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Georgian authorities ‘investigating’ media giant Palitra

27 September 2018
(Palitra.ge)

The Georgian Prosecutor’s Office has ordered media holding group Palitra Media to hand over all documents related to their legal, accounting, financial, and economic activities over the last four years. Palitra Media announced that investigators visited their Colorpack printing house on Monday with a court order demanding the files, including correspondences, from 2014 to September 2018.

Palitra Media is one of the largest media holdings in Georgia, owning over a dozen print, online, radio, and TV outlets including the Palitra News TV channel, news agency IneterPressNews, and newspaper Kviris Palitra. The company also owns several marketing, internet-commerce, and web development companies, as well as popular bookshop chain Biblusi.

Palitra Media said that although they could appeal the court order, they intended to cooperate with the authorities and hand over all the requested documents ‘within days’.

In their statement on Tuesday, the company compared the request to a ‘thorough search’ conducted by the government in 2011, which, according to Palitra Media, ‘confirmed their activities’ lawfulness and transparency’. They said they expected a similar outcome in the current probe.

In June 2011, the Revenue Service simultaneously audited six companies belonging to Palitra Media based on what they said was a ‘randomly generated’ selection by their computer system. The audit resulted in the holding’s production facilities being temporarily sealed.

In an interview on Tuesday with TV Pirveli, Parliamentary Speaker Irakli Kobakhidze said he did not know the details of the investigation but insisted that both the Prosecutor's Office and Interior Ministry were ‘very open’.

Following Palitra Media’s announcement of the order, the Prosecutor’s Office released a statement saying their Criminal Prosecution of Corruption Crimes Division visited Colorpack over an investigation into ‘possible embezzlement of large amounts of state funds by public officials’.

According to the authorities, they are investigating the possible misappropriation of government subsidies worth $1.6 million in 2014 through the Enterprise Georgia programme. Enterprise Georgia, also known as Produce in Georgia, is an agency under the Economy Ministry that financially supports business initiatives in the country.

The Prosecutor’s Office underlined that they were interested in the Colorpack’s financial documents related to the subsidy only and that the printing house would not be prevented from continuing to operate.

Reported corruption involving an ex-Minister

News about the investigation broke on Tuesday, two months after the Georgian investigative project ifact.ge alleged corruption ties between Colorpack and relatives of former Economy Minister Dimitri Kumsishvili.

Kumsishvili served as Minister of Economy in 2015–2016 and 2017–2018, occupying the finance minister's post for a year between. Before joining the Georgian Dream government, Kumsishvili was Palitra Media’s Director for Business Development.

According to ifact.ge’s July report, two companies, Made in Georgia #1 and Colorpack, received loans worth $1.1 million from Cartu Bank as part of the Produce in Georgia programme. Cartu is owned by the family of former Georgian Prime Minister and current Georgian Dream party chair Bidzina Ivanishvili.

The report indicated that Kumsishvili’s brother-in-law was a business partner of Davit Begiashvili — an advisor for Made in Georgia #1 and also the husband of the Head of the National Agency of State Property, also an agency under Kumsishvili’s Ministry. The investigation also identified the owner of Colorpack, Irakli Tevdorashvili, as a cousin of the Minister’s wife.

Ifact.ge said that Produce in Georgia covered the interest for the loans to both companies for two years, and both companies, together with a third, Adline, also owned by Tevdorashvili, won a number of state tenders while Kumsishvili was in power.

Colorpack’s director, Giorgi Zhorzholiani, responded to the report in July by denying the allegations and assuring the public that the company won tenders without any lobbying from Kumsishvii. Speaking to Palitra Media’s Palitra TV on Tuesday, Zhorzholiani complained that ‘this [subsidy] programme ended in 2016. I would be grateful if [the authorities] explained why they are demanding documents up to 2018’.

Troubles in media freedom

In their 2018 Nations in Transit report, American rights group Freedom House downgraded Georgia’s score from the previous year, noting ‘ownership consolidation among pro-government private television stations’.

A number of international rights groups including Human Rights Watch and Amnesty International have expressed concern about possible government interference in Georgia’s media. Examples they cite include an ownership dispute over TV channel Rustavi 2, alleged government pressure on Iberia TV and TV Pirveli, controversial decisions made by the new management team at the Georgian Public Broadcaster, and a recent scandal involving audio recording allegedly of a former Sports Minister trying to extort cars for Kumsishvili and other officials from Omega Group, the owner of Iberia TV.

Zaza Okuashvili, the owner of Omega Group, has filed a lawsuit at the London Court of International Arbitration against government officials, including Bidzina Ivanishvili and Dimitri Kumsishvili over the case.

There has been media speculation that the probe into Palitra Media’s print company could be targeting the former Economy Minister. In July, Bidzina Ivanishvili disavowed Kumsishvili, who was not included in the new cabinet. After returning to politics in July, Ivanishvili castigated Kumsishvili and his boss,  former Prime Minister Giorgi Kvirikashvili, for their alleged failure to address excessive indebtedness and poverty in the country.

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