How People’s Bank Sold Restaurant “Sokhumi” Owned by the Danelias

Property of one million was sacrificed to the loan of 15 000 USD

Eka Kevanishvili, Tbilisi

If you walk anywhere near the restaurant Sokhumi along side the River Mtkvari embankment you will see withered palm trees and darkness behind the closed curtains, as all activity has come to a complete standstill. The two brother Danelias who own restaurant Sokhumi lost their property the way other private property owners have in recent times. Meanwhile they can only have some home that court proceedings over their ownership rights for restaurant will be fruitful.  However, based on how protracted the process has been they are losing hope.

Meanwhile Ltd. “M.T.B. Diamond” which sells diamonds and gems has become an official owner of Sokhumi. Nonetheless, the Danelias state that the real owner of the restaurant is Giorgi Goguadze, a Georgian MP and former president of the People’s Bank.

The restaurant Sokhumi formerly owned by Ltd. Dagi and has been functioning at the River Mtkvari right embankment # 4-6, Tbilisi since 1996. The family of Danelias has been the proprietor of the plot the restaurant was erected on back in 1989. Since the death of Givi Danelia, head of the family, his two sons Giorgi and Davit Danelias have taken control over the restaurant. The restaurant Sokhumi, well-known in Tbilisi was named after the city Sokhumi after Georgians had lost this city in Georgian-Abkhazian war a in the early 1990s. It worked as a seasonal summer restaurant. The brother Danelias who were from Sokhumi employed many IDPs from Abkhazia in the restaurant. The brothers say the restaurant served as a home for those people who missed Sokhumi, as they could gather in the restaurant and recall the city and fond memories.

Everything started when Danelias decided to build a fountain at the restaurant back in 2003. The redecoration cost 15, 000 USD. The brothers turned to banks for credit. The restaurant Sokhumi was a seasonal restaurant and many banks refused to take risk and loaning them money. The Danelias contacted their acquaintance Zurab Shavishvili, a businessman who had one credit account in TBC Bank at that time. Shavishvili could open another account in the same bank. Therefore, Danelias asked him to take credit instead of them. Based on the terms of their agreement Shavishvili was to be allowed to use Dagi’s name and restaurant Sokhumi as a guarantee to the bank. Everything went as planned: Shavishvili received credit of 15, 000 US Dollars and gave the money to Danelias. The brothers used this money for the restaurant redecoration. The two sides agreed that the credit was 5- year long and Danelias had to pay back the loan in installments.
 
In 2004 Shavishvili told the Danelias that the People’s Bank had offered him better credit terms. He said he wanted to move the credit line from TBC Bank to the People’s Bank. Shavishvili signed a loan agreement # 160804/01 and took 348, 175 GEL (190 000 US Dollars at the prevailing dollar exchange rate at the time that credit was granted. The collateral put up was Dagi’s property [restaurant Solhumi] again. Shavishvili took all credit money from the bank. However, the Danelias did not know anything about it. The agreement between the bank and Shavishvili was endorsed by N. Bigvava, the notary on 16.08.2004. The agreement was signed for a term of 18 months. Shavishvili should have returned the debt not later than February16, 2006.

The Danelias had been paying 300 US Dollars from June 2003 to December 2005, which was paid against the outstanding debt 15 000 US Dollars they had indebted to Shavishvili. In December 2005, Shavishvili told Danlias they were free from paying the percent. He promised he would settle

The restaurant Sokhumi stopped functioning from January 2006 to June 2006 as the process of redecoration was being implemented.

Suddenly, out of blue in May 2006 G. Kometiani, the bailiff from Tbilisi Bailiffs Bureau and Giorgi Chakhnashvili,a representative of the People’s Bank visited the brothers and showed them a court order with which the property of Dagi would be confiscated and put up for auction. The reason for this was that T. Kachkachishvili, Shavishvili’s manager and signer of the loan agreement from Shavishvili’s side (Kachkachishvili who did not work with Shavishvili for a long time now.), could not cover the outstanding bank credit. It turned out that when the brothers were reconstructing their restaurant there was a court dispute between the bank and Kachkachishvili because Kachkachishvili did not pay the debt according to the agreed terms. The trial ended with agreement between sides. However, the problem is that the court dispute participants [People’s Bank and Kachkachishvili] did not inform the Sokhumi proprietors that there was a trial concerning their property.

Davit and Giorgi Danelias officially addressed the court civil colleague and requested to receive the copy of judgment on friendly settlement between dispute participants dating December 31, 2005. They found out from the document that Kachkachishvili did not fulfill the bank demands. Consequently, the bank lodged an appeal against Kachkachishvili and demanded that the debtor have to pay 1,031, 692 GEL. Danelias also found out that Kachkachishvili had other loan agreements with the People’s Bank:

1. Loan agreement # 010704/04 dating July 1st, 2004.
2. Main load agreement # 020704/06 dating July 2nd 2004.
3. Agreement # 130704/02 dating July 13th 2004.
4. Loan agreement # 170904/01 dating September 17th, 2004.

The representatives of the People’s Bank and Kachkachishvili had a deal: if Kachkachishvili paid the debt within the agreed terms, the bank would write off 814 000 GEL from the outstanding debt. It must be noted that owners of the properties Kachkachishvili used as collateral, did not know anything about the developments. No one had involved them in the dispute as the third party to the dispute.

That is why the Danelias lodged an appeal in court and demanded to annul the court judgment on the so-called “friendly” settlement. The trial of July 13, 2006 was than postponed to July 25 as Giorgi Chakhnashvili, the representative of the People’s Bank had applied to the court and requested the time to execute a friendly settlement with Danelias. At the same time Shavishvili told the Danelias that he was planning to sell his Volvo Service Center to Beeline, mobile operator. Shavishvili promised to pay off Kachkachishvili’s debts. Consequently, the Danelias would have their restaurant back. Consequently the two brothers did not continue the court dispute. However, Shavishvili had not consummated the deal and sold the Volvo Service Center.

As the People’s Bank was planning to sell Danelias’ restaurant at auction, they decided to make a deal with the bank. The Danelias agreed to pay money the bank had lost for violating the loan agreement #160804/01 dating August 16th, 2004. However, Giorgi Karanadze, the head of the People’s Bank’s Legal Department said that if the Danelias continued the court dispute the bank would demand that they paid Kachkachishvili’s full amount of loan that totaled 1,300 000 GEL. The proprietors of Dagi could not and would not pay this money.

Meanwhile Shavishvili sold Volvo Service Center and gave the Danelias 25,000 USD. Giorgi Chakhnashvili, the lawyer of the People’s Bank gave the Danelias Kachakchishvili’s loan account. The brothers put money on the account on November 30, 2006.Giorgi Chakhnashvili told the brothers they had to cover another part of debt 135 000 US Dollars as soon as possible. (In the end the Danelias pain 385 000 US Dollars to the bank).

On February 23, 2007 Zurab Shavishvili officially handed over a 4-room apartment which is located on 19 Kekelidze street and valued at 230, 000 USD to Gia Danelia. The flat transmission documents were then presented to Karanadze, head of Legal Department of the People’s Bank and requested that the apartment served as collateral instead of restaurant Sokhumi but Karanadze refused to accept the document and demanded that they (the Danelia’s) sell the flat and bring money to pay the debt. He said that only after this the bank would calculate the amount of unpaid loan. The Danelias started looking for the client. However, they found out in March 2007 that Karanadze had been arrested….

Giorgi Goguadze, the head of the People’s Bank and now the MP of parliament of Georgia did not meet the Danelias who visited him to discuss their problem. The brothers were told that Karanadze was taking a vacation. At the end of May Karanadze called the brothers and demanded they paid the bank 500 000 GEL. The Danelias started searching for the client again. Soon they found the apartment buyer and started negotiations. However, Karanadze disappeared again. Danelias could not contact him either on phone or in person. At by this time Dagi was not the official owner of the Sokhumi restaurant any longer.

The brothers received a record from the Civil Registry Agency on June 25th, 2007. The information they read out from the record was shocking: G. Kometiani, the bailiff held a second auction wrote a protocol and according to this protocol the People’s Bank bought the restaurant Sokhumi. The protocol was dating November 14th, 2006.

On June 28th, 2007 the People’s Bank gave a-two-week time to the Danelias to vacate the restaurant....

However, this case did not stop here. On July 6th, 2008 the Danelias requested a record from Civil Registry Agency on the Sokhumi and found very suspicious information: the owner of the restaurant was not the People’s Bank any more. According to the record, Sokhumi’s official owner was Ltd. “M.T.B. Diamond”. The Ltd. bought the restaurant by an installment plan. According to the record, after having registered the Ltd. “M.T.B. Diamond” in the Civil Registry Agency the company had to pay 150 000 USD within two days period of time (27.06.2007) and 446, 000 USD in three weeks. 

The Danelias state that the contract was a mere hypocrisy and cheating. The bank tried to hide stolen property behind the facade of a foreign legal entity. This means that the People’s Bank tried to create the face of a decent customer via Ltd. Diamond but there was another motivation involved.

This Ltd., came on the scene so unexpectedly that the Danelias decided to study how and where did this company come - its origins. The Ltd.’s official address in the Civil Registry Agency and in the contract does not match. One address is 3 Zhabotinski Street, Telaviv, Israel and the second one is Ramat gan, 3 Ha Ietriza Street, Israel. The founders are Murman Khikhinashvili, owner of 60 % of shares, Boris Krikheli- 30 % and Besik Krikheli-10 %. The firm manufactures and sells diamonds.

On July 9th, 2007 when the Sokhumi had been alienated, the representatives of Ltd. “The Agency for Business Protection” visited the Danelias in the restaurant. The representatives of the Ltd. presented their contract with the People’s Bank and documents from the Civil Registry Agency. According to the record, People’s Bank was the owner of the restaurant. The Danelias showed them another document from the Civil Registry which indicated that the Ltd. “M.T.B. Diamond” was the actual owner.

The same people from “The Agency for Business Protection” visited the restaurant for the second time after a while. This time they said that the People’s Bank and Ltd. “M.T.B. Diamond” had agreed that “the Agency for Business Protection” would guard/protect the restaurant. “M.T.B. Diamond” sent a letter via fax demanding that the restaurant was guarded by “the Agency for Business Protection”. In response to this the Danelias presented the official documents that “M.T.B. Diamond” had not paid the money for restaurant at the time. The Danelias’ attorney sent a letter to the administration of “M.T.B. Diamond” and warned them not to pay the rest of money to the bank for the bank was not the legal proprietor of the restaurant. They also indicated that there was a court dispute over the restaurant. The Danelias can prove that the Ltd. administration also received the letter of notice.

The proprietors of Ltd. Dagi assume that Giorgi Goguadze, the head of the People’s Bank, Giorgi Chakhnashvili and Giorgi Karanadze, the employees of the People’s Bank supported by Gela Kometiania, the bailiff of Tbilisi Executive Department had agreed to cease Ltd. Dagi’s property in advance illegally based on self-interest. The brothers suspected that the restaurant was sold to “Diamond” to cover the fact that the People’s Bank had ceased the restaurant illegally (this crime is punished by Article 194 of the Criminal Code of Georgia).The assumption was based on the fact that “Diamond” did not pay the money afterall.

However, despite the warning of Danelias’ attorney, the administration of “Diamond” paid the rest of money on April 16, 2008. This was when Tbilisi Court of Appeals was still adjudicating the issue of removing the ban on restaurant Sokhumi that had been imposed by a lower court
 
The criminal proceedings on positional negligence of bailiff Kometiani is in process now.

In April, 2008 the Danelias applied to the Department for Urban Planning of Tbilisi City Hall in order to find out if anyone had presented a project for the plot that Sokhumi was located. Representatives of the Department responded that no one had officially presented a project proposal for the territory in question.

It must be mentioned that the director of “M.T.B. Diamond” lodged an appeal in Tbilisi Court of Appeals. He alleged he had been planning a project on building a big business center. His company singed a contract with a co investor “ASHDAR” company on August 15th, 2007. The head of the Ltd. stated had been intending to invest 17, 450 000 Euros and to start a project implementation in October, 2007 (note that the project was not agreed with any official bodies at that time). However, they stopped the project as the property was barred. The appellant indicated that he incurred the loss exceeding 2,000, 000 Euros.

Based on rough estimates the Ltd. Dagi’s property equals approximately 3 million USD.
The court has lifted the bar from the restaurant. As a result now the Ltd. “M.T. B. Diamond” can legally sell the property and if it really happens, Dagi will lose Sokhumi once and forever.
However, the process is frozen now as the Danelias sent an attorney to Israel. They suspect that the appeal of “Diamond” is false; the Ltd. has not signed contracts with other companies at all and the court had been misled. The Danelias received the information that this firm does not have any property in Israel at all.

According to the audit’s conclusion Dagi’s debt was only 400 000-odd GEL from the several millions indebted by Kachkachishvili.

Legal assessment:

First of all, the operative part of the judgment did not indicate on the forms of selling Ltd. Dagi’s real estate, which means that the both sides (the bank and Kachkachishvili) did not make an agreement for the sale of the property; Ltd. Dagi had not been invited to participate in the civil dispute.

Secondly, Tea Kachkachishvili and not Ltd. Dagi was than declared the actual debtor according to the court records of execution. However, it was Dagi’s property that was banned and later sold off.

“According to Article 44 of Law on Executing Proceedings only the property of a debtor can be barred. The Article 69 of the same law prescribes the terms for selling the barred property at auction. According to this article a bailiff can appoint an auction only when the debtor is the official owner of the real estate presented as the collateral. Here we can see that this aspect of the law has been violated.

The Ltd. “M.T.B. Diamond” is registered with two different addresses. The representatives of Civil Registry explained that it was only a technical mistake. The Ltd. was warned that the seller was not the real owner (an official letter from the Danelia’s attorney) of the property and there was a court dispute on this case. According to Part I of the Article 187 of the Civil Code of Georgia a customer must be considered as being dishonest if he/she knew or should have known that the seller was not the owner of the property.

The lawyers state that the restaurant Sokhumi was sold without the court decision in order to pay other businessperson’s debts. Therefore based on Part III of the Article 32-3 of the Law on Executive Proceedings the property should be returned to the real owner- Ltd. Dagi.

Danelias trusted their property to Zurab Shavishvili. He is declining to comment on the fact now.
Tea Kachkachishvili states that she does not work for Shavishvili’s company any more and she was doing what the boss had told her to do at the time.

Gela Kometiani, the bailiff declines to comment as well. When we asked him why the Danelias were not involved in the case as the third side of the agreement and why no one expressed interest on whose property was on sale, Kometiani stated with irritated voice that the citizens were waiting for him at his chamber and therefore he could not give us interview. He added that everyone should obey to the court’s decision. He also advised us to review the court order in this matter.

In addition, representatives of the People’s Bank refused to meet us. Consequently, we sent them an official letter. Here are the questions we asked them:

The proprietors of Dagi assume that you- Giorgi Goguadze, the former General Director of the People’s Bank, Giorgi Chakhnashvili and Giorgi Karanadze, the representatives of the same bank with G. Kometiani’s assistance, who is the bailiff of the Tbilisi Bailiff Bureau, agreed in advance to cease the property of Ltd. Dagi illegally based on self-interest. They also suspect that as Diamond did not pay for the restaurant People’s Bank hid the fact that it was the real owner of Sokhumi (the crime prescribed by Article 194 of the Criminal Code of Georgia).

Why was not Dagi involved in the case as the third side of dispute and why was restaurant Sokhumi sold without having informed Dagi?

We provide the letter sent by the bank without any comments. As we can communicate with the bank representatives only with letters, we are unable to ask the additional questions. It would be connected with bureaucratic procedures and they take much time. Zurab Tsulaia, the present head of the People’s Bank wrote to us:

“It is unknown and not very interesting to us what the Dagi owners assume. We can assure you they are not telling the truth when they say that the bank representatives acted based on self-interest and some preliminary agreement. If you confirm their statements we have received via your letter with law enforcing bodies we will lodge an appeal in the Office of the Prosecutor General against Dagi and demand that the criminal case is launched against them for slander.
They lie when they state that Diamond did not pay money for the restaurant and masked the property ownership rights based on a law. We elucidate that according to the contract Diamond was obliged to pay property price on installment and Diamond met this requirement.

The process of confiscating the real estate was implemented by the court bailiff based on the acting current legislation. He fulfilled his obligation by informing Dagi about the auction. We would like to inform you that the representatives of Dagi- director and his associates attended the auction. (The Danelias confirm the fact of attending the first auction, but say that no one informed them on the second one).

We also state that on the eve of the auction the Dagi’s director and his brother came in our bank. We gave them guarantees, the bank would pay 900 000 GEL if it won in auction. Their debt equaled 989 000 GEL.  You can see that the bank wrote off 89 000 GEL (!) from Dagi’s debts.

Based on an audit and a document was it possible for Dagi infer that it owes only 500, 000 GEL.
Do you think the representatives of Dagi had not visited other competent bodies before visiting you? They had demanded that the case was launched in the Financial Police. The Financial Police studied the case and with the assistance of the National Bureau of Expertise ascertained that Dagi owed the People’s Bank approximately 1, 100 000 GEL and not 989 000 GEL calculated by the bank itself (this means that the bank forgave 200 000 GEL of debt to Dagi).

Therefore the Dagi owners’ (or your?) consideration on the bank assigning T.Kachkachishvili’s debts to Dagi is a lie.”

We would like to say to the People’s Bank’s administration that the authors of this article have not expressed their opinion anywhere in the article. We used the official documents given by the representatives of Dagi, an interested party in this dispute. These documents raised the questions that we have already put forth to the reader.  Consequently, the remark of People’s Bank is inappropriate.

www.humanrights.ge is not interested in discrediting any side in this conflict. However, many private property owners have lost their property like Dagi did under the government’s order or with the involvement of government associate persons. Consequently, our question, what interests Giorgi Goguadze, the former head of the People’s Bank who was in close relations with governmental authorities and now is representing the government’s interests in Dagi’s property. Our question is logical because the victims (the Danelias) have raised some suspicions in this regard.

If Diamond sells Sokhumi thebn Dagi will lose it ownership rights now and forever. Until then, however, let us follow the developments and see where Dagi protects its property, whether in Georgia or in the State of Israel.