Business Interests of Tbilisi City Assembly Members and Violations in Asset Declarations - საერთაშორისო გამჭვირვალობა - საქართველო
GEO

Business Interests of Tbilisi City Assembly Members and Violations in Asset Declarations

05 May, 2022

A number of restrictions are applied to public officials in Georgia regarding their business activities to avoid giving priority to their personal interests above the interests of the state and citizens.

Transparency International Georgia (TI Georgia) analyzed business interests and activities, and political donations of all 50 members, including 29 public officials, of the Tbilisi City Assembly of the 7th convocation and revealed several violations:

  • 8 public officials have incompletely declared their own or family members’ business activities: Zurab Abashidze, Shalva Ogbaidze, Irakli Kheladze, Levan Abashidze, Tornike Bikashvili, Otar Grigolia, Givi Chkhartishvili, and Giorgi Sharashidze.
  • 8 public officials have not delegated the right to manage shares in the private companies to other person: Konstantine Zarnadze, Levan Japaridze, Shalva Ogbaidze, Irakli Kheladze, Tornike Bikashvili, Sopio Japaridze, Giorgi Oniani, and Giorgi Sharashidze.
  • 5 public officials still hold a managerial position in a private company, thus are incompatible with their official position: Konstantine Zarnadze, Shalva Ogbaidze, Tornike Bikashvili, Giorgi Oniani, and Giorgi Sharashidze.
  • 4 public officials indicated O GEL income received from their or family members’ economically active companies in the assets declaration, which could imply an incomplete statement of the income. These officials are Giorgi Akhvlediani, Tinatin Nibloshvili, Levan Arveladze, and Giorgi Sharashidze.
  • The study has revealed the case of alleged political corruption, in particular:

16 out of 29 members of the Tbilisi City Assembly from the ruling Georgian Dream party donated suspiciously identical amounts (GEL 5 or 10 thousand) to “Georgian Dream – Democratic Georgia” on the same day, 12 October 2021 (following the first round of the local self-government elections) – in a total of GEL 115,000.

In the period between October 13 and October 21, five more members of the Tbilisi City Assembly – Avtandil Tsintsadze, Alexander Khujadze, Akaki Aladashvili, Irakli Kheladze, and Konstantine Zarnadze – transferred a total of GEL 65,000 to Georgian Dream’s account.

We believe that illegal political donations through third parties may have taken place.

On April 13, 2022, Transparency International Georgia urged the State Audit Office (SAO) to investigate alleged political corruption with regard to political party financing. On May 2, 2022, SAO replied that "the State Audit Office inspected the finances of individuals financing political union of citizens “Georgian Dream - Democratic Georgia” in 2021, and did not find any violation."

TI Georgia urges the Civil Service Bureau to review the violations found in the asset declarations of public officials below and respond in accordance with the law.

The business activities of the Tbilisi City Assembly members and their families look as follows:

  • 23 out of 50 members of the Tbilisi City Assembly have links with business activities, and 12 of them are public officials. 3 of these 12 members had active companies in 2021 (Levan Arveladze – Georgian Dream, Giorgi Sharashidze – For Georgia).[1]
  • 11 ordinary members (non-public officials) have business activities, and 5 of them had economically active companies over the past year.
  • 35 out of 50 members of the Tbilisi City Assembly donated money to their political parties at different times. 8 members donated GEL 323,286 to the United National Movement; 23 members – GEL 237,242 to Georgian Dream; 2 members – GEL 65,000 to Lelo for Georgia; 1 member – GEL 12,085 to For Georgia; 1 member – GEL 8,100 to For People.
  • The companies affiliated with 6 members of the Tbilisi City Assembly have participated in public procurement. Only one of them is a public official (Giorgi Sharashidze). At different times, most contracts were awarded to companies linked to the following councilors:
  • In 2016-2021, the company Transporter LLC affiliated with Georgian Dream councilor, Akaki Aladashvili received GEL 4,141,182 through public procurement – GEL 2,832,990 through 62 tenders and GEL 1,308,192 through simplified procurement.
  • In 2011-2022, 96 simplified procurement contracts (GEL 522,060 in total) were concluded with 8 companies directly or indirectly linked with Giorgi Sharashidze, deputy chairman of the “Tbilisi for Georgia” faction. The same companies also won 39 tenders (GEL 946,221 in total).

Recommendations

Annul an exception related to inactive companies – currently, the non-disclosure of companies that are inactive for 6 years is not considered a violation. It is important to repeal this exception, related to inactive companies, and disclose all companies that are directly or indirectly linked with the name of a specific public official or his/her family member, regardless of the company’s activity status.

Requirement for non-public official members of the Tbilisi City Assembly to disclose their business interests – The public should be aware of the business interests of every person elected to the local representative body, regardless of his/her position. For this purpose, it is advisable to introduce a simplified form of assets declarations for non-public official members, focusing on their and family members' business activities (disclosing connections with private sector companies), to strengthen the prevention of conflicts of interest at local government bodies.

Expanding the circle of family members to be declared - Research shows that it is necessary to declare all family members (parents, siblings, and adult children) and their interests as well. A very good illustration would be an example of Giorgi Akhvlediani and his son - Levan Akhvlediani, who is engaged in several business activities and is not included in the declaration, despite the fact that he is registered at the same residential address as his father.

Methodology

Currently, the non-disclosure of companies that are inactive for 6 years is not considered a violation. This exception weakens the oversight mechanism of civil society and the media, as it is impossible to determine the activity of a company (as well as an individual entrepreneur) over 6 years through open sources. The only source of verification is the Geostat Business Registry.[2]  However, it only shows whether the company has been active over the past year. For the purposes of the study, Transparency International Georgia used this very source.

In this study, the company that had not been economically active over the past year, according to the Geostat registry, is marked with a * symbol.

The amendment made to the Law of Georgia on Conflict of Interest and Corruption in Public Service on December 30, 2021, shall be assessed positively. Based on this amendment, a deputy chairperson of the faction of a municipal Assembly shall be obliged to submit an asset declaration.


[1] Source: National Statistics Office of Georgia, Statistical Business Register.

[2] National Statistics Office of Georgia, Statistical Business Register.