Companies of Akhaltsikhe Mayor Win Tenders in Akhaltsikhe - საერთაშორისო გამჭვირვალობა - საქართველო

Companies of Akhaltsikhe Mayor Win Tenders in Akhaltsikhe

16 July, 2019


After the election of Zaza Melikidze first as Akhaltsikhe Governor and then the Mayor the amounts earned by Melikidze's current and former companies through public procurements increased from 124 793 GEL to 546 044 GEL, amongst them the companies received 524 902 GEL from Akhaltsikhe Municipality.

The Companies associated with Melikidze never participated in Akhaltsikhe Municipality tenders until his election to the office of the Governor. In 2015, after being elected, these companies won 15 tenders. The number of contracts awarded to these companies through direct procurement procedure also increased - in 11 of 21 procurements the contracting parties are the legal entities of Akhaltsikhe Municipality.

After the election as the Mayor, Zaza Melikidze's own sister-in-law and brother-in-law were appointed as the Directors of the companies owned thereby, while his former financial manager was appointed as the First Deputy in the City Hall.

Transparency International - Georgia has investigated the business activities of Akhaltsikhe Mayor and his immediate circle. Along with the above listed facts this research also offers the other findings of no lesser importance, which should become the focus of interest of relevant authorities.

From Business to Politics

In 2014 the businessman Zaza Melikidze was elected as the Governor of Akhaltsikhe Municipality as a candidate of Georgian Dream party and in 2017 - as Akhaltsikhe Mayor1.

Before election to Governor's office Zaza Melikidze had four registered companies Meliza LLC, Meliza2 LLC, Legi LLC and Meskheti XXI LLC. 50-50% shares of Meskheti XXI were divided between Melikidze and his brother-in-law Khvicha Alavidze, while the 100% owner and Director of the other companies was Melikidze himself.

On 1 July, 2014, when Melikidze took the office of Akhaltsikhe Governor, he assigned his shares in two of four companies: Khvicha Alavidze became 100% owner of Meskheti XXI LLC, while Zaza Melikidze's former employee Nunu Kapanadze was appointed as the Director of the company. Nunu Kapanadze also became the Director and 100% owner of Meliza2. Melikidze still maintains the 100% management of Meliza and Legi what is a violation of Paragraph 6 of Article 13 of the Law of Georgia on the Conflict of Interests and Corruption on Public Service. As per the law2, the Mayor was supposed to assign his shares to some other person under management right, however he only changed the Directors of the companies - he appointed his bother-in-law and sister-in-law to these positions: Khvicha Alavidze became Meliza's Director and Teona Alavidze - Legi's Director.

Participation of companies associated with Zaza Melikidze in tenders

Melikidze's companies never participated in tenders before his election to Governor's office. After becoming the head of the Municipality they participated in 29 tenders and won 15 of them. In 14 of 15 cases the contracting entities are Akhaltsikhe Municipality City Board/City Hall and municipal LLCs/N(N)LEs.

514 341 GEL of overall 528 123 GEL earned through won tenders are the amounts received from Akhaltsikhe City Board/City Hall and their LLCs/N(N)LEs.

Tenders won by Meliza and Meskheti XXI, associated with Zaza Melikidze

Simplified procurements of companies associated with Zaza Melikidze

In 2010-2014, before Zaza Melikidze's election to Governor's office, his companies Meliza, Meliza2 and Meskheti XXI received in total 12 simplified procurements in total and only two of them was awarded by Akhaltsikhe municipal LLCs/N(N)LEs.

After Melikidze's election as the Governor, the number of simplified procurements of both his and his brother-in-law's companies increased up to 21, of which 11 were made with Akhaltsikhe municipal LLCs/N(N)LEs. Hence, after the election to Governor's office of 17 921 GEL earned from simplified procurements, 10 561 GEL were paid to companies by legal entities, found by Akhaltsikhe Municipality. It should as well be stressed, that before election as the Governor, Melikidze's companies had received relatively more through simplified procurements procedures - 124 793 GEL.

Meliza LLC - Mayor's Company

Zaza Melikidze is still the 100% owner of Meliza LLC, and has brother-in-law Khvicha Alavidze is appointed Director of the company, while the Melikidze's spouse Asmat Alavidze - is Meliza's Office Manager. Crane - KAMAZ-53213 (license plates MMA 920) owned by Melikidze was also leased to this company for three years (2014-2016). The company started to participate in tenders only when Melikidze became Akhaltsikhe Governor in 2014.

During the period, when Melikidze held the office of Akhaltsikhe Municipality Governor, Meliza participated only in 7 tenders of Vale Public Utility Association, LLC of the same Municipality. After being elected as the Mayor, the company participated in 2 tenders announced by Akhaltsikhe City Hall legal entity Public Utilities and Services, LLC. Meliza was the only bidder in all 9 tenders (NAT180021019, SPA180001579, SPA170011621, SPA170002437, NAT160002250, SPA160021078, SPA160015100, SPA160003284, SPA150032180) and has won them. The tenders were held for cargo conveyance and transportation services on the territory of Akhaltsikhe Municipality. Meliza's net income from these tenders amounted to 297 276 GEL.

As regards Meliza's simplified tenders, here its main procuring entity before Melikidze's election as the Mayor, was United Water Supply Company of Georgia and after Melikidze's election, Akhaltsikhe municipal LLCs/N(N)LEs, along with the aforementioned Company.

The fact that the crane, belonging to Melikidze, is participating in the performance of works procured through public procurement procedures is proved by his property declaration3, as well as procurement documents and the Contract executed with United Water Supply Company of Georgia.

Meskheti XXI, LLC - Mayor's brother-in-law's company

Before Melikidze's election as the Governor Meskheti XXI had only one simplified procurement for 60 GEL from United Water Supply Company of Georgia, while after Melikidze's election as the Governor Meskheti XXI participated in 20 tenders, of which 16 were announced by Akhaltsikhe City Board/City Hall. In total, the company has won 6 tenders. In 5 of 6 cases (SPA160027132, SPA160027107, NAT160000425, SPA150024868, SPA150023158) the procuring entity is the City Board/City Hall of Akhaltsikhe Municipality. Consequently, the most part of money earned through tenders - 217 065 GEL out of 230 847 GEL, were paid by Akhaltsikhe Municipality. It should be mentioned that the company was the only bidder in all five tenders.

The sessions of Tender Commission, where the question of awarding contract to Meskheti XXI was discussed, were not attended by Zaza Melikidze - the Chairman of Tender Commission - due to the conflict of interests. In all five cases the contracts with Meskheti XXI were executed by the First Deputy Mayor Guram Melikidze.

It is worth mentioning, that for quite a long time Guram Melikidze had been representing Zaza Melikidze with state authorities, while in 2006-2008 he held the office of a financial manager of Meskheti XXI. In 2014, as soon as Zaza Melikidze was elected as Akhaltsikhe Governor, he became the First Deputy Governor, and since 2017 he is the First Deputy Mayor.

Legi LLC - restaurant of brothers-in-law

Zaza Melikidze registered Legi LLC in July 2005 in Akhaltsikhe, N3, Sapara str. The company owns the land plot of 4 216 m2 of area, where the building of former beer and lemonade works is located.

In November 2010, the restaurant - Alaverdi LLC was registered at the same address and in the same premises under the consent of Zaza Melikidze, as the Director of Legi LLC and the owner of the real estate. The founder and 100% owner of Alaverdi LLC is Zaza Melikidze's brother-in-law Khvicha Alavidze.

When Zaza Melikidze became the Governor, his sister-in-law, Teona Alavidze was appointed as the Director of Legi LLC, while he remained the manager of 100% share.

Questions with regard to Zaza Melikidze's property declarations

According to property declarations, submitted by Zaza Melikidze in 2014-2018, the net income from his own companies amounted to 231 250 GEL.

Apart from the foregoing the Mayor's family additionally received 43 795 GEL from Meliza, of which 22 195 GEL was yearned by his spouse in the capacity of the Office Manager and 21 600 GEL through leasing of the crane to Meliza.

In his declarations Melikidze states that he did not received any income in 2017-2018 from being 100% owner of Meliza and Legi. Despite the foregoing Meliza bought two land plots in 2017: in Akhaltsikhe - of 5 085 m2 of area in June and on the right bank of the river Potskhovi - of 1 498 m2 of area in September. As regards Legi, where the restaurant of the brother-in-law is located, it is still operating. Consequently, the reason, why Mayor says that he has not earned any income from the ownership of Meliza and Legi in 2017-2018, in not clear.

Political donation

Although Zaza Melikidze was nominated first as the Akhaltsikhe Governor and then as the Mayor by Georgian Dream, neither he, nor his family has donated any money to Georgian Dream. Zaza Melikidze can be found only amongst the donators of the National Movement. On 17 July, 2012 he donated 30 thousand GEL to then governing party.

Transparency International - Georgia calls:

-       State Audit Service - to investigate procurements, accomplished by Akhaltsikhe Municipality and its legal entities, that were won by the companies associated with Municipality Mayor;

-       Public Service Bureau - to initiate the inquiry with regard inadequacies, detected in Zaza Melikidze's property declarations.


[1] In 2014-2017 there existed self-governing city Akhaltsikhe and Akhaltsikhe self-governing Community in Akhaltsikhe, like Telavi, Ozurgeti, Zudgigi, Gori, Ambrolauri and Mtskheta, however before 2017 Self-Governance Elections the community and the city were again united in one Municipality.

[2] Paragraph 6 of Article 13 of the Law of Georgia on the Conflict of Interests and Corruption on Public Service.

[3] Property Declaration submitted by Zaza Melikidze in 2014, p. 4.