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Kibar Khalvashi to sell Rustavi 2

12 August 2019
Kibar Khalvashi. (Mzia Saganelidze /RFE/RL)

Khalvashi is selling the indebted opposition television channel less than a month after a ruling by the European Court of Human Rights (ECHR) allowed him to take ownership of the channel. 

In a statement, published by Rustavi 2 on Monday, Khalvashi said that the company is on the edge of bankruptcy and that he is unable to save it from financial ruin. 

As a result, he has chosen to auction if off ‘within a week’. 

He added that he is also ready to negotiate a sale with anyone but ‘Rustavi 2’s former informal owner and the ruler [former president] Mikheil Saakashvili’.

Khalvashi, who has denied allegations of acting on the orders of the government to stifle the prominent opposition mouthpiece, had controversially dismissed Nika Gvaramia, the director of Rustavi 2, and appointed his lawyer as the head of the company on July 18, the same day he had taken ownership of the channel. 

‘I have reiterated many times that since the launch of the legal debate [over the company’s rightful ownership] the former director of Rustavi 2 had used all of his leverage to harm the company’, Khalvashi said in his statement. ‘Everybody must remember that to avoid damage [to Rustavi 2] I have been asking for temporary ownership of the company since November 2015’.

‘Unfortunately, we are facing the consequences that I had assumed would come’, he added. 

Khalvashi also stated that Rustavi 2 currently has debts valued at ₾70 million [$24 million] . Of that sum, he says, ₾27 million  [$9 million] is owed to the state budget.

Paata Salia, the current director of Rustavi 2, said in a  televised briefing on Monday that there is evidence that Gvaramia was intentionally bankrupting the company. 

‘Six days before the announcement of the ruling by the ECHR, the company signed a contract in which they exchanged unique archival footage owned by the company, for equipment valued at ₾200 000 [$68 000]’, Salia said. Salia claims that the value of the equipment is  significantly lower than the estimated market price of the archive. 

Salia also alleges that the ownership of the footage was transferred to Intermedia, one of whose shareholders ‘is speculated to become the director of Gvaramia’s new TV channel’.

He added that they will seek compensation for the financial damage allegedly inflicted by Gvaramia.

In his response on Monday, Gvaramia said that the company already held ₾30 million of ₾70 million debt when he became the director, while an additional ₾25 million debt was the result of the freezing of some of the channel’s assets by the Tbilisi City Court in 2015. The assets were frozen in response to a claim on the channel made by Khalvashi that same year.   

Gvaramia said that the real amount of debt owed by Rustavi 2 is ₾5 million  [$2 million]. 

He also warned that he plans to appeal to the The London Court of International Arbitration and is seeking ₾5 million. He considers his firing a breach of  contract. 

Indicted for ‘abuse of power’

Khalvashi’s announcement about selling Rustavi 2 came four days after the Prosecutor’s Office indicted Gvaramia for ‘abuse of power’. If convicted, he faces up to five years in prison.

[Read more about charges against Gvaramia on OC Media: Former Rustavi 2 director Nika Gvaramia indicted]

Gvaramia was released on 11 August on ₾40 000  [$13 000] bail. However, he said that he plans to appeal the bail payment. The court also banned him from leaving Georgia without informing the prosecution in advance. 

The indictment comes after Gvaramia was questioned as a witness on 2 August at the Tbilisi City Court in a case launched by the state prosecution on 20 July. 

The case concerns allegations made by Nino Nizharadze, who had previously owned 9% of the shares in Rustavi 2. According to Nizharadze, Gvaramia cost Rustavi 2 ₾30 million – ₾50 million ($10 million–$17 million) by signing a deal with advertising agencies in 2015–2017 at rates unfavourable to the TV channel. 

The agencies were owned, according to the prosecution, by ‘friends of Gvaramia’.

A spokesperson for the Prosecutor’s Office said that the possible damages to Rustavi 2 amounted to ₾6.8 million ($2.3 million).

Non-government organisations have expressed concern over possible political motivations in Gvaramia’s arrest.

‘Circumstances make us think that the case may be politically motivated and aimed at persecuting opponents and critical media’, said a statement signed by over a dozen NGOs on 9 August, the Open Society Georgia Foundation and the Institute for Development and Freedom of Information among them. 

Who owns Rustavi 2? 

Gvaramia, a former Deputy Prosecutor-General (2007–2008) and Education Minister (2008–2009), took over Rustavi 2 in 2012, right after the United National Movement (UNM) was ousted by the ruling Georgian Dream coalition in parliamentary elections. 

Gvaramia branded Rustavi 2 as a ‘pro-opposition’ TV channel vowing to contribute to the downfall of Ivanishvili, who many critics regard as an ‘informal ruler’ of Georgia. 

In July, the ECHR ruled in favour of the Georgian government, greenlighting the transfer of Rustavi 2 to one of its former owners, Kibar Khalvashi.

Georgia’s Supreme Court ordered that the channel be handed back in 2017, but the ECHR put a temporary hold on their ruling until they considered the case.

Gvaramia, who was fired from Rustavi 2 following the ECHR ruling, announced he would found a new TV channel, claiming that Rustavi 2 was doomed to be under control of the government or ‘shut down by the end of the year’.

[Read more on OC Media: Georgia’s Rustavi 2 TV transferred to previous owner after ECHR ruling]

The founders of Rustavi 2 Davit Dvali and Jarji Akimidze have also claimed to be the legitimate owners of the company. On 1 August, the two rejected an offer from Khalvashi for 40% of the shares in the channel, saying that this was not justice and accusing Khalvashi of acting in collusion with Ivanishvili. 

After Khalvashi’s announcement that he would sell Rustavi 2, the lawyer of Dvali and Akimidze warned potential buyers that they may not be considered as ‘fair buyers’.

Yet another person contesting the ownership of the channel was Ia Kitsmarishvili, the wife of one of the founders of Rustavi 2. On 12 July she made an appeal to the court and demanded that 30% of the company’s shares be transferred to her ownership. 

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