Money Embezzlement through Kutaisi Parliament?
13 June, 2013
Money Embezzlement through Kutaisi  Parliament?
The money attraction and spending scheme practiced by ex-powers that be on financing construction works of the new Parliament building in Kutaisi, bespeaks of money embezzlement.
The long-withheld financial papers of the new parliament building of Georgia constructed in the third biggest Georgian city Kutaisi under the initiative of the president of Georgia, became available at last. On June 5, 2013 the State Audit Office of Georgia published results of the audit of attraction of financial resources for the parliament
construction and their reasonable handling.
Nobody including the media and non-governmental sector could get any information on the parliament construction expenses during the entire three-year construction period of 2010-2012. The information was tabooed and discussed on the level of conjectures. The new parliament was largely believed to be a money squander however the actual revelation is staggering: The parliamentary building costing around GEL 340 million [as the new authorities disclosed as soon as it took its office by end of October 2012] and implemented by Meno International Ltd was constructed without construction permit; no expertise conclusions on carrying out basic engineering works including the geological-engineering and the technological parts of the project are provided. GEL 73 757 930 was spent on the questioned parliament through governmental orders. Kutaisi municipality was put in charge of attraction due financing for the project initially. Later the State Service Bureau (SSB) replaced Kutaisi municipality. The sum was mainly made up of loans, money taken through privatized or leased state property. The loan part includes GEL 209 270 from the governmental reserve funds [projected for financing unforeseen expenses such as natural disasters or war] and USD 28. 5 million at 11% of yearly yield lent by the state owned Georgian Gas and Oil Corporation (GOGC) from the resources attracted by GOGC after issuance USD 250 million Eurobonds at London Stock Exchange in May of 2012 on purpose to finance the construction of 450 MW Namakhvani Hydro Power Plant; as well as over GEL 17 million lent by Ministry of Finances (MOF) under preferential 2%. Based on the state audit data, the privatization and leased transactions pricing policy looks non-transparent: the money attracted via privatization/lease deals were accumulating on the SSP accounts directly bypassing the state budget that complicated the monitoring of the money turnover. The property was priced by four-five-fold below or over the market price. For instance the Academic Gudushauri Medical Center with over GEL 30 million market-price was privatized for GEL 6.6 million in November of 2011. On the other hand, a non-residential real estate with the adjacent land spot costing GEL63 819 as market price was sold for a million. No audit conclusion was provided. The total sum of the differences between privatized properties’ market and sold prices accrued to around GEL 2 million. And no paper explains where this difference went to. Besides, frequently money was paid to the operator companies without any official writ proving completion of the work in due timelines and manner. Expenses agreed with the operator Meno International for construction of Parliament Palace were amended ten times increasing from GEL 1.5 million to GEL 281 million within 2010-2011 without any prior calculation that makes the state audit presume the paid sum does not square with the real cost of the Parliament Palace. The audit presumes that the construction works approval was a mere formality and the implemented works were far below the par. Ditrikh Muller, a co-founder of Georgian Investment Group, believes the published rap sheet bespeaks of money embezzlement.
“The non-transparent pricing and contradictions in the financial papers indicate that the money was pocketed first and the financial papers were made up afterwards to make the scheme legal,” he said.
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