BUSINESS
The Revolving Door risks in Georgia
19 December, 2013
The “revolving door” or the movement of officials between the government and the business sector requires more regulation in Georgia to mitigate corruption risks, Transparency International Georgia reported on 4 December. According to the report, there is intensive movement of officials between the government and the private sector in Georgia. A number of wealthy businessmen have been elected to the Georgian Parliament, while some members of the executive branch have direct or indirect ties with business. Similar movement is taking
place in local government and independent regulatory commissions.
A number of companies with connections to Georgian officials have obtained important benefits through their deals with the state in recent years. These benefits include money received through public procurement, tax exemptions, exclusive licenses and rights, legislation designed to suit the interests of specific companies, and the lenience of law enforcement agencies toward specific companies. Some officials have moved to the market sectors that they used to supervise in their official capacity.
For example, companies connected with former and current Parliament members Kandid Kvitsiani, Archil Gegenava, Temur Kokhodze, and Gocha Enukidze received millions of Lari through public procurement (including procurement conducted without open tenders). Law enforcement agencies did not investigate alleged offences committed by companies connected with former MPs Rusudan Kervalishvili and Davit Bezhuashvili while they were members of the parliamentary majority.
Davit Bezhuashvili, Gocha Enukidze, and Kakha Okriashvili, wealthy businessmen who were elected to Parliament in 2012 from the United National Movement, left the former ruling party after it was voted out of power. This raises valid questions concerning the reasons why Georgian businessmen engage in politics.
The report pointed out that there are reasons to believe that the law that was adopted by the Georgian Parliament in 2012, enabling companies to avoid sanctions for the damage caused to the environment, was tailored to suit the interests of companies connected with MP Koba Nakopia. Companies connected to former Defense Minister Davit Kezerashvili had nearly complete control over the Georgian TV advertising market until 2012. Moreover, companies connected with Kezerashvili held exclusive licenses for outdoor advertising in Tbilisi, and the national lottery. The Imedi TV station benefited from a tax amnesty on two occasions while former Economic Development Minister Giorgi Arveladze was its director and co-owner.
The revolving door is also a problem in the new government: Energy Minister Kakhi Kaladze had direct and indirect ties with several companies operating in the energy sector prior to his appointment. Deputy Energy Minister Mariam Valishvili (who has held this position since 2008) was, according to the company registry data, also the director of the TOT Energy Company in 2008, which is a direct violation of the law.
“Georgia’s legal framework contains important mechanisms for the prevention of these problems,” TI Georgia analysts say. “However, as a result of the gaps in the law and in practice, no effective regulation of the revolving door process is carried out presently. Because of the lack of effective monitoring, there are cases where violation of existing rules by public officials does not result in any sanctions. Only a formal investigation can determine whether corruption actually occurred in the cases described above.”
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