The TV station of ‘victorious people’: The story of Rustavi 2
© Rustavi 2
Rustavi 2 has been at the center of Georgian politics and shaping public perceptions for more than a decade. Today, the ownership of the country’s largest private media outlet – last year, it reported revenues of GEL 30.7 million and accounted for about 32 out of every 100 minutes Georgians spend in front of their TV set – remains disputed.
Between 2004 and 2012, Rustavi 2 changed owners approximately 20 times, often in controversial deals that had a political flavor, involving people with close links to President Mikheil Saakashvili and to officials of the United National Movement-led government. Rustavi 2 is now the only major channel that is largely perceived to be close to the opposition: in a recent NDI/CRRC poll, 47% of respondents said the station’s programming reflected the interests of the UNM.
Shortly after the parliamentary elections in October 2012, Davit Dvali and Jarji Akimidze, who had founded Rustavi 2 in 1994 together with Erosi Kitsmarishvili, said they were initiating a court case to reclaim the station. “We will continue fighting to regain our shares in Rustavi 2 which by law belongs to us and was illegally taken from us in 2004,” Dvali recently told TI Georgia. In recent months, they have seen no progress in the investigation of their case, Dvali and Akimidze say.
The two co-founders had been silent about what happened in 2004 until September 29, 2012, a few days before the parliamentary elections, when they described themselves as the “first victims of violence” of the “state machine” in an open letter.
Before the Rose Revolution
After setting up the station as a TV channel in the town of Rustavi, Jarji Akimidze, Davit Dvali and Erosi Kitsmarishvili each held 33.3% of shares between 1994 and 2004.
By the early 2000s, the local channel from a provincial town had become Georgia’s largest private TV station and was often critical of the government of Eduard Shevardnadze. In 2001, Giorgi Sanaia, host of the popular program Gamis Kurieri (Night Courier), was killed, the circumstances of his murder were never fully investigated. Later that year, the authorities raided Rustavi 2 to investigate alleged tax non-payment of GEL 1.5 million. The allegations were widely perceived as fabricated and sparked civil protests that finally resulted in the resignation of the government.
On the eve of the 2003 parliamentary elections, Rustavi 2 showed the results of its exit poll, according to which Mikheil Saakashvili’s United National Movement had won the elections, while official results saw the pro-Shevardnadze block For New Georgia in the lead. Rustavi 2’s coverage of the election fraud and its continuing coverage triggered and fueled peaceful protests that finally resulted in the Rose Revolution and the resignation of President Shevardnadze.
Kibar Khalvashi and withdrawal of founders of Rustavi 2
In February 2004, Rustavi 2’s co-founder Erosi Kitsmarishvili was appointed elected President of the Chamber of Commerce. In spring, Rustavi 2’s director Nika Tabatadze, who held 10% in the company (after having received 3.33% from each of the three founders) became Deputy Foreign Minister.
Dvali and Akimidze claim that in the months after the Rose Revolution – Rustavi 2 called itself the channel of the ‘victorious people’ at the time – representatives of the UNM approached them and asked to hand over the control of Rustavi 2. The two owners refused, despite what they describe as psychological pressure. Rustavi 2 had taken out a loan from the Media Development Loan Fund (MDLF), for which the station's owners put down their personal assets, including shares in the Internet provider Georgia Online, as guarantees. Meanwhile, their relationship with Kitsmarishvili had soured, Dvali and Akimidze told TI Georgia.
On June 11, 2004, Kitsmarishvili started bankruptcy proceedings against Rustavi 2 as the channel announced it owed 9.2 million GEL, including 4.6 million GEL debt to the state budget. The government offered to reschedule the debts. Davit Dvali says that Rustavi 2 owed money USD 1.2 million to the Media Development Loan Fund and had another outstanding loan of about GEL .5 million with TBC, but says the company was making its payments on schedule.
However, with the TV company having publicly declared it was facing bankruptcy, Dvali and Akimidze say they found themselves in a situation where their lenders demanded their loans back and they were coerced into selling Rustavi 2 in order to be able to save their other personal assets they had used to secure the loans. A representative of the Media Development Investment Fund (as the MDLF is called today) confirmed that Rustavi 2 repaid its loan in 2004, however was not able to provide information on the circumstances of the repayment and the loan itself due to reasons of client confidentiality.
This is when the many changes in Rustavi 2’s ownership began. On June 16, 2004, Paata Karsanidze, a businessman with no public profile, bought 60% of the debt-stricken Rustavi 2 (30% from Davit Dvali and 30% from Jarji Akimidze) only to sell his shares to Kibar Khalvashi the same day. Karsanidze paid USD 100,000 to each of the two founders and sold shares to Khalvashi for USD 200,000, according to public records. Khalvashi’s company, Panorama LTD, also acquired Nika Tabatadze’s 10% of shares in Rustavi 2 – public documents state that Tabatadze voluntarily withdrew from his shares and received GEL 200, the nominal value of his shares based on Rustavi 2’s starting capital – and Erosi Kitsmarishvili’s 30% of shares (for USD 50,000 USD). By October, Kitsmarishvili quit as the President of Chamber of Commerce, and fully withdrew from his positions at Rustavi 2, after his reported friendship with Prime Minister Zurab Zhvania had come to an end.
Kibar Khalvashi reportedly was a friend of Irakli Okruashvili, who served as General Prosecutor (2004), Minister of Interior (2004), Minister of Defense (2004 to 2006) and Minister of Economic Development (2006) under Saakashvili. Khalvashi became the distributor for Procter & Gamble products and Pepsi (a fire destroyed his storage facility in late December 2007, a few weeks after Okruashvili had broken with the Saakashvili government and was charged with corruption).
Bezhuashvili family acquires shares in Rustavi 2
In December 2005, SakCementi acquired 22% of Rustavi 2 from Khalvashi’s company Panorama for GEL 131,994. Robert Bezhuashvili, father of Gela Bezhuashvili, the Foreign Minister (2005-2008) and acting head of the Georgian Foreign Intelligence Service, and of Davit Bezhuashvili, a Member of Parliament for the United National Movement, held 100% of SakCementi.
A year later, the Georgian Industrial Group (GIG), also owned by Robert Bezhuashvili (through Holding Georgian Industrial Group LTD, which is owned by Chemexim International, registered in the Marshall Islands) bought 22% of shares from SakCementi. Georgian Industrial Group’s assets include coal mining, energy, real estate and it also holds 25% of HeidelbergCement Georgia. Davit Bezhuashvili has been disclosing his involvement as a partner in Chemexim International in his public asset declarations from 1999 onward, though he has never declared any income from this company.
In August 2006, Nika Tabatadze, who had left his post as deputy minister of Foreign Affairs in October 2004 to become Rustavi 2’s Executive Director, was sacked. He was replaced by Koba Davarashvili, reportedly a friend of Giorgi Arveladze, the head of President Saakashvili’s administration at the time.
Within ten days, Geo-Trans sold 55% of its shares in Rustavi 2 to Delgado Resources Ltd, a British Virgin Islands shell company, represented by Levan Karamanishvili, who has also represented shell companies that own shares in Caucasus Online and Mobiltel/Beeline Georgia, as well as the owners of the GMC restaurant group and of a shopping mall in the Tbilisi central train station. Geo-Trans’ remaining 23% of shares were aquired by GIG, which already held 22% of shares in Rustavi 2 at the time.
In the beginning of 2007, Geomedia Group, represented by Bidzina Nizharadze, bought the 55% of Rustavi 2 held by Delgado Resources – a deal between two Marshall Island shell companies. The beneficiary shareholders behind these two entities remain unknown.
Irakli Chikovani served as Rustavi 2’s director between 2007 and 2009, he later served as the chairman of the Georgian National Communications Commission (GNCC) from 2009 to 2013. In 2008, Chikovani also acquired 30% of the company – 15% from Geomedia Group and 15% from GIG. There is no record on this particular deal in the Georgian public registry.
When Chikovani became a GNCC commissioner in 2009, he appears to have sold his shares back to GIG and Geomedia Group, but also for these transactions, there are gaps in the public registry’s online archive. Chikovani’s business partner Giorgi Gegeshidze became Rustavi 2’s new director. Gegeshidze represented Degson Limited, a British Virgin Islands shell company that had acquired the 70% of Rustavi 2; the remaining 30% of shares remained in the hands of the Bezhuashvili family (GIG transferred its 30% of shares to its direct owner, Chemexim International).
Despite the rising public concern, owners of Rustavi 2 remained hidden from public. Local and international criticism, informed by a TI Georgia report on opaque television ownership, grew. The government was lobbied to shed more light on who owned and controlled the country’s major broadcasters.
In 2011, Parliament banned offshore ownership of TV and radio stations and mandated the disclosure of beneficial owners of broadcasting license holders. Shortly before these amendments came into force in the beginning of 2012, Levan Karamanishvili bought 60% in Rustavi 2 from Degson Limited and 30% from Chemexim International. Giorgi Gegeshidze bought the remaining 10% from Degson Limited, which he himself represented.
After the 2012 parliamentary elections
On October 4, 2012, immediately after Georgian Dream won a majority in the Parliament, resulting in the first democratic transition of power in Georgia’s history, Media Georgia, a company owned by Davit Kezerashvili, registered a day earlier, bought 40% of Rustavi 2 for USD 500,000 and five days later sold the shares to Giorgi Karamanishvili for the same amount. President Mikheil Saakashvili had once referred to Giorgi Karamanishvili as his friend.
Since November 2012, Rustavi 2 has been owned by the brothers Giorgi and Levan Karamanishvili – Levan holds 22% directly, Giorgi 18% directly, they hold another 51% via TV Sakartvelo, which is owned by Levan (60%) and Giorgi (40%) – with the remaining 9% owned by Giorgi Gegeshidze.
Under UNM rule, TV Sakartvelo was a channel with close links to the Ministry of Defense, owned by Iago Chocheli, brother of Tsezar Chocheli, the long-time governor of Mtskheta-Mtianeti until the change of government. After the elections, its frequency was acquired by Tabula TV.
Since November 2012, Nika Gvaramia has been Rustavi 2’s director. He has served as Minister of Education, Minister of Justice and as Deputy General Prosecutor. Gvaramia was briefly arrested after the elections on accusations of corruption and released on a GEL 30,000 bail.
Demanded restitution of ownership: A politically sensitive case
Dvali and Akimidze’s case is politically very sensitive: Rustavi 2 currently provides at times more critical and substantiated news coverage of the government than many other media outlets. Any political involvement in this court case would thus be – and internationally perceived as – highly problematic. Since 2004, Rustavi 2’s ownership has changed so many times that the current owners might be able to argue that they acquired shares in good faith.
It will be up to a court to decide if the founders of Rustavi 2 have a legitimate legal case and if and how they shall be compensated – and who will be held to account.
Note: This article was ammended after publication. An earlier version of this article suggested that only Dvali and Akimidze were liable for loans taken out by Rustavi 2.
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