GEO

Georgia’s Political Finance in 2019: Revenues and Expenditures of Political Parties and Financial Oversight

09 July, 2020

 

Based on the analysis of annual financial declarations submitted by 19 political parties, Transparency International Georgia outlined the following key findings:

  • Although there were no general elections in 2019 and only by- and snap elections were held in Spring and Fall, last year,19 political parties received a total of GEL 20 739 364, of which almost half (46%) – GEL 9 502 653, was the revenue of the ruling party Georgian Dream - Democratic Georgia. The Alliance of Patriots of Georgia was second with GEL 1 676 618, and the European Georgia was third with GEL 1 643 099.
  • (GEL 12 301 675) of the total revenues received by political parties came from public funding, and 41% (GEL 8 437 689) came from private sources. If we exclude the Georgian Dream, 18 political parties got 88% of their income from the state budget. With the exception of a few, all political parties almost entirely depend on public funding, and this trend has virtually not changed from year to year. Only one of the 19 parties, the Lelo Movement, did not receive public funding since it was formed in 2019 and has not yet participated in elections;
  • Only 13 of the 19 political parties received private donations. More specifically, the political parties received a total of GEL 8 362 581 from 450 individuals and 26 legal entities, of which GEL 7 036 166 (84% of all donations) went to the ruling Georgian Dream party. The Lelo Movement was second with GEL 520 000 and the European Georgia was third with GEL 289 982. The data show that the private donations received by the Georgian Dream are about 14 times higher than the donations of the second-ranked Lelo and five times higher than the donations received by all 18 other political parties;
  • From January 1, 2019 to May 1, 2020, nine legal entities donating Georgian Dream and 15 companies related to individual donors (who donated a total of GEL 1 745 000) got simplified public procurement contracts amounting to GEL 15 750 924. During the same period, they also won public tenders of GEL 126 092 739.
  • In this regard, several cases were particularly noteworthy. In 2019, G&K Technology LLC and its owner Roman Abramishvili respectively donated GEL 40 000 and 60,000 to the Georgian Dream. This company won 8 public tenders of GEL 28 376 575 in 16 months. In other years, Abramishvili has also donated money to Salome Zurabishvili and the United National Movement;
  • Over the years, several major groups have been formed among the ruling party's donors, contributing large sums of money to the Georgian Dream in almost every election. All such groups have a common story when a large part of its members donate money to the ruling party on the same day or 1-2 days apart. It raises some doubts about whether such collective action is organized in advance by someone. Georgian legislation prohibits third-party donations, so the SAO should be interested in such suspicious circumstances;
  • Such donor groups include: a) individuals and legal entities affiliated with Bidzina Ivanishvili; b) individuals connected with Tegeta Motors LLC, a large public procurement contractor; c) persons connected with Lilo Mall LLC; d) persons directly or indirectly connected with Service-Agro LLC and; e) individuals linked with Polimeri LLC. The last two business groups were beneficiaries of the state program Produce in Georgia in different years;
  • In 2019, 19 political parties spent a total of GEL 20 723 057, of which 43% - GEL 8 877 711 – was spent by the ruling party, which was followed by the European Georgia with GEL 2 206 248 and the Alliance of Patriots of Georgia with GEL 1 671 775. Similar to the revenues, the ruling party outperformed the rest in terms of spending. For instance, the expenditure of the Georgian Dream was four times higher than that of European Georgia;
  • Since there were no general elections in 2019 and only by- and snap elections were held, the advertising expenses were relatively low. More specifically, political parties spent a total of GEL 2 352 736 on advertising services during the year, of which GEL 1 747 140 (74%) was spent by the ruling party, which made a huge difference compared to other parties. The Georgian Dream’s advertising expenses were three times higher than that of the rest 18 parties;
  • From January 1 to June 30, 2019, the SAO’s Department of Political Finance Monitoring sent 14 protocols of administrative offenses to the Tbilisi City Court;
  • TI Georgia revealed a number of inconsistencies and shortcomings in the financial declaration filled out by political parties, which is a continuation of the trends of previous years. Incomplete financial reporting by political parties remains a serious problem. The absolute majority of financial declarations miss some information or contain inconsistencies. Information required by the reports are left blank on multiple occasions. It seems that political parties either do not know how to properly complete declarations and what information needs to be presented in which way or they deliberately make these mistakes;
  • This issue has persisted for years and the SAO has been ineffective at addressing this problem. Especially worrying is the situation in regards to the monitoring of political party spending. The SAO representatives have said multiple times that they lack relevant resources to carry out such monitoring;
  • Furthermore, the SAO has been ineffective in following up on the instances of suspicious donations, which is partly caused by legislative gaps;
  • The use of various types of anonymously sponsored political materials on social media, mostly on Facebook, remains one of the major challenges in political finance. These materials are spread in the form of text, video or photo and have a distinctly political character. It usually serves as a smearing campaign against politicians or public figures. These are clear cases of unreported money spent for political purposes, which may serve to circumvent legal restrictions. Nevertheless, the SAO is unable to obtain information about this type of advertising and its sponsors due to Facebook's refusal to provide the information;
  • Facebook, on its own initiative, deleted hundreds of inauthentic Facebook and Instagram users, pages and groups twice that have been smearing members of various political parties. In these cases, a large number of financial resources were spent for political purposes. More specifically, according to Facebook, in the first case, $ 316 000 was spent on advertising sponsored by these social pages and platforms, and in the second case the amount was $ 30 000. Such actions should be qualified as political donations, therefore, the SAO should continue to work with Facebook to investigate these cases.
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