A Gentlemen’s Agreement without Gentlemen
11 June, 2015
A Gentlemen’s Agreement without Gentlemen
In Search of a Scapegoat

Trust counts the most in any relationship, but in business and politics it is a must. No partnership can work without trust between states or business partners - this is an unwritten code of behavior all over the globe. The terms of gentlemen’s agreement must be observed as accurately as those of official contracts.

Whether or not the IMF asked Ivanishvili to spare Kadagidze the responsibility for his alleged wrongdoings is still a matter of
speculation. The criminal responsibility of Kadagidze is also on the level of verbal suspicion. The only thing that is crystal clear is the fact that Georgian statesmen have lost their reputation in the eyes of the international community and investors alike.

It is an open secret that private information shared during one-on-one dialogues and the gentlemen’s agreements make the basis to important official decisions in future.
If this confidentiality is broken, this means other international partners and diplomats will never share any confidential information with the statesmen of such a country. Investors will keep away from a business climate in which top officials do not understand the importance of the moral code of verbal agreements.
This very shame came over Georgia on June 4, when ex-Prime Minister of Georgia, billionaire Bidzina Ivanishvili disclosed details of his gentlemen’s agreement with the International Monetary Fund’s high-ranking official.
According to Ivanishvili, when he held the post of Prime Minister, a representative of the IMF asked him in a private dialogue not to have Giorgi Kadagidze, Governor of the National Bank of Georgia, arrested. Kadagidze was allegedly involved in a criminal campaign against four banks, including the Cartu Bank, which is owned by Ivanishvili. After his conversation with the IMF representative, Ivanishvili agreed to rescind his claim filed to the Prosecutors’ Office on account of Cartu Bank case.
“The IMF knew that he [Kadagidze] had violated the law. They said they knew that he belonged in jail, but asked me to forgive him. I said I might forgive the private affair that made Javakhishvili [Deputy Minister of Infrastructure and the ex-head of Cartu Bank] extremely upset, but I explained to both the IMF official and Kadagidze that I could not prevent legal actions against him if he had committed a crime against the state,” Ivanishvili stated on June 4.
The IMF resident representative in Georgia did not respond to any calls that day. Next day he rebuffed Ivanishvili’s statement, saying that the IMF “has not taken, and cannot take a view on the issues related to justice and individuals’ relation with the law.”
“This is not our mandate,” the IMF statement reads.
There are speculations in Georgia that in 2006-2012 Kadagidze was involved in anti-banking activity that had deliberately led four banks to bankruptcy. It is largely believed that Kadagidze [who came to the NBG from the Prosecutors’ Office of Georgia] is a friend of the ex-General Prosecutor Zurab Adeishvili, who is wanted by the Georgian state at the moment. Many think that Kadagidze acted under his orders and exerted political pressure on banks that belonged to political rivals of the United National Movement party, which ruled Georgia from autumn of 2003 to autumn of 2012.

“Even as Prime Minister, Ivanishvili had no right to prevent the investigation, as he claims he did, regardless of such a conversation taking place or not”

The list of these four banks is as follows: Standard Bank, owned by the deceased tycoon Badri Patarkatsishvili, People’s Bank, Intellect Bank and Cartu Bank, which is owned by Ivanishvili himself. Allegedly, Kadagidze was involved in all four cases in various capacities: as the Head of the Financial Monitoring Service in 2007-2008, the Head of Financial Supervision Service of the NBG in 2008-2009, and as the Governor of the NBG since 2009.
As the previous owners of the Intellect Bank and Standard Bank say, under the previous government, these banks were deliberately led to bankruptcy and sold out. The People’s Bank stakeholder was forced to sell the controlling package for almost nothing. After Ivanishvili entered the political scene as an opposition member and founded the Georgian Dream party in 2011, a campaign against his Cartu Bank began. Due to legislative changes, the bank lost 150 million GEL and barely escaped bankruptcy.
During his pre-election campaign, Ivanishvili pledged to investigate all banking cases and call Kadagidze to account. Javakhishvili, now an ex-Governor of the NBG, was named as the candidate for Kadagidze’s post.
However, shortly after the power shift in autumn of 2012, when Ivanishvili’s Georgian Dream came into power and he took the Prime Minister’s office, he called Kadagizde “a very smart and talented guy who learns quickly”. Eventually, Kadagidze ended up keeping his post at the NBG. Javakhishvili, who threatened to put him and his team behind bars for all wrongdoings they had committed, fell silent.
Things took a wrong turn for Kadagidze in November of 2014, after Georgian national currency, the lari, started rapidly depreciating. Many economic analysts blamed Kadagidze for the inadequate monetary policy that led to lari losing 34 percent of its value in 8 months. However, neither the Georgian government nor the now former Prime Minister Ivanishvili dropped as much as a single word about Kadagidze’s fault back then.
Even by the end of January, Ivanishvili justified depreciation of the lari, calling it “a healthy behavior in line with the macroeconomic situation in the region”. However, in March Ivanishvili came out with a revelation that the national currency’s depreciation was completely the fault of NBG and Kadagidze’s inadequate monetary policy.
Thus, the smear campaign and the blame game against Kadagidze were launched. The government eagerly heaped the entire responsibility for the lari’s plummeting exchange rate onto him. They reminded the public that Kadagidze was an ally of the former government and has most likely sabotaged the currency. Javakhishvili once again reiterated that Kadagidze belonged in jail.
Kadagidze responded by saying that it was the government’s inadequate budgetary and economic policies that were behind the currency depreciation. He dismissed all accusations against the NBG as pure slander. International financial institutions, including the IMF and the EBRD, backed up the NBG, justified its policy and called on the government to cooperate.
Instead, Ivanishvili disclosed details of the alleged gentlemen’s agreement with the IMF that the IMF later dismissed. In its official statement, the IMF geotv.gereminds how important independence of the NBG is. It also reminds that Georgian authorities have repeatedly reaffirmed their commitment to NBG independence, receiving financial support in return.
“The authorities have reaffirmed their commitment to NBG independence repeatedly. This has allowed the Fund to support Georgia with economic assistance programs, and most recently through the Stand-By Arrangement launched in July 2014,” the IMF states.
This Stand-By Arrangement implies around 150 million USD, and a large part of this sum is already spent. Whether or not the IMF official asked Ivanishvili to spare Kadagidze the responsibility for his alleged wrongdoings is still a matter of speculation. The criminal responsibility of Kadagidze is also on the level of verbal suspicion. According to Irakli Shotadze, Deputy General Prosecutor, there is an ongoing investigation of all the four banks’ cases, including that of Cartu Bank. And if the investigation determines it necessary to interrogate Kadagidze, it will be done.
“If this deal between Ivanishvili and the IMF really took place, it cannot be considered as an agreement between two private persons. It is an interstate agreement, in fact, and once it is violated, there will be consequences,” Levan Alapishvili, a legal expert, told Georgian Journal. “I do not rule out the IMF asking the Georgian government to return the 150 million USD disbursed within the framework of the Stand-By Arrangement last July. Can our budget afford that, I wonder?”
Alapishvili also thinks that Shotadze’s statement has essentially saved Ivanishvili’s questionable adherence to law from scrutiny.
“If not for Shotadze’s statement regarding the banks’ case still being on, we might have gotten to probing Ivanishvili’s term as a PM for law violations. Even as Prime Minister, Ivanishvili had no right to prevent the investigation, as he claims he did, regardless of such a conversation taking place or not” he said.
Whatever Kadagidze’s fault is, he is nevertheless a scapegoat in the lari devaluation story, claims Soso Archvadze, an economic analyst.
“His monetary policy was indeed inadequate, but he alone could not have led lari into such a massive bout of depreciation. The government is obviously trying to shift blame to Kadagidze,” he said.
Despite many questions marks popping up after Ivanishvili’s disclosure, the only thing that is crystal clear is the fact that Georgian statesmen have lost their reputation in the eyes of the international community and investors alike.

Other Stories
International observers about the presidential election in Georgia
The presidential election took place on the 28th of October in Georgia.
First Ladies of Independent Georgia
The presidential election took place on the 28th of October in Georgia. It was the last election in which the president will be selected by popular vote.
Funny incidents on Election Day in Georgia
The presidential election took place on the 28th of October in Georgia.
Deadline for the second round of presidential elections in Georgia is December 2
Presidential elections were held on the 28th of October in Georgia. None of the candidates managed to get majority of votes, so the second round of elections is to be appointed.
The USA National Security Advisor John Bolton is in Georgia
National Security Advisor of the United States John Bolton visited Georgia today.
People are detained at the Cannabis Festival
Today, Georgian political movement Girchi holds an event in the Dedaena Park called the Cannabis Festival.
Top safest countries and Georgia is among them - new survey says
Georgia is among the safest countries in the world. This fact is substantiated by various surveys and researches.
Who is interested in the cultivation of cannabis in Georgia?
Several weeks ago the government announced about its initiative to legalize the cultivation of medical marijuana in Georgia.
Fight in Gori – head of administration uses a bin full of manure
There was an incident yesterday in Gori municipality, Georgia at the entrance of the municipality building.
2 Georgian detainees freed from the Tskhinvali prison
Georgian detainees Maia Otinashvili and Akaki Dotiashvili are freed from the Tskhinvali prison. They had been accused of illegally crossing a so-called the borderline into the occupied Tskhinvali region.
Georgia might provide Far East countries with armored vehicles
LEPL State Military Scientific-Technical Center "Delta" might provide several Far East countries with armored vehicles, - “Delta” has informed InterPressNews about it.
Who can be the next first lady of Georgia?
On the 28th of October, presidential elections will be held in Georgia. The last elections in October 2013 resulted in a victory for Giorgi Margvelashvili, a candidate of the Georgian Dream (the ruling party).
Another Georgian kidnapped at the occupational line, stays detained
Maia Otinashvili (a mother of three children) was detained in her own garden on the 19th of September. Eyewitnesses claim that she was kidnapped by armed people with masks.
Fight broke out in the Georgian TV show
Fight in the Georgian Show Archevani (a choice) broke out between the guests yesterday.
7 amendments that come in force today in Georgia
On the 1st of October, 7 new amendments come in force in Georgia.
Speaker of the parliament plays Knockin' on Heaven's Door
What do the politicians do when they have free time? It is an interesting issue in every country.
What are the new New Year decorations for Tbilisi
New Year decorations and its price in Tbilisi is always a matter of discussion in the capital.
Mamuka Bakhtadze gives a speech at the 73rd session of the UN General Assembly
Mamuka Bakhtadze, the prime minister of Georgia is attending the 73rd session of the UN General Assembly from the 24th of September.
Georgia will ban use, import and production of plastic bags
The Georgian government has decided to tighten rules regulating use of plastic bags in Georgia.
The parliament returns to Tbilisi
The Parliament of Georgia will continue working in Tbilisi, the capital of Georgia from January 2019. Currently, the building is located in Kutaisi (west Georgia).
Mamuka Bakhtadze is visiting the USA within the working visit
The Georgian PM Mamuka Bakhtadze Brought a wreath to the tomb of the Georgian military serviceman John Malkhaz Shalikashvili.
Use of plastic bags to be reduced from the 1st of October
Within the framework of the Green Economics and Environmental Protection Policy the Georgian government has approved new regulations
Four Russian Journalists have not been allowed to enter Georgia
Three members of the Russian delegation were not allowed to enter Georgia as this would have violated the Law on the Occupied Territories of Georgia.
Tbilisi sign may appear on the Funicular hill
Hollywood has become a source of inspiration for many people worldwide. A similar idea from a Tbilisi citizen sounds very clever and attractive.
Russia was at an undeclared war with Georgia for years - Matthew Bryza
I think anybody who has observed how Russia has been conducting its war in Ukraine should realize that Russia was at war with Georgia, an undeclared war for years,
Exchange Rates
GEL Exchange Rate
Other Stories
On 26 May, Jean-Claude Juncker, President of the European Commission, joined celebrations in the Georgian capital of Tbilisi
Violation of Georgia’s sovereignty and territorial integrity by Assad regime has been strictly criticized
Exactly one year ago, Georgia was granted visa-free travel with the European Union.
Georgia’s ex-president president Mikheil Saakashvili's supporters managed to free detained Mikheil Saakashvili in the center of Kiev.
The US Ambassador to Georgia Ian Kelly congratulates Georgia on Independence Day.
The regulations on the introduction of visa-free travel for citizens of Georgia have been officially signed in Brussels.
The entire Georgia is involved in Secret Santa game, which means that people are sending gifts to each other secretly
The Minister of Foreign Affairs of Georgia is taking part in NATO Ministerial underway in Brussels, Belgium.
A special squad has been mobilized at the 48th polling station in Marneuli, Kvemo Kartli region.
Two politicians in Georgia have come to blows during a live TV debate ahead of the country’s parliamentary elections, Euronews reports.
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30