WHO APPROPRIATES CITY BUDGET?
07 June, 2012
WHO APPROPRIATES CITY BUDGET?

‘Fate of GEL 288 million remitted to Mayor’s funds not clear’!

Georgian Young Lawyers’ Association (GYLA) studied financial activity of the funds established by Mayor’s Office of the Capital. Actually, the study is a basis for worry because GEL 288 million remitted from the Capital’s budget to funds gives raise to questions. Sulkhan Saladze, young lawyer, author of the study: ‘Tbilisi Mayor’s Office set up funds; then the Office gave certain territories or objects and additional funds from the Capital’s budget

to the fund for carrying out different projects. The funds, in their turn, alienated the given territories or objects to private companies that were chosen at their discretion and the selling price was also determined by them. In case Tbilisi Mayor’s Office desired, they could get more money through direct selling i.e. the city budget would be more replenished. The fund is obliged to present account of carried out work once a year but the Office doesn’t issue these documents and for this reason we have litigation. But at least we managed to learn that to the funds set up by Tbilisi authorities, especially to the one meant for rehabilitation and development of Old City, in 2005-2011 more than GEL 288 million were remitted from the Capital’s budget. Corruption deals come into picture.’
GYLA possesses Mayor’s Office’s correspondences sent to certain structures from which it becomes clear that the funds avoided the law on ‘Public purchases’. To be more exact, the Mayor’s Office itself enabled them to do so by remitting the money to the funds from the state budget as ‘payments’ for purchase. The property, the right of alienation of which was given to the fund, was created by the founder, i.e. by Tbilisi government’s finances. The funds chose companies at their discretion and placed orders.
Sulkhan Saladze: - The City government made a questionable deal with ‘Akhali Rike’ ltd. that was set up 1.5 month before with authorized capital of GEL 200. With the help of a fund the Mayor’s Office alienated 43.350 squire meters of Rike territory for a very cheap price. Later, with the help of the fund for rehabilitation and development of Old City it redeemed the said territory for a much higher price. As a result the City budget suffered losses. The difference of selling and buying made GEL 15.764.500(!). The ‘Akhali Rike’ ltd. was set up by GMC Holding ltd. and physical entity Nikoloz Makharashvili. The share of each side was set at 50-50% and the authorized capital – at GEL 200. In its turn, the  founder of ‘GMC Holding ltd. is ‘Newcom Association Ltd., registered on Virginia Islands of the Great Britain.
Extract from GYLA conclusion: ‘For ownership the fund was given the territory that was not yet alienated by the ministry. As a basis for giving real estate in ownership the Tbilisi government used the legislative norms that were not yet enforced (?!) Thus was the fund of Development of Tbilisi given a part of real estate, including Rike territory as well as part of real estate on Agmashenebeli Ave and Pushkin, Leselidze and Lomouri streets.

 

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