Witch-hunting petty business
21 October, 2010

Georgian government disclosed a contraband scheme of cargo turnover at customs and detained the members of a rogue enterprise Cargo-Trans LLC together with tens of petty affiliated traders. However, experts say government just used one felony case to extort money from petty traders in fact.
On October 5, 2010, the Investigation Service of the Ministry of Finances of Georgia (MOF), disclosed a scheme of smuggle trade and faking customs papers practiced by Trans LLC importing goods from Turkey to Georgia.

Gela Chikviladze, General manger of the Trans LLC along with his accessories including two Trans LLC employee guys and number of alleged accessories including petty importers were arrested.

According to preliminary investigation, the suspects have been importing cloths and shoes from Turkey to Georgia though the Trans LLC largely known among entrepreneurs and market traders as Trans-Cargo LLC that has allegedly customs cargo transportation offices in Tbilisi and Istanbul. Actually the questioned enterprise has been practicing issuance of fake procurement papers, invoices, certificates of goods origins, and transportation-related papers in agreement of importers for USD 50 per paper. The aggregate price per car of transported goods [including all mentioned faked procedures] accounted for GEL 20-30 thousand and the enterprise implemented 5-6 transportation per months generally.  The suspects also eluded significant customs and taxation duties affecting the state budget. The overall budgetary loss is not calculated and the investigation is still on.
Nonetheless, according to Georgian media, about 70 petty traders were arrested at the malls dubbed Kidobani [Ark] and Passage on October 5, 2010 as the fake case accomplices and sentenced by two-month preliminary detainment. However the victim traders claimed that the figure reached 170 in fact for the MOF law-enforcers arrested many people at homes where the media could not trail MOF guys to cover the whitch-hunt. The Investigation Service did not elaborate with Georgian Journal how many importers were arrested all in all. On the other hand business associations and non-governmental organizations claimed the arrested importers were unwitting accomplices and their arrest was illegal.
“We got acquainted with the questioned [contraband] case and based on the information available to us we conclude that there is no legal ground for mass-arrest of the questioned petty traders of Kidobani and Passage,” Merab Janiahsvili, Head of the Association of Young Financiers and Businessmen (AYFB), told Georgian Journal. “Each violation and breakage of tax and criminal code must be investigated and punished, but only based on firm proofs and evidences, while the given case provides with no details as of yet to justify this kind of arrest of entrepreneurs like terrorists and ruffians. No democratic country globe over arrests petty entrepreneurs while investigating this kind of felonies and sentences them two-month of preliminary detainment.”

Janiashvili assures that the arrested traders were unaware of the illegal transactions the Trans LLC practiced and have been endorsing papers without reading them actually. Many of them pled not guilty and appeared ready to cooperate with the investigation. They are unwitting accomplices in fact and can face just about GEL 2-3 thousand of penalty, while the government cracked down on them to conclude procedural deals and pay GEL 5-10 thousands instead.

The victim entrepreneurs however eluded any kind of comments with media and did not appeal to any official right defending structure including the Ombudsman and business associations to find the truth. According to incognito source, the investigation body threatened the arrested entrepreneurs to make them to fork out even more than the already distorted money or keep them behind bars.
Thus entrepreneurs preferred to pay the demanded sums to escape prison and be tightlipped rather than trumpet the problem in quest of the truth and plunge in the dipper swamp. Only ten traders are supposed to remain under custody at the moment as incognito sources say. Investigation Service does not disclose details of this presumption claiming that it is beyond its competence.
According to Levan Kalandadze, Head of Association of Georgian Small and Medium Business, the problem is that the documentation respective to the questioned arrest was not made public and nobody knows concrete motives of the arrest.
“The investigation is still on, therefore entrepreneurs could not be fined as far as penalties are imposed only after investigation is through and the crime proved. Yet entrepreneurs preferred to pay twice more and escape the prison for they do not believe they can find the truth,” Kalandadaze elaborated with Georgian Journal.

“All this makes us  think that authorities needed this campaign to deter entrepreneurs and distort money. And I am amazed that no independent right defending body took an interest to protect traders. Ombudsman was obliged to be interested in this case even if nobody appealed with the request, because the information spread by media can lay ground to address alleged problem,” Janiashvili said.
AYFB analysts believe government hardly manages to fulfill the state budget. The amount of grants in the state budget of 2011 diminishes by GEL 229 million and other incomes by GEL 45 million compared to 2010. Nevertheless the state assignments of 2011 state budget increase thanks to taxes.
“The tax-based incomes figure increases by GEL 768 million next year against the backdrop of the economic crisis. We cannot expect a high-paced economic development next year so where these sums are supposed to be raised from?” Janiashvili asks and presumes that government decided to crackdown on petty business that does not enjoy any lobby at government unlike big businesses.