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Almighty Kezerashvili

29.08.2011

Levan Martadze, “Banks and Finances”

In accordance to the Law on State Purchases, property of over 50 000 GEL shall not be purchased without tender. However, the Georgian Lottery Company can pay 3 million GEL without tender.

Magazine Banks and Finances has already written about interesting cooperation between the Georgian Post and Georgian Lottery Company GLC. The State registered the private property Georgian Lottery Company in a very strange situation.

Reportedly, the budgeted profit of the GLC within 10 years was 4.3 billion GEL. From the very beginning, when the company obtained exclusive right on lottery management, the tender requirements obliged the company to pay tax of more than 900 million GEL to the state budget within ten years. On August 9, 2011 70 % of the GCL was assigned to the state and the Georgian Post runs it now. In this case, we wonder who will implement the tender requirements.

Generally, it is very strange how the state got hold of such a huge private business. On the other side, nobody mentions the obligations of the company towards the state budget. It is clear that famous product of the GLC “Lotto” is not as popular as it was last year. Consequently, the Company faced problems with the budgeted profit. So, the GLC will hardly implement the assumed responsibility towards the state.

The state got hold of the business of the former defense minister and businessman Davit Kezerashvili in order to increase rentability of the Georgian Post. The question is the rentability of which business should have been increased with this operation.

In fact, the deal was acceptable for both parties if both businesses continue activities in future too. First of all, this deal demonstrates that Kezerashvili has interests in the Georgian Post too. Generally, whatever becomes target of Kezerashvili’s interest becomes his property too… so Georgian Post will also become part of his monopolist scheme.

We should recall another interesting fact – for uncertain reasons business interests of Kezerashvili are always ultimate for the government of Georgia. For example, draft-laws were adopted in favor of the lottery company. Furthermore, lately, exclusive rights were granted to the Georgian Lottery Company as a state entity.

In accordance to the Law of Georgia on State Purchases, a state institution cannot purchase materials and service of over 1 million GEL without international tender. However, the GLC was allowed to purchase the property of about 3 million GEL without tender. The resolution states that when purchasing the property, the procedures defined by the international organizations and states shall be applied.

According to the regulation, the Company shall purchase property according to the preliminarily worked out annual plan. Materials and service can be purchased through the negotiation with one person unless the presumed price of the property is no more than 3 million GEL. The purchase can be implemented in accordance to the Law on State Purchases via online tender and simplified online tender.

Another detail is interesting in this resolution of the government. “Georgian Lottery Company can purchase the materials and service of no more than 3 million GEL not only without international tender but through the negotiations with one person. Here, one more paragraph of the Law on State Purchases is neglected. In accordance to the law, generally, state institution cannot purchase property of more than 50 000 GEL without tender. However, the government’s resolution entitled the GLC to purchase the property without any tender through the negotiation of only with private person.

After all, if the Company intends to fairly purchase the property, why it needed the abovementioned privileges. Generally, much money can be earned from state purchases. Winning of various tenders by the businessmen close to the governmental officials is a usual fact. For example, the story about Kezerashvili and his company UniGroup.

UniGroup LLC provides the Fuel Company Lukoil with marketing and distribution service. UniGroup has won almost every state tender on fuel purchase announced recently. So, UniGroup sells the fuel imported by Lukoil. It has solid contracts with the ministries which waste much fuel. It is interesting, how the company without even a website, manages to win governmental tenders. And how it defeats other companies with its tender offers, when it does not import the fuel itself. They sell the fuel of other companies. But everything will get clear after we learn that Davit Kezerashvili is the owner of the UniGroup.

After the government passed the abovementioned resolution, Kezerashvili’s company, who is under official patronage of the state, obtained right to spend the state funds according to its own decision and the funds can reach even 3 million GEL each time (!). 

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