Business Integrity in Georgia: Operational Environment and Internal Mechanisms
According to Transparency International Georgia’s report “Business Integrity in Georgia,” the country faces significant challenges in terms of the prevention of corruption in the private sector. These challenges stem from the shortcomings of the business’ operational environment and the public institutions tasked with regulating it, as well as the private sector’s internal problems.
The study is based on the Business Integrity Country Agenda (BICA) methodology developed by the Transparency International Secretariat. Its goal is to assess the corruption risks facing the private sector of a given country. To identify these risks, one needs to analyse both the internal state of the private sector itself and the general environment in which this sector operates.
Overall, Georgia has a good legislative framework for preventing corruption. However, the enforcement of the legislation is often ineffective, especially as far as the cases of high-level corruption are concerned. This stems mainly from the insufficient independence of the agencies responsible for the investigation of corruption from the ruling party, as well as the ruling party’s former leader’s informal influence on their activities. This type of influence creates opportunities for using anti-corruption investigations as a tool of revenge against the companies and the businessmen whom the authorities dislike.
The following of the various problems noted in the report should be highlighted in particular:
- Ineffective enforcement of the legal provisions designed to prevent conflicts of interest in the public sector and protection of whistleblowers.
- Frequent violations of the provisions regulating political donations which are mostly left without appropriate response.
- Inadequate response to the possible instances of corruption in public procurement.
- The absence of an independent judiciary because of which business is not sufficiently protected from possible unfair and unlawful treatment.
- Shortcomings of the Competition Agency’s work.
- The lack of information about the beneficial owners of companies which reduces the transparency of business and raises the risks of corruption.
- Weakness of internal anti-corruption mechanisms in private companies.
- The lack of transparency in various aspects of operation of private companies (management structure, spending on lobbying and political donations, remuneration and possible conflicts of interest of board members and senior managers).
- Ineffective supervisory work of the privates companies’ boards.
- The private sector’s passiveness in terms of participation in the development and implementation of the country’s anti-corruption policy -- both at the level of individual companies and business associations.
- Lack of cooperation between the civil society and the private sector in fighting corruption.
- Government infringement on media independence which undermines the media’s ability to uncover possible instances of corruption.
The report includes a number of recommendations for the resolution of these problems, including:
- Ensuring efficient enforcement of the country’s anti-corruption legislation, including by forming an independent anti-corruption agency;
- Eliminating improper party and informal influence on public institutions;
- Ensuring independence of the judiciary;
- The business sector’s greater activeness in terms of developing its internal anti-corruption mechanisms and ensuring transparency of its own activities we well as in terms of participation in the anti-corruption efforts of the government and civil society;
- Ending any attempts to infringe upon media independence.