the declarations is not comprehensive and often lacks detail.

To ensure that the declaration is not missing any details, the following fields / data should be added:

Identification numbers – identification numbers of companies and other organizations (for example those belonging to the employer) related to the official and his / her family members; Cadastral codes of their real estate; Vehicle state number;

Paid work – salaries of officials should be broken down in the declaration (salary, bonus, allowance, etc.).

Maximum accurate dates – Where possible, dates should be indicated with the exact day, for example: Exact date of entering / leaving office; Exact date of purchasing personal property and real estate (instead of only specifying the year); Exact date of receiving a gift and dates of other income / expenses indicated on the last page of the declarations, etc.

Gift – Exact date of receiving a gift, identity of the person making the gift (identification code and address in case of a legal person)

Securities – the address of the company (including the country) and the percentage of the total company shares held by the official.

Providing such details will accelerate and simplify the process of verifying the data in the declaration as well as make it easier to detect possible violations. For example, it is difficult to verify without details whether there is an inconsistency between the official’s declared income and expenses.

In order for the declaration to fully reflect the official’s assets and interests, the following information must also be subject to the declaration:

Declaring interests of family members – The list of an official's family members (spouse, minor child and persons in permanent residence with the official) for whom the asset declaration requirements apply is rather limited. Family members (parents, siblings and financially independent children that do not live with the officials) are left out of the declarations despite the fact that they might be receiving benefits from the official’s illicit enrichment or even be carrying out activities that are not compatible with the duties of the public official. Adding the interests of the parents, siblings, and financially independent children (names of companies and organizations associated with them) to the asset declaration will be another robust mechanism against nepotism, favoritism and corruption in the public sector;

Connections with non-entrepreneurial organizations – A public official should declare his/her connection to any non-entrepreneurial legal entity, including detailed information such as: name of the organization, identification code, registration date and address, type of connection and time period;

Real estate and personal property owned abroad – As of today, neither the declaration form nor the respective legislation explicitly specify that the fields for ownership of real estate and personal property imply those owned in Georgia as well as abroad;

Real estate and personal property used by an official – Officials should be obliged to declare real estate and personal property that is not directly owned by him or any of his family members, but which is used by them: personalized cars, or the actual residence that does not belong to the official or his or her family members;

Beneficial ownership – Information on the beneficial ownership of private companies by public servants (such as ownership of a company registered offshore);

Virtual currency – Type of currency, date of purchase / production, amount paid (as of the first day of the month the declaration was filed).

Expanding the information to be declared in this manner will increase the public officials’ sense of responsibility, simplify the monitoring efforts carried out by civil society organizations and, most importantly, make the information on the activities, connections and financial standing of the public officials accessible to the public.

Concealed activities prior and after leaving office

There are a number of restrictions in Georgia that limit the type of work that may be performed by former officials for certain periods of time. Namely, former public servants may not, within one year after leaving office, start working in a public institution or carry out activities in an enterprise that has been under their systematic official supervision during the past three years.[8] The purpose of this restriction is to manage the risks associated with the mobility of persons between the private and public sector (so-called revolving door).

In addition to the fact that regulations for the revolving door phenomenon are not well defined on the legislative and practical level in Georgia, it is also problematic that the law directly prohibits the disclosure of information that is essential in order to reveal instances of revolving door. Declarants are obliged to disclose information about their activities before entering and leaving office. However, this information on their work during these periods is by exception not made public.

Under these circumstances, civil society organizations don’t have the means to reveal violations of the aforementioned rules as the information is not public (the respective declaration fields are empty). Moreover, the Monitoring Department of the Civil Service Bureau (which has access to the information on the activities before entering and after leaving office) has not identified in the last three years any violations related to revolving door.

Furthermore, the law itself doesn’t give effective mechanisms to the Civil Service Bureau to identify instances of revolving door. According to the instructions for monitoring declarations: “a declaration is subject to monitoring, unless more than a year has passed since the public officials' resignation”.[9] In other words, the Civil Service Bureau does not have the right to check the activities of an official after he/she has left office. This makes it hard to identify instances of revolving door. In 2017-2019, the Bureau cancelled the monitoring of 24 declarations as they were selected more than a year after the resignation/dismissal of the official.

A public official may reap the benefits for favoritism towards certain actors in the private sector long after leaving office. It is therefore important to make public the information on the activities prior to entering and after leaving office. This will make it possible for civil society organizations and other interested stakeholders to reveal violations related to conflict of interest.

Another issue is the fact that often only a short period after leaving office is covered in the asset declaration. This happens when a public official leaves office towards the end of the year. For example, former Minister of Internal Affairs Aleksandre Chikaidze, who left office in November 2017, got to declare a period of only one month (December 2017) after he left office. Bearing in mind that the legal restrictions on work after leaving office covers a period of one year, the final declaration submitted by the declarant should cover a period of at least one year after leaving office.

Automatization of the process

Much of the information provided by officials in their asset declarations is stored in government databases and is publicly accessible. As such, these databases can be electronically connected to the declaration system, which could allow the declarants to automatically import their data from the databases into their declaration forms.

Automating the declaration process in this manner could at the very least cover entrepreneurial activities and real estate/personal property. This would completely exclude the possibility of human error such as providing incomplete or inaccurate data. Automatization will also simplify and accelerate the process of filling in the declaration and will provide the public official with more time to correctly and accurately fill in the fields that need to be manually filled into the declaration. Such fields include interests, gifts and information on income/expenses.

The 2019 Report of the Civil Service Bureau reads:

In the process of filling out a declaration, data for respective modules for a number of the declaration’s pages (real estate, personal property (vehicle, firearms), information about enterprises, revenues, contracts) will be fetched from the relevant web services (State Service Development Agency, Public Registry National Agency, Service Agency of the Ministry of Internal Affairs, Revenue Service and Notary Chamber).[10]

The report also reads that "the updated electronic declaration system should be operational by March 1, 2020”. However, at the time of publication of this study (September 2020), the system is yet to be updated. According to the Civil Service Bureau, the updated electronic system is currently in test mode.[11]

We hope that the Civil Service Bureau will be able to develop a mechanism for automatically filling out declarations for all fields, which can be directly fetched from government databases and integrated directly into the declaration system.

This automatization of filling in a declaration will also simplify the work of the Declaration Monitoring Department of the Civil Service Bureau, as it will no longer have to spend a considerable amount of time verifying a number of data. Instead, it will be able to redirect its resources to identifying more complex forms of violations such as corruption, conflict of interest, revolving door, incompatibility of duties, illicit enrichment, etc.

It is noteworthy that the Declaration Monitoring Department devotes most of its resources to the verification of the accuracy of the information provided in the declarations. In 2017-2019, the Department has not identified a single complex violation (see Chapter on Monitoring Shortcomings).

The automatization process could also include a change, whereby public officials are unable to leave certain fields blank, such as the fields for dates and values in different sections of the declaration, which is currently possible.

Declaration form and rules of its completion

Completing the declaration form as it currently stands today is not an easy task. All information must be manually entered into the electronic form. This complicates the process, increases the risk of error and makes it possible for incorrect data to be entered into the declaration.

The description of the fields in the declaration forms is often vague: there are no templates or instructions attached, which could explain what exactly is supposed to be declared, as well as address any questions that the declarant might have in the process of filling out the declaration. According to official statistics, there are many such questions. In 2019, the Civil Service Bureau received an average of 46 consulting calls each day, with 23 declarations being completed on average per day.

The difficulties of completing a declaration is reflected in the monitoring statistics and it can be assumed to be one the reasons behind the high percentage (2017 - 80%; 2019 - 45%) of violations identified. Namely, it is unclear what and how to disclose information in the declaration form.

In 2018, the Civil Service Bureau drafted the Instructions for Filling in the Asset Declaration Form. However, this is a standalone document and is not integrated into the declaration form.

The Civil Service Bureau is working on updating the declaration form and website in the framework of the National Anti-Corruption Strategy. This should resolve the ambiguity associated with the current process and result in a declaration form that better explains which fields are obligatory and how they should be filled in. To achieve this goal, the following should be taken into account:

Firstly, the instructions for correctly filling in the declaration should become integrated with the electronic declaration form. With this change, declarants will no longer have to look for answers in external sources such as in standalone documents or consulting calls with the Civil Service Bureau. This process should be accompanied by the simplification of language used and adding simple definitions of all possible technical terms. For example, it was not clear until 2019 if earnings had to be declared with taxes or with taxes withheld. This was a source of major confusion. The disclosure of net income instead of gross income was named as one of the most common violations in the 2017 and 2018 Monitoring Reports.

There should be a minimum amount of information that requires manual input. Instead, the declarant should choose their answer from a multiple-choice list. The list of possible answers is already given in the stand-alone instructions for filling in declarations. These instructions, for example, specify that movable property implies vehicles, other means of transportation, furniture, home appliances, paintings, jewelry, firearms, and other movable property. For fields for which there are no predetermined answers, it is possible to show the 5 most frequently used answers by other declarants.

Using sample answers – Sample answers can be added to the descriptions provided for the fields in the declaration form. These sample answers will provide hints as to what information should be provided in the relevant fields.

These measures will simplify the process of filling in declarations, make the information provided in the declaration more machine-readable, take off pressure from the Civil Service Bureau in terms of providing consulting calls, and most importantly, will decrease the number of incorrectly and incompletely filed declarations.

Format of the declaration published

Asset declarations are currently published in PDF format. The official declaration website allows for the filtering of the declarations by year and public institutions. It is also possible to search for specific words in the contents of the declarations. While this functionality might have been sufficient in 2010, when declarations were first digitized, it needs to be updated and developed further.

It is necessary for the information provided in the declarations to be stored in a structural manner and be published in machine-readable (open data) format.

The structuring of data implies storing each type of information as a separate cell. For example, five types of data are combined in the field for entrepreneurial activities: “type of entrepreneurial activity, period of activity, registering entity and date of registration”. In all such cases, the information should be split and stored in separate fields.

Furthermore, there should be a standardized answer for each field (the current system, everything has to be manually filled in, which increases risk of error and decreases the quality and reliability of data). The introduction of standardized answers is a prerequisite for automatically processing the data provided in the declarations through various electronic means.

Machine-readable format implies formats other than PDF, such as CSV and Excel, which allow interested stakeholders to reprocess the data as desired. An example of this is the creation of the so-called “red flags” that are automatically generated through computer code. These “red flags” tag declarations that seem suspicious and potentially high-risk. Such functionality is one of the most important components for an effective monitoring system. It is noteworthy that the Declaration Monitoring Department of the Civil Service Bureau currently does not use any type of “red flag” mechanism.

The publication of declaration in open data format would allow the Civil Service Bureau, as well as other interested stakeholders, to create new functionalities that would take the declaration mechanism and its monitoring to a new level. For example, the publication of the contents of the declaration in open data format would allow the automatic counting of the year-to-year income and expenses of public officials, as well as identifying inconsistencies between them.

More cooperation with civil society                                                                                                   

The Civil Service Bureau is working on improving the declaration system in the framework of the National Anti-Corruption Strategy. Meetings are being held and documentation is drafted to explain the details of the upcoming amendments. However, this information is not made public and is not subject to wide discussion. Civil society organizations, as one of the interested stakeholders, are not given the opportunity to participate in the discussions to present their opinions on the ongoing and planned amendments.

The monitoring of asset declarations is one of the main activities of civil society organizations that work primarily on anti-corruption. As a result, they have the experience and substantiated opinions on how to improve the declaration system. The Bureau therefore should involve these interested stakeholders in the process of improving the declaration system. This can be done, for example, by holding working meetings and making it standard practice to proactively and periodically make public the information on the planned amendments to the declaration system and its monitoring mechanisms.

The Civil Service Bureau should also consider the possibility of involving civil society organizations that work on anti-corruption in the declaration monitoring process. For example, the Bureau can give such organizations access (on the basis of registration) to the electronic declaration system that is used for verifying declarations by the monitoring department of the Bureau. This step would strengthen the capacity of the civil society to identify corruption and increase the scope of the declaration monitoring.

Recommendations

  • The monitoring of declarations should not be limited to the verification of the accuracy of the data provided in the declarations. The identification of conflict of interest and corruption-related offenses should become an integral part of the monitoring process. A methodology should be developed and implemented to make this happen;
  • Recommendations by international organizations that are related to the asset declaration system should be taken into account. Namely, the recommendations of the Organization for Economic Co-operation and Development Anti-Corruption Network (OECD-ACN) on the assessment of the effectiveness of the Asset Declaration Monitoring System and the consideration of imposing effective sanctions for the prevention of unjustified enrichment and instances of conflict of interest;
  • The shortcomings associated with the rules for the selection and work of the independent commission that selects declarations for monitoring should be resolved. It is essential to rule out any possibility that could lead to the commission not being established. The commission should also be given more freedom to select declarations for verification based on their identified risk-factors;
  • No further easing of responsibilities should take place in regards to the submission of asset declarations. The decision to carry out several amendments, such as lifting the obligation to declare companies that have not been operational in the last 6 years, should be reconsidered. This should be done to ensure that the civil society is given effective means to monitoring declarations;
  • This practice of not replacing declarations that cannot be subject to verification for various reasons should be amended. To this end, it should be possible to select additional declarations to form a waiting list during the electronic random selection process for later use.
  • The following is crucial in order to identify instances of revolving door through the checking of declarations: information on paid activities before entering and after leaving office should be made public in the declarations; the final declaration filed by a public official after leaving office should cover a period of at least 1 year after the official has left office; monitoring should not be cancelled if upon the selection of the declaration more than a year has passed from the public official leaving office;
  • The Civil Service Bureau, which is currently working on the improvement of the declaration system in the framework of the Anti-Corruption Strategy, should take into account the recommendations presented in this report, such as expanding the list of declarants, increasing the level of detail declaration content, making public the results of  declaration monitoring, simplifying the process of filling in of declarations, which includes the standardization and automatization of answers.
  • Information provided in asset declarations should be available in machine-readable format (such as CSV). This will make it possible for the data to be processed automatically and will simplify the work of both the Civil Service Bureau and civil society organizations;
  • The Civil Service Bureau should make public their ongoing activities and future plans on improving the asset declaration system. Furthermore, the Bureau should involve civil society organizations that work on anti-corruption in the processes related to the improvement of the declaration system. This should be done to make sure that all interested stakeholders are able to contribute to the process.


[1] Civil Service Bureau, 2017 Asset Declaration Monitoring Report

[2] Decree N81 (February 14, 2017) of the Government of Georgia on the Approval of the Instruction on the Review of Public Official Asset Declarations.

[3] Ibid.

[4] Correspondence between Transparency International Georgia and Civil Service Bureau via email, 18 September 2020.

[5] Civil Service Bureau, 2019 Asset Declaration Monitoring Report

[6] Decree N81 (February 14, 2017) of the Government of Georgia on the Approval of the Instruction on the Review of Public Official Asset Declarations.

[7] Correspondence between Transparency International Georgia and Civil Service Bureau via email, 18 September 2020.

[8] Law on Conflict of Interest and Corruption in the Public Service, Article 13(10)

[9] Ibid., Article 19(1)

[10] Decree N81 (February 14, 2017) of the Government of Georgia on the Approval of the Instruction on the Review of Public Official Asset Declarations, Article 4(3)

[11] Correspondence between Transparency International Georgia and Civil Service Bureau via email, 18 September 2020.