6 May 2016

Transparency International Georgia has published research on Risks of Conflict of Interests and Corruption in the Ministry of Culture.  

TI Georgia examined the risks of corruption and conflict of interest related to the Ministry of Culture and other public agencies in the field of culture. The study revealed several important findings:

• Organizing Jazz Festivals in Georgia is one of the priorities of the Ministry of Culture and is directly included in its annual budget. According to the Ministry, spending on Jazz Festivals is justified because they attract tourists. However, the Ministry is not engaged in analyzing tourist data, even though it spends a considerable amount on these festivals. For example, the Ministry allocated GEL 600,000 or 33% of its Subprogram for Supporting Cultural Events (total budget - GEL 1,808,500) for a single project – the Black Sea Jazz Festival; and GEL 400,000 or 24% of total funding (GEL 1,670,000) allocated for promoting international festivals and events for the Tbilisi International Jazz Festival.

• There are ten companies/organizations currently active in Georgia that are directly or indirectly connected with the Minister of Culture Mikheil Giorgadze and his deputies. They work in the field of culture and regularly receive contracts and funding from the government, including the Ministry of Culture and its subordinate Legal Entities of Public Law (LEPL).

• Since July 2014, after Mikheil Giorgadze became the Minister, companies connected with high-ranking officials at the Ministry of Culture have received a total of GEL 2,421,743 from various public agencies through simplified public procurement contracts as well as direct funding.

• Despite having given up his shares in Eastern Promotions Ltd., as of September 2014 Culture Minister Mikheil Giorgadze may have still been involved in business activities, specifically, in organizing a tour of Ennio Morricone in Tbilisi. According to information [1] provided to TI Georgia by Alter Vision Group, a representative of Ennio Morricone confirmed that Mikheil Giorgadze represented Eastern Promotions in the negotiations on the April 26, 2015 concert.

• We have also identified signs of conflict of interest and corruption in the Standing Commission on Sustainability of Cultural Sphere. The fact that the father of Kakhi Kandelaki, First Deputy Minister of Culture and deputy chairman of the Commission responsible for approving the funding of projects at the Ministry, is a shareholder of a company (Eastern Promotions) that is funded by the Ministry may be contrary to the Law [2] on Conflict of Interest and Corruption.

• Davit Menabde, director of the Culture Development Investment Fund, owns 28.5% of shares in Eastern Promotion Ltd. (not to be confused with a similarly named Eastern Promotions). Menabde’s business partner through this company Giorgi Kereselidze is the director and 90% shareholder of a company (Eastern Promotions) that is funded by the Ministry of Culture. During his time as a member of the Commission, Davit Menabde also owned shares in Eastern Promotions and International Events, and for a time was the director of the latter company.

• Part of the staff at the Culture Development Investment Fund is simultaneously employed at International Events and Eastern Promotions.

• City Festival Ltd. was funded by the Ministry of Culture for GEL 365,000 without competition one month after its registration. Ministry officials and company managers are former business partners. One of the managers is the son-in-law of a Commission member in the Ministry. All this has raised questions about the fairness of the decision to fund the company.

• In 2015, the Ministry of Culture funded Eastern Promotions for nearly one million GEL without competition for organizing the Black Sea and Tbilisi Jazz Festivals.

• In 2015, the Ministry of Culture spent GEL 4,762,767 on music events, out of which GEL 1,369,891 was given to companies connected with Ministry officials without competition. Overall, 29% of funds spent by the Ministry of Culture in 2015 on music events were given to companies related to Mikheil Giorgadze, Kakhi Kandelaki and Davit Menabde.

• In 2014, 62.7% of the Black Sea Jazz Festival budget of GEL 1,029,164 was state funded (GEL 645,413 was covered by the Ministry of Culture, and Adjara’s Ministry of Education, Culture and Sports). 33.7% of costs were covered by the organizer company Eastern Promotions, and the remaining 3.6% was covered by private donors (sponsors / supporters).

• The majority of simplified procurement (direct) contracts awarded within the framework of Heat Batumi 2015 were signed with companies connected with officials at the Ministry of Culture. The total value of these contracts amounted to GEL 303,990. In addition, LEPL Culture Development Investment Fund received GEL 909,811 for organizing the visits of foreign musicians.