Law
15 MILLION FOR SWINDLERS?
03 October, 2013
15 MILLION FOR SWINDLERS?
State Prosecution accuses Tbilisi Mayor Gigi Ugulava and ex-Minister of Defense Davit Kezerashvili of appropriation of other people’s property and legalization of illegal income. Actually, this isn’t the only case when Ugulava-Kezerashvili friendly tandem used their position, influence and power for their own well-being. Monopoly on outdoor advertising is one of the doubtful schemes that is connected with these two ex- and acting high-ranks.
Today the exclusive right on outdoor advertising, till 2021, belongs to “Outdoor. Ge ltd”. This company
till the recent times was connected with Davit Kezerashvili’s name. Besides billboards and monitors, the company holds the right of placing ads on public transport, bridges for pedestrians and Tbilisi elevators. In case you want to place an ad banner on Tbilisi streets, you have to agree the project with the architectural service of Tbilisi but the right to do it must be obtained from Outdoor.Ge. The money for each square meter of ad construction erected by you must be transferred to the monopolist Outdoor.Ge. Besides Outdoor.Ge. a small part of advertising infrastructure belongs to several other small advertising companies but for placing the ads on their own advertising boards and other advertising means they are paying rent to the “boss” of outdoor advertising “Outdoor.Ge.” Giving exclusive rights to one company resulting in squeezing other rivals out of the market.
Jaba Samushia, Deputy Chairman of Tbilisi City Council: ‘On 6 February 2009, the Mayor’s Office submits an offer and takes away from the City Council the right to regulate outdoor ads. In a month, it announces an auction on the right to place outdoor ads and chooses two winners: Outdoor.Ge. and Magi Style Media. But something interesting happened here and it must be specially investigated – it’s indicated in the auction conditions that the minimum price for one square meter of ad is GEL 18. But in the license given to the companies by the auction commission of the Mayor’s Office the following day the sum for one square meter of an advertisement turned out to be GEL 6. So, it comes out that for this period of time the city budget has lost about GEL 15 million.
Diana Chachua, media analyst of Transparency International Georgia: After the 2012 Parliamentary elections both companies – Smod and Outdoor.Ge. officially went to Davit Iakobashvili’s possession. Kezerashvili’s several other companies turned up to be in Iakobashvili’s possession as well. Alexander Beridze, the Iakobashvili’s representative actually confirmed that the businessman owns Outdoor.Ge. but the change of owners isn’t yet reflected in the documents of Public Register.
The fact that the conditions of the auction to obtain the right of placing outdoor ads differ from those written in the minutes of the auction award could represent a violation of law.
The auction commission that gave the right for ad placement was at that time headed by Mamuka Akhvlediani and the agreements with the winner companies are endorsed by his signature. He couldn’t remember how GEL 18 was decreased to GEL 6 and to clarify this he called the Property Managing Department. Later, on the phone, he made this comment: “When the auction conditions were announced it was said that the minimum payment during the reporting period had to be GEL 18. By that time there was such a practice for the companies that they gave account to the Mayor’s Office once every three months. Accordingly, they had to pay GEL 18 once every three months. Afterwards an agreement was drawn envisaging payment every month and up till now advertising companies pay the Mayor’s Office GEL 6 per one square meter.”
Neither the auction declaration nor the authorization document says that the reporting period was three months and the companies had to pay GEL 6 per month. It is known that the ad space for which Outdoor.Ge. pays the Mayor’s Office GEL 6 is rented by them for $ 30-40.
Even experts are lost in the labyrinth
On 13 December 2011, Transparency International Georgia published the report on the ad market.
“The advertising sector of Georgia is characterized by lack of competitiveness and high concentration of the market because its big part is controlled by ex-Minister of Defense Davit Kezerashvili and the network of his close friends and relatives. When establishing inter-relations between inner players of the advertising sector, Transparency International Georgia found out that several off-shore companies registered in Panama and British Virgin Islands concealed names and cash flow of real owners of the company.
In the outdoor advertisement segment, Outdoor.Ge holds a dominant position. Officials of Tbilisi Mayor’s Office declared that all the licenses issued for outdoor ads that were gained by their owner as a result of noncompetitive process expired by the end of 2010. This enabled Outdoor.Ge and Smod to occupy dominant position in advertisement market; the latter is closely connected with Outdoor.Ge which operates a joint enterprise together with Tbilisi Mayor’s Office…
P.S. If something, we have the scandalous documents of the auction.

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