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Donations from Business MP Candidates - Investing in Future Tenders

30.09.2020

 
Salome Chkheidze, Kvemo Kartli

The Parliamentary Elections of 2020 in Georgia stands out in quantities of donations. According to the information from the Monitoring Department of Political Finance of the State Audit Office, the parties received total of GEL 14,690,602.52 from January 1 to September 14, 2020 as donations.  

In accordance with the legislation of Georgia, the donations received by a political party from a natural person during a year should not exceed GEL 60,000 and from a legal person, GEL 120,000.  Often, political donations are carrying the risk of corruption. Individual donors usually are the founders, directors or related persons of various companies. 

There is a significant trend evident in 2020 elections. Most of the majoritarian candidates nominated by the parties are big businessmen or the donors of the parties.  

According to a survey published by Transparency International Georgia on September 11, 2020, more than half of the majoritarian candidates nominated by  Georgian Dream 19 out of 30 are engaged in entrepreneurial activities. These candidates, in turn, are in some way connected with 186 companies. 

Major donors are also the family members and partners of the majoritarian candidates.  Fourteen out of 30 majoritarian candidates were personally donating to Georgian Dream. 

Among the candidates nominated in Kvemo Kartli Gogi Meshveliani is in the list of donors to Georgian Dream, he is nominated as a majoritarian candidate in Bolnisi, Dmanisi, Tetritskaro and Tsalka municipalities and he is an MP at the time being. In 2016, Meshveliani donated GEL 20,000 to Georgian Dream - Democratic Georgia. 

In the same electoral district, Kakhaber Okriashvili the founder of company PSP is also running as a majoritarian candidate, who has been nominated as a common candidate together by the United National Movement, Republican Party, State for People, European Democrats, and Freedom and Progress that are united into the electoral block of Power is in Unit. 

For the first time, Kakhaber Okriashvili became an independent majoritarian MP from Dmanisi in 2004. In the Parliamentary Elections of 2008 and 2012, he was nominated as a majoritarian candidate from Dmanisi by then ruling party United National Movement, however, in 2016 he was a candidate from Georgian Dream - Democratic Georgia.

Kakhaber Okriashvili is engaged in entrepreneurial activities. He himself, his wife, Lina Topuria and his son, Giorgi Okriashvili are connected with 29 companies.  These are as follows: PSP Pharma, Geomed, Alpha, Sanimedi, GMP, AXA Medical, Patria Medica, Georgian Beer Company, New Hospitals and others. Kakhaber Okriashvili has entered all the companies into the declaration completed in 2020.  He has transferred his shares to his brother Vaja Okriashvili in full compliance with the Law of Georgia on Conflicts of Interest and Corruption in Public Institutions.

Although Kakha Okriashvili and Lina Topuria are not themselves political donors, the donors are the companies and business partners related to them who between 2012-2020  donated in total to Georgian Dream - Democratic Georgia GEL 388,000, to independent candidate Tsezar Chocheli, GEL 85,000, and to United National Movement, GEL 90 000.
 
In 2013, Vaja Okriashvili, who is the share manager of the companies of Kakhaber Okriashvili, purchased a state property, namely 1,000 sq.m. of Plot located in Dmanisi and buildings located on the plot all worth of GEL 20, 000.  Further, between 2012-2020, PSP Pharma Ltd won more than 900 state tenders of total worth of GEL 50 million and was awarded 2827 direct contracts of worth of GEL 12 million. Between 2011-2020, Geo Med Ltd won 17 state tenders worth of GEL 1,322,775 and was awarded 7 direct contracts worth of GEL 104,895. In 2013 and 2015, GMP Ltd 100% owner of which is Okriashvili's wife Lina Topuria, won 2 large state tenders worth of GEL 3,392,685; and in 2015 was awarded one direct contract worth of USD 116,478. Between 2011-2020, New Hospitals which is a subsidiary company of PSP Pharma won 34 state tenders worth of GEL 1,442,668 and was awarded 261 direct contracts worth of GEL 2,645,000. Moreover, between 2013-2015, Medcapitals Ltd a subsidiary company of PSP Pharma, won 5 State tenders worth of GEL 141,863. Between 2012-2020, the company was also awarded 45 contracts of direct procurements worth of GEL 412,000. 

Gigi Chikhladze, a lawyer at the Transparency International Georgia believes that it is often the case that several employees of one company transfer sums in favor of a particular party. According to Chikhladze, there is a reasonable doubt that these are the funds of the company and such transfers serve the purpose to overcome the upper limit of GEL 120,000, although it is hard to investigate and prove anything here. 

“As you know, according to our legislation, donations made by third parties are prohibited.  However, in hearing such cases, the court considers that if a person has an annual income of GEL 60,000, it is theoretically possible that the entire income was donated to the party and thus the court does not impose a liability on the person. The issue of inadequate examination of financial donations is a complex problem because the Audit Office does not have sufficient legal grounds for this. At the same time, the human and technical resources of the Audit Office are limited. “Moreover, the case law in the area of hearing the matters of donations to parties is of low standards," admits Gigi Chikhladze. 

As for Rustavi municipality, David Kirkitadze is a major donor to his own party from the majoritarian candidates.  The total amount transferred by him to United National Movement is GEL 77,000.  In 2015, he donated GEL 15,000 to the party, in 2018, GEL 60,000 and in 2020, GEL 2,000.

Policy expert Gia Khukhashvili believes that at the stage of nominating the candidates, there is no doubt about the lawfulness of this trend, because any citizen of Georgia, including businessmen or financial donors, may run for elections.   However, according to Khukhashvili, the reason for such trends lies in the fact that candidates are investing for the election expenses from their own pockets. 

„More importantly, these funds remain outside of control and naturally, in many cases, directly or covertly carry the character of bribery and corruption. The results are very negative because the businessman always thinks that any investment, after some stage, should be returned.  He invests in politics and afterwards lobbies for his own economic interests from the armchair of a politician.  During the recent history, a whole caste of political businessmen has been created in Georgia. These people serve any government, they move from party to party and then we see how their companies win tenders and how they use administrative resources to expand their business,” Gia Khukhashvili told HUMANRIGHTS.GE.  

Sources used in the article:


State Audit Office, Political Finance Monitoring Department:
https://monitoring.sao.ge/ 

Public Service Bureau: https://declaration.gov.ge/ 

The Article was prepared in the frame of the project “Monitoring 2020 Parliamentary Elections in Georgia”, which is supported by the Open Society Georgia Foundation. The contents of the article are the sole responsibility of the Human Rights Center and do not necessarily reflect the views of the donor. 


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