State Procurements received by the privileged company “Neostar” exceeded 53 Million GEL - საერთაშორისო გამჭვირვალობა - საქართველო

State Procurements received by the privileged company “Neostar” exceeded 53 Million GEL

13 October, 2023

Neostar” is a state privileged company. It and its subsidiaries receive government contracts on a non-competitive basis. Along with "Legi" and "Georgian Stone", another company related to "Neostar", "Legion" LLC appeared in Kobuleti municipal purchases.

Since 2011, "Neostar" and its subsidiary companies have been granted land plots totaling 161,369 square meters, including 129,852 square meters granted at a symbolic price of 1 GEL, and have secured state procurement contracts amounting to 53,661,137 GEL.

"Neostar" - a company supported by the government

The companies "Neostar" and "Legi" founded by businessman Leonid Ezik have received large-scale support from the government several times:

On July 18, 2011, "Legi” LLC acquired its initial property from the Adjara government, a 32,382 square meter land plot situated in the village of Khutsubani, Kobuleti municipality, for the nominal price of 1 GEL. This transaction marked the beginning of the company's commitment to constructing a concrete product factory, involving an investment of 1 million GEL.

On January 24, 2017, as per Decree 88, the Georgian government sold a non-agricultural plot of land along with the buildings situated on it, totaling 97,470 square meters in Lilo settlement, to "Neostar" for a nominal amount of 1 GEL. The company committed to establishing a building materials manufacturing enterprise, investing a total of 3,508,920 GEL into the venture. In September of that year, the company used the plot of land acquired from the state at a symbolic cost as mortgage. The state extended financial support for a duration of 2 years under the "Enterprise Georgia" program to assist in repaying the loan.

In 2020, "Legi" LLC secured a victory in an uncontested auction, obtaining a plot of land measuring 31,517 square meters in the village Nakhshirghele, Terjola municipality across the highway. Leonid Ezik spent 160,000 GEL to emerge as the successful bidder in the auction. As per Sergo Lekvinadze, the company's Director of Development and Marketing, "Legi" intended to construct a decorative tile factory at this location, with a planned investment of 6 million euros. In 2010, Sergo Lekvinadze was the majoritarian member of the Kutaisi City Council from the "United National Movement", but in 2013 he left this party and joined the "Patriots Alliance" faction.

"Georgian Stone" Secures 30 Million GEL Contracts with Kobuleti Municipality

"Legi" LLC is wholly owned by the company "Georgian Stone," whose director, Badri Romanadze, formerly served as the head of Kobuleti municipality's architecture service. On February 3, 2021, "Transparency International - Georgia" released the initial study shedding light on the dubious involvement of "Georgian Stone" in tenders conducted by the same municipality.

Before the release of the mentioned study, "Georgian Stone" LLC had received 39,154,543 GEL from tenders and 756,229 GEL from simplified purchases. Notably, 24,550,616 GEL came from tenders won by Kutaisi Municipality. Following the study's publication, the company saw an additional 11,677,225 GEL in revenue from state purchases, including 4,942,264 GEL from Kobuleti Municipality.   


"Legion" revenues from Kobuleti municipality

In February 2022, another subsidiary company linked to "Neostar" and "Legi," named "Legion," became involved in Kobuleti purchases. Established on November 17, 2020, "Legion" was founded by "Neostar" and Giorgi Dolbaia. Dolbaia serves as the director of the company and holds a 15% ownership stake, while "Neostar" owns the majority share of 85%.

The company won its initial tender valued at 107,000 GEL in Kobuleti Municipality. The tender specifications mandated bidders to possess a minimum of 300,000 GEL worth of experience in executing improvement works. "Legion" LLC demonstrated its eligibility by providing the buyer with subcontracting agreements signed with "Georgian Stone" LLC.

"Legion" LLC engaged in a total of 11 tenders, and won in 6 of them. Notably, in 4 of the 6 successful tenders, the City Hall of Kobuleti Municipality served as the buyer, with 3 of these tenders being secured without competition.

The cumulative worth of the secured tenders stands at 1,473,903 GEL, with direct contracts signed with the City Hall of Kobuleti Municipality amounting to 828,451 GEL (56%). Notably, tenders won without competition contribute significantly, totaling 720,614 GEL, which constitutes 87% of the funds acquired from Kobuleti municipality tenders.

It is noteworthy that in all tenders, the company presented the subcontracting agreements signed with "Georgian Stone" LLC to the buyer as proof of experience. "Legion" LLC, "Georgian Stone" LLC and "Legi" LLC do not compete with each other in tenders.


Who is Giorgi Dolbaia, the director and shareholder of "Legion" LLC Giorgi Dolbaya?

Giorgi Dolbaia served as the deputy director/engineer of “Khobi-2005” LLC from 2011 until December 22, 2020. This design company was responsible for creating the design and cost accounting documentation for infrastructure projects. Subsequently, the City Hall of Kobuleti Municipality initiated two electronic tenders based on this documentation. "Legion" LLC emerged as the uncontested winner in both tenders, securing more than half a million GEL in the process.

"Khobi-2005" LLC, a project-focused company in Western Georgia, has gathered funds of up to 3.5 million GEL through numerous tenders and simplified procurements. The company has entered into over 30 contracts with Kobuleti Municipality.   

"Transparency International - Georgia" calls on the anti-corruption agency of the State Security Service and the Kobuleti Municipality City Council to thoroughly investigate the aforementioned facts within their respective jurisdictions and implement the measures prescribed by the existing legislation.