TBC Bank founder Khazaradze charged with money laundering

The Georgian Prosecutor’s Office has charged two of the founders of TBC Bank Group, the former chair of the board Mamuka Khazaradze, and former deputy chair, Badri Japaridze, with laundering almost $17,000,000. 

A spokesperson for the Prosecutor’s Office said that they had appealed to the court to place the two in pre-trial detention. The court’s decision is pending. 

If found guilty of laundering a ‘particularly large’ sum of money by ‘more than one person’, the two face 9–12 years in prison. 

‘What they stated today is absolutely absurd and I’m very ashamed that we are stuck with this kind of a prosecutor’s office and interior ministry’, Khazaradze stated, before going to the Prosecutor’s Office to have the indictment formally served.

The indictment on 24 July came two weeks after Khazaradze announced he would launch a ‘public movement’ in September, citing a need to consolidate ‘progressive and pro-Western’ forces in Georgia. 

The Prosecutor’s Office unveiled in January that they had been investigating Khazaradze and Japaridze for eight months, saying they were looking into loans that TBC issued to two companies, Samgori M and Samgori Trade, in 2007–2008.

Khazaradze, who was then the chair of TBC’s supervisory board and Japaridze, his deputy, took loans of same amounts from these companies in 2008 only for them to be written off soon after, according to prosecutors.

Khazaradze’s earlier claims of government pressure

In January, the National Bank of Georgia fined TBC ₾1 million ($380,000) for violating conflicts of interest rules and ordered that Khazaradze and Japaridze resign from their posts. 

Khazaradze claimed in February that the national regulator was not independent in their decision and that he could not afford to remain in the post while TBC Bank’s shareholders suffered losses due to the dispute. 

Addressing Parliament in early March, Khazaradze accused Interior Minister Giorgi Gakharia of sending him a threatening letter in November 2018 demanding he pressure TV channels Pirveli and Artarea into covering presidential candidate Salome Zurabishvili favourably. 

Pirveli is owned by a friend of Khazaradze’s, Vakhtang Tsereteli. 

In an interview on 11 March with Kviris Palitra, the Georgian banker claimed that statements he made against the opposition United National Movement Party and their ‘revanchism’ before November 2018’s presidential run-off were due to government pressure.

He denied ‘even thinking’ about intervening in the media coverage of any TV channel. 

‘To damage the Anaklia project’

Speaking to journalists in front of the Prosecutor’s Office on Wednesday, Khazaradze insisted that the indictment was an attempt by the government to ‘damage’ not him but ‘Georgia’s financial interests, shareholders, and the Anaklia Project’. 

Since January, opposition groups have accused the government and Georgian Dream Chair Bidzina Ivanishvili applying legal pressure to Khazaradze after the Anaklia Development Consortium won a bid to build the Anaklia Deep Sea Port project on Georgia’s Black Sea coast. 

The consortium, co-owned by Khazaradze and the US-based Conti Group LLC, won the bid for the project in 2015 when Giorgi Kvirikashvili was the Minister for Economy.

Khazaradze himself claimed on 21 February that a ‘deliberate campaign against’ him and Japaridze was being conducted due to TBC’s plans for Anaklia, something he promised to dedicate ‘all his energy’ to after his resignation.

Giorgi Chitidze, a human rights and criminal lawyer and an invited lecturer at Ilia State University, said there were strong suspicions that the charges against Khazaradze were politically motivated.

‘Money laundering is a grave economic crime which is directly reflected on one’s reputation, trust, and success in business… It is inconceivable that the state would trust the strategic [Anaklia] project to someone now accused of such a crime’, Chitidze told OC Media. 

‘Add to that a lack of trust towards the Prosecutor’s Office and the judiciary, which often apply selective justice’, he said.

Chitidze named the unsolved cases of the murder of teenager Davit Saralidze, the fatal shooting of Temirlan Machalikashvili, and claims of a media takeover by the former owners of TV company Rustavi 2 as examples of a biased approach to justice. 

‘Hence, linking the renewal of an investigation against Khazaradze and charging him with his potential move into politics I think is legitimate suspicion’, Chitidze said. 

TBC insisted in January that the transactions in question had already been investigated by the National Bank in 2008, which ‘did not result in any action being taken at the time’. 

Ivanishvili’s intervention

Parliamentary Speaker Archil Talakvadze, a member of the ruling Georgian Dream party, commented promptly on Wednesday that the money-laundering investigation had been launched long before Khazaradze’s indication that he intended to go into politics. 

After Khazaradze’s claims in March that he was being pressured by the government, the opposition European Georgia Party demanded a parliamentary committee be set up to investigate. The idea was rejected by parliament.

In July, the chair of Georgian Dream, billionaire Bidzina Ivanishvili, castigated TBC and Bank of Georgia — the two largest commercial banks in Georgia — for having ‘eaten up the whole country’. He also accused former Prime Minister Giorgi Kvirikashvili, who stepped down a month earlier, of lobbying for them. 

In his resignation speech in June 2018, Kvirikashvili confirmed that Ivanishvili and other party leaders disagreed with him ‘over the economy’. 

Reassurances from Georgian Dream

Since January, a number of cabinet ministers and Georgian Dream leaders, as well as the National Bank of Georgia, have stressed TBC Bank’s important role in the economy and insisted the bank had nothing to worry about.

They reiterated this immediately after the latest announcement by the Prosecutor’s Office. 

Since early January, Georgian Dream has assured the public that the Anaklia project would go forward. But in recent months, Infrastructure Minister Maia Tskitishvili and Economy Minister Natia Turnava have made several statements suggesting that Khazaradze’s consortium was falling behind their commitments to ensure investments into the project. 

On 29 May, Anaklia Development Consortium said they were ‘shocked’ to learn about a government permit issued earlier that month for construction of a new deep-sea harbour in Poti, a seaside town south of Anaklia. 

The next day, Economy Minister Natia Turnava fired the head of the ministry’s Technical and Construction Supervision Agency (TCSA) for sanctioning the permit, denying the government had greenlit it. 

The opposition has claimed that businessman and former Economy Minister Vano Chkhartishvili is behind the Poti Port. 

In a TV interview in October, Ivanishvili expressed sympathies towards Chkhartishvili while criticising Khazaradze once again.