Procedural Code Discriminates Investors
17 October, 2013
Procedural Code Discriminates Investors
Malfunctioning of the Procedural Code of Georgia foster discrimination of businessmen and encumber the much touted process of restoration of investors’ rights in spite of declared political will of Georgian Government to reinstate justice in the country. And Georgian investors constitute the most vulnerable group, suffering from the inadequate legislation that mandates Prosecutors’ Office to act at its own discretion and settle things in favor of foreign investors. However, discrimination of any investor sends negative signals about the investment climate
of the country.
Discrimination of Georgian businessmen, investors and proprietors through Prosecutors’ Office and law-enforcing structures was a well tested practice established by the ex-ruling power of the National Movement. According to Amiran Giguashvili, the lawyer who specializes in property rights protection, the active procedural code was re-tailored in 2010 [without consultation with the Association of Georgian Lawyers] by currently wanted ex-Prosecutor of Georgia Zurab Adeishvili in order to fit it to the money-extortion mechanism of the ex-power, whose main victims were Georgian investors.
“The reason is simple: to extort money from local entrepreneurs [or violate rights of proprietors] is much easier than to trespass on the rights of foreigners. So the practice was that whatever the crime foreign partners [or litigant sides] might have committed against Georgian businessmen and no matter how faithful Georgian partners might have been to the law, the Prosecutors’ Office would settle disputes in favor of foreigners and Georgian investors were put behind bars and sentenced to pay money [in the state budget]. And the driving force of this practice was law-enforcers led by Department of Constitutional Security and Prosecutors’ Office that was granted a full mandate to act at its own discretion,” Giguashvili said in the interview to Georgian Journal. The excuse was the need to improve investment climate to attract more foreign investments. However after forceful handing of assets, in particular agriculture lands, from Georgian owners to foreign investors no investment projects were implemented and the lands were laid unused offering no contribution to value-making chains of Georgian economy. Economic analysts explain that many investors from money-abundant countries like China, India, Iran, Turkey or United Arab Emirates used to invest money in real estate in Georgia as the land is much cheaper here whereas its value increases each year and can be sold for much higher price after some time. And this vicious mechanism still goes ahead as far as neither the law nor the personnel of Prosecutors’ Office is changed. The underway litigation process between Ali-Riza Kizildag, a Swiss by citizenship and Turk by ethnicity who turned out to be convicted in Turkey for making a plot against the state, and his Georgian business partner Archil Vekua, an owner of hazelnut factory in Zugdidi [west Georgia], is a clear illustration of it, Giguashvili believes. According to him, Kizildag, who started his business in Georgia as a representative of Swiss investment group in 2009, swindled other Georgian partners before he became a partner to Vekua in nut business. Now he sues Vekua for alleged financial arrears that were pumped by Kizilgad’s own microfinance organization Swiss Credit out of Vekua’s company in fact. Although Vekua sued Kizildag at the civil court in Zugdidi, Kizildag succeeded to start [in spring of 2013] and win a parallel litigation at Prosecutors Office before the civil court draw out its decision. Afterwards Vekua won the civil court and now the trick is that Vekua bears a criminal responsibility for the case that he was acquitted of by civil court.
“It is nonsense in the international law. Filing one and the same case separately at two instances is forbidden normally but it is lawful in Georgia thanks to the Adeishvili’s procedural code that leaves things at the discretion of Prosecutors. And since the personnel at the Prosecutors’ Office is not changed in fact, they act as they used to during the previous Authorities and the vicious practice of discriminating investors goes ahead and will continue unless the law is not changed properly,” Giguashvili elaborated.

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