Black Marks on Mikheil Kareli’s Fund

Black Marks on Mikheil Kareli’s Fund
Shida Kartli Governor Creates New Substitute Funds

According to donations, Shida Kartli Governor, Mikheil Kareli’s fund is the largest of all the regional governors’ funds in Georgia. Its vastness is linked to the existence of another fund - the ‘Shida Kartli Development Fund’, founded by Mikheil Kareli’s close friend and member of the local ‘National Movement’ office, Davit Kekelishvili. For two years (2004-2005), information about the income and expenditure of these two funds’ remained secret. The Governor’s administration blocked any information about the funds.

The Shida Kartli Governor’s fund was founded as a legal entity on the 19th November 1997. The income of this fund hit 13,500GEL in 2002. In 2003 it increased to 23,000GEL. In 2004, during Mikheil Kareli’s governance, nearly 489,000GEL was deposited but the money’s origin is completely unknown and information about what it was spent on is even more of a mystery.

Information about the Sum Deposited in Mikheil Kareli Fund in 2005 Remains Secret.

Journalists and NGOs trying to uncover the public information regarding the fund had to assert their rights in court after officials tried to block them. The Shida Kartli Regional Administration however took no notice of the court verdicts. Nobody saw the need to obey the Gori and the Regional Court’s decisions. The Governor’s administration instead tries to prove their position - that the transfer and expenditure of money to and from the fund is a commercial secret - in the Supreme Court. Deputy Governor, Gela Naskidashvili, categorically states that the income and expenditure of the fund is a commercial secret. 

Since 2004, the Shida Kartli’s Governor’s fund has attracted our interest. Several businessmen from Gori pointed out in private conversations with journalists that they had transferred specific amounts of money to the fund. The businessmen were informed that this money was spent on the rehabilitation of Gori’s ‘Culture and Rest Park’.

We were informed that the owners of several businesses were made to pay quite a lot of money. Those businesses were: “Samegobro” LTD (a juice factory), “Ateni” LTD (a wine factory), and “Forte” LTD (a mill/industrial complex), “Gorkoni” LTD (an apple processing factory) and owners of other enterprises.  They state in private that they transferred 100,000GEL each to the fund. Information ascertained from the official sources however, showed that the aforementioned businessmen from Gori had only paid 50,000GEL each.

The rehabilitation of the Gori Culture and Rest Park cost 133,201GEL in 2004. This figure is confirmed by an audit report made by the Chamber of Control. The Chamber of Control audited the Governor’s Administration in March in 2005. We also obtained the 4th-11th October 2004 issue of a local newspaper, ‘Trialeti’. The details of Mikheil Kareli’s fund occupy a full page, including information about income and expenditure. It was stated in the newspaper that 166,266GEL was apportioned from the fund to spend on the Gori Culture and Rest Park.

If in October 2004, the Fund’s administrators gave information that the park restoration cost 166,266GEL, yet in March 2005 the attorney of the Chamber of Control proved that the restoration only cost 133,201GEL, the later figure shows a 33,000GEL difference to the previous one.

The amount spent on restoring the park, whether 133,201GEL or 166,266GEL is still in question. The attractions, that have been assembled in Gori Park were brought from Borjomi. These attractions had been previously written off as old and ready to throw away as scrap. In May 2005, when park season started, during his visit, President Saakashvili took a seat on one of the attractions. On the 1st June 2005, Gori dweller, 11-year-old Tamta Zedgenidze, miraculously survived after a chain on an attraction broke. After that incident, the Healthcare Ministry checked the health and safety conditions in the park.

There is also a newly-built sports pitch in the park. In 2004 two pitches were built in Gori; one of them is in the one in the park. A third pitch was also finished in 2005. In 2004, 57,600GEL from Governor’s fund was spent on building the two sports pitches. If we divide this amount in two, we can estimate that the sports pitch in the park, where on the 18th May 2005 the President played tennis, cost about 28,800GEL. The conclusion that can be drawn from this is that the restoration of the Gori Culture and Rest Park, including its write-off attractions and the sports pitches, cost either 162,001 or 195,066 GEL.

The financing of an Ossetian news program also attracted our interest. The project was financed by the American organization “IREX”. The Shida Kartli TV Company ‘Trialeti’s’ Ossetian news program turned out to be funded from the Governor Kareli’s fund in 2004 to the tune of 9,000GEL. The journalists, who prepared topics for this program, declared that they did not receive any wages from this grant or the fund. According to Tamar Okruashvili, former head of the TV Company “Trialeti” news service, the funds apportioned for the Ossetian news program did not reach the journalists.

Moreover, the journalists from “Trialeti” learned from us, that the 9,000GEL was apportioned from Governor Mikheil Kareli’s fund was for them. Deputy Governor Gela Naskidashvili advised us to ask “Trialeti” to produce the receipt, which would prove that the money was transferred from the Governor’s fund. We did what he told us, although the Director-General of the TV Company “Trialeti”, Joni Nanetashvili did not answer our questions and refused to give us any information.

It has been impossible to get any information from Governor Mikheil Kareli, which showed where he had spent first 489,000GEL in 2004 and supposedly spent even more money in 2005. As we could not get any information from the Regional Administration, we were able to draw some conclusions from the Chamber of Control’s audit report. Deputy Governor, Gela Naskidashvili says that the businessmen deposited money to the charity, but it transpired that they needed this ‘charity’ for themselves.

For example, included in the list of donors, is Rezo Abramishvili, former Director of “Gori-gazi”, whom the Shida Kartli Prosecutor’s Office has been trying to track down, since September 2005, for hiding 1millionGEL. Rezo Abramishvili told to us that bus stops in Gori were built by “Gori-Gazi”, which was on the edge of bankruptcy in 2004. Officially the bus stops cost 48,855GEL.

Another example, is Boria Gogichaishvili, director of “Sakartvelo” LTD (a Champaign factory) who, besides transferring money, made repairs to the road in his village up to his house. In 2005, the financial police locked the factory because of its financial liabilities.

A third example, is Zurab Tskrialashvili, director of “Samegobro” (a fruit concentrates factory), who transferred 50,000GEL to Mikheil Kareli’s fund – which, according to the Deputy Governor, was of course an act of charity. The same year, the Shida Kartli Prosecutor’s office found 98,000GEL in unpaid debts against the finances of “Samegobro”. 100,000GEL (2,000GEL more than his debts), was transferred by Tskrialashvili - but not into his company’s account. 50,000GEL of it entered Mikheil Kareli’s fund and another 50,000GEL was deposited in the Law Enforcement Development Fund. 200,000GEL was then transferred to the Governor’s fund from the Law Enforcement Development Fund, although, Mikheil Kareli had given them only 22,643GEL.

Mikheil Kareli did one more interesting thing. In 2005 he wrote to the Financial Minister of the time to apportion a sum for Samachablo’s development. The requested sum was nearly 500,000GEL. It must be pointed out that the European Commission has been working on Samachablo’s Development with a fund of 1.5millionEuros for two years now. Mikheil Kareli asked the Financial Minster for help building units which are already being repaired using European Commission funds.

Mikheil Kareli deceived not only the Financial Minister, but he also wrote to Chamber of Control, informing them that he had spent 49,950GEL on the Samachablo development program, and 19,970GEL on the rehabilitation of the Samachablo culture and education centers (2002 - January, 2005). It is strange that in April 2005 Mikheil Kareli also asked the Financial Minister for funding for the fields that were mentioned in his letter to Chamber of Control, although Kareli’s requests in this letter were not satisfied.

We found out that fines paid by people for illegally transporting scrap-iron and sums of money donated to the church, ended up in the Governor’s fund. A ‘charitable woman’ who ‘donated’ to the Governor’s fund, Inga Jabanashvili, paid in 400GEL to the fund (as documents show), but she cannot recall when she did it. Inga Jabanashvili does remember however that in 2004 her brother in law was arrested for dealing in scrap-iron and she paid a 400GEL fine for him at the bank. Why this money, paid to the state budget, was later found in the Governor’s fund, is unclear.

Koba Sauri, the owner of one low income shop in the Tsmindatskali district in Gori, remembers that Regional Administration officials came to him and declared that they were collecting money to build a church. Koba Sauri was pleased to give them 1000GEL. He confirmed that he had not donated this money to any fund. We showed him the information sent to the Chamber of Control by Mikheil Kareli, which proved that the aforementioned 1000GEL donation went into the Governor’s fund - not a tetri was spent on the church. Sauri had genuinely believed that his money had been spent on the church.

According to figures from the Chamber of Control, Governor Mikheil Kareli lists 91 ‘charitable’ people. It is impossible however to ascertain all the information about these people, as most of them are mentioned only by name and no other information is given, making it difficult to locate them.

Despite the Georgian President adopting laws abolishing all Governors’ funds, the Shida Kartli local government could not live without their funds. Since the abolition of Governor Mikheil Kareli’s fund, it has been discovered that several other funds still remain active in the region, including the “Shida Kartli Development Fund”, and the “Gori Development Fund”.

According to information received from the Ministry of Justice, the “Shida Kartli’s Development Fund” was also due to be abolished, although we have not been able to find any official documents about it yet.

It is important to note that on the 20th June 2005, the “Gori Regional Development Fund” was created on the orders of the Gori Regional Administration. It is a legal entity. On the 20th June, members of the Gori Regional Administration became responsible for the fund. Ramaz Tsatsiashvili, director of “Akhal Baghi” LTD (a park) was also made a board member of the “Gori Regional Development Fund” according to the orders.

The orders of the Administration, dated the 20th June, shows that the fund’s governing members were listed as different people when it was founded and these original founding members were later replaced by members of the Gori Administration.  We applied to Nukri Abalaki, Chief of the Gori State Property Management Department to find out their names.

Nukri Abalaki states: “I have heard about such a fund, but I do not have detailed information about it. I do not know the orders of the Regional Administration either. It is quite normal that I do not know the main parties that make up a private legal entity, the “Gori Regional Development Fund”.

We applied to lawyer Giorgi Gotsiridze to comment on the issue. Giorgi Gotsiridze states: “Even the fact that the Gori State Property and Privatization Department has no information about this private legal entity’s membership, is a crime. It is true that the government has no right to ban such an organization, but in the case that a legal entity joins the fund, it is represented as a part of the State Property Management Department; as we deal with apportioning the property. According to the Civil Code, the fund is established on the basis of property. Thus, the “Gori Region Development Fund” is initially an illegal structure. It is good that people are paying attention to this question, as there is information that small amounts of money are still being taken from small businessmen.”

It is interesting to hear the comments of Revaz Gogiashvili, Chief of the Judicial Department of the Gori Administration about the “Gori Regional Development Fund”.

Revaz Gogiashvili states: “This fund has just been established. It was established mainly on the basis of our property. With the help of this fund we paint the facades of the buildings in the city, set up traffic lights, etc. The donations are made by both legal entities and physical people. If a certain person refuses to name the origin of the donation, we should not be obliged to give either their names or the amount of their donations.”

City Councilor, Kote Tavzarashvili, declares that the city budget was cut in two by the Regional Administration in comparison to last year’s. According to him, “if the money, collected in the fund, would be spent via tender, then painting the facades, lighting and setting up traffic-lights would be more transparent.”

We have found out that irrigation pipes from the Gori region’s villages, Uphlistsikhe and Kvakhvreli, were used to set up traffic lights in Gori. Villagers state that it would have been better if they had used the tubes to bring gas to the villages.

All in all, many interesting details have been discovered about the fund. As is evident, despite the Governors’ funds having been abolished on the 1st January 2006, the local government has no reason to worry - other funds still exist. The situation proves that the Georgian Government has conducted a simple PR exercise in abolishing governors’ funds, as it seems quite a lot of funds still exist in Gori.

Saba Tsitsikashvili, Gori

Please see the list of ‘donors’: http://www.humanrights.ge/eng/files/list_eng.pdf