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High-level officials arrested in Adjara for embezzling money intended for the homeless

31 May 2019
Giorgi Ermakov (left), Bagrat Manvelidze, Tengiz Petridze, Archil Vanadze and Egarslan Lomadze.

Seven high-ranking former and current officials in Adjara, an autonomous republic in western Georgia, have been arrested on corruption charges. The former mayor of Batumi and several deputy ministers are suspected of embezzling ₾1.3 million ($460,000) intended to be spent on building apartments for homeless people.

The list of arrests includes former Batumi Mayor Giorgi Ermakov, Deputy Education and Culture Minister of Adjara Bagrat Manvelidze, Deputy Finances and Economy Minister Archil Vanadze, Batumi Vice-Mayor Tengiz Petridze, Property Management Agency head Egarslan Lomadze, deputy head of the Infrastructure service Vladimer Khintibidze, and the head of Batumi City Hall’s Procurement division Beka Khalvashi.

The Prosecutor’s Office of Georgia announced the arrests on 30 May. According to investigators, in October 2015, the officials were all members of the Batumi Mayor’s Office Tender Committee when the Mayor’s Office announced a tender for the Cheap House project, designed to provide homeless people with affordable housing.

According to prosecutors, the Mayor’s Office announced the tender based on a project cost-estimate document prepared by a company that the suspects knew was the only one able to provide the services described. They announced the tender without a prior market study, the Prosecutor’s Office said.

The only contender in the tender was Conver Georgia, who prosecutor’s said ‘presented fake documentation upon applying’, which was not revised by the Tender Committee. They said the same documentation had been the reason for disqualifying the company when it applied for a previous tender.

Members of the Tender Commission, despite obvious reasons to disqualify the company, prioritised it unlawfully and announced it as the winner, prosecutors said.

Upon winning the tender, Convert Georgia presented a bank guarantee to the contract issued by Point Bank Ltd, a company registered in London. According to prosecutors, the company is inactive and is not a bank at all.

Despite the public interest, officials signed a state procurement agreement worth ₾4.3 million and despite knowing that Point Bank was not trustworthy, paid Convert Georgia ₾1.6 million in advance, out of which the company carried out work worth just ₾250,000 ($89,000), while the rest of the work remained unfulfilled.

The suspects could face 7–10 years behind bars if found guilty.

After the revelations, Tornike Rizhvadze, the acting chair of the Government of Adjara, said that an ‘implacable fight against corruption continues’.

‘I’d like to reiterate that a senior position is not a guarantee or a privilege under our rule’, said Rizhvadze.

Georgia criticised by EU for elite corruption

The European Parliament expressed concerns over high-level corruption, protection of human rights, labour safety, judicial independence, and more in Georgia in a report on the implementation of the country’s EU Association Agreement published in November 2018.  Despite criticisms, the report’s summary said overall assessment of the implementation process was positive.

The report said that high-level elite corruption remained a serious issue in Georgia, despite acknowledging Georgia’s progress in fighting low and mid-level corruption, leading to a good regional ranking in corruption perception indexes.

The EU Parliament called on Georgia to implement the AntiCorruption Strategy and its Action Plan and said it must ensure that the Anti-Corruption Agency was independent — free of any political interference and separated from the State Security Service.

The European Parliament reiterated ‘the importance of an effective separation of powers and a clear dissociation between politics and economic interests, and stresses that fighting corruption requires an independent judiciary and a solid track record of investigations into high-level cases of corruption, yet to be established’.

The report came in light of a scandal over secret recordings in Georgia suggesting a racket in the Georgian government.

Audio files published by opposition-leaning TV Channel Rustavi 2 in September featured former sports minister Levan Kipiani allegedly attempting to extort expensive cars for other ministers from Omega Group, a business group that owns local TV channel Iberia TV.

Several recordings were released, suggesting the government was applying pressure on businesses.

[Read more about racket allegations in Georgian Government on OC Media: Analysis | Georgia’s tapes scandals suggest something is rotten at the top of Georgian politics]

The report also emphasised the role of the opposition in a parliamentary system as well as ‘the urgent need to put in place more rigorous mechanisms for scrutinising the executive, including through the ability of Members of Parliament to put questions to ministers and the Prime Minister on a regular basis in order to hold them accountable’.

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