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Still about steel?

Monday, November 30
The Messenger has several times commented on the ongoing dispute between Thames Steel UK and the local management team in charge of Georgian Steel JSC. Here we republish an interview given by Thomas Blake to the Georgian Newspaper Cronika, followed by the comments of Thomas Blake and an article on the subject from The Wall Street Journal.

Here comes the interview which will be followed by the comment.

What is Thames Steel lying about and whose interests is it promoting?

"Georgia is a country of paradoxes. These paradoxes have no boundaries. We have had cases of private property being appropriated and disputes about such cases. We have seen the continuation of these disputes in the Georgian and international courts. We listen to mutual accusations and accuse the courts of not behaving objectively. However we are now seeing, for the first time, a mysterious company trying to take away property from another mysterious company and not being able to even identify itself.

Some time ago a hitherto completely unknown person called Thomas Blake introduced himself to the Georgian media, calling himself the Director of an obscure and undocumented company called Thames Steel. After presenting himself he said that somebody in Georgia was taking away his assets. These sentences are not sarcasm on our part. Blake cannot name the person or company who he is accusing and cannot even produce to journalists any documents to prove his allegations. Moreover he cannot comment about the origin of his company, who founded it and how much it is worth.

This interview makes it clear that we are dealing with a fraud. The person who is making the accusations is the one who is actually a fraudster. This person is Thomas Blake, who calls himself the Director of Thames Steel.

Q: Mr. Blake, who are the owners of Thames Steel?

A: A dispute over this is underway now. Proceeding from this there are matters which the lawyers of my firsm forbid me to comment on.

Q: Why are you keeping secret the names of the owners of the company?

A.: There is a court case underway right know. When our lawyers allow me to speak about this I promise to speak to you first.

Q: You have bought all the shares in this company for USD 30,000, it is said. Is this so?

A: Iíve heard this, newspapers have also written this, but I donít know where this information comes from. It is wrong information.

Q: How much did you buy the shares for? Give us reliable information.

A.: I have stated the amount, it is USD 70,000,000.

Q: But this is investment, isn't it?

A: This is the total amount. It includes investments as well as the sum paid for the shares. I can tell you only this. I donít know where 30,000 came from.

Q: My source has shown me the contract where this amount is stated....

A: USD 30,000? Show me the contract. It would be interesting to see.

Q: Can you show me the contract which proves that you paid USD 70,000,000?

A: I donít carry that contract in my pocket. It doesnít belong to me.

Q: Does your company have an official site?

A: Georgian Steel has a site.

Q: We understand that, but doesn't such a serious company as yours, with 70,000,000 of investment, have an official webpage?

A: It is not necessary. To clarify the structure of 'T.S.', it is a holding, it has certain functions, it holds all the assets. It is responsible for developing strategy, for control. It is a holding, it has no clients of its own, production is conducted by Georgian Steel. Georgian Steel has a site and we are the owners of Georgian Steel.

Q: We have found information about you on the internet, but very little. We have found only a commercial site which gives information about T.S. and various other companies...

A: Yes, it is a commercial site, there are advertisements there.

Q: It is said there that your company was established in 1953....

A: Itís a mistake, the company was founded in 2006.

Q: It also says that your capital assets are USD 100,000?

A: Itís a mistake. This is a site for traders. There are many advertisements there, some reliable, some not.

Q: If this is an advertising site isnít it more profitable to indicate your real capital assets on it? Is it not a negative advertisement otherwise?

A: Maybe somebody wanted to make out that the company has been in the market for not 3 but 50 years, and thatís why 1953 was mentioned.

Q: It is strange for a company which makes 70,000,000 investments to only have 100,000 in assets. The site also says that you employ only 5-10 people...

A: I donít know. I wouldnít have paid any attention to such sites.

Q: Where did that 70,000,000 investment go precisely?

A: This is a big asset, very complex. This is not one factory, which unfortunately doesnít work well. What is worst of all, during the last month they have started dismantling equipment and selling it as scrap metal.

Q: Who?

A: Management. We have a certain conflict with them and a court dispute. I came to Georgia in July but wasnít allowed to enter either the factory or office even once, despite the fact that we are the owners of this asset.

Q: With whom precisely are you in dispute?

A: We are in dispute with Georgian Steel. We are the 100 percent owners of this company, but we are having a court dispute with it. They donít obey us, they donít provide us information and in July they took out a court case against us. Iím sure that not only the management is involved, there are some other people around with an interest. What happened at the court hearings wouldnít have happened if very influential people had not interfered.

Q: You mean state officials?

A: Yes, including state officials.

Q: Can you justify this statement?

A: Suspicion is like rumour. I can say only this, that we have spoken with several officials and according to them such questions are dealt by the top officials.

Q: Who did you speak to precisely?

A: Different people, including businessmen and people working in the state structures. I wrote to the President and Prime Minister, but didnít receive an answer. One important person whom I canít name told me that according to his knowledge the Government will not return this asset to us.

Q: From whom did you buy the shares?

A: From Badri Patarkatsishvili's company Global Steel Holdings.

Q: How much did you pay? Why do you keep it confidential?

A: This was a deal between two private companies. We are talking about a total sum, put into different things. This is important, because about a week ago all our assets were taken away. It is important for us to quantify our minimal losses and investments, and we have lost even more. The State sold our assets at auction for a price of 120 million, which it set itself. We think that the assets are worth more.

Q: Do you think Joseph Kay is interested in your company? Have you communicated with him either directly or indirectly? Did he make an offer for your assets?

A: No. He was Chairman of the Supervisory Board of Georgian Steel. He left this post about a month and half ago, but I know he is still a member of the Tuji XXI Board. However we have no doubt that he is involved in all these matters.

Q: According to my information the widow of Badri Patarakatsishvili, Ina Gudavadze, is behind your company and that is why you are confronting Joseph Kayís company. Is this so?

A: This is one of the versions. If you possess such information you should not write this article now but afterwards when everything is cleared up. However these issues might not ever be clarified, because we do not even know who has our assets now. Nobody will tell us this officially.

Q: Is this refusal to say who has Georgian Steel not the same thing as you not saying who is behind you?

A: I have told you already that our lawyers think that is not appropriate to talk about such matters now.

Q: So, you confirm only that the assets were brought from Badri Patarkatsishvili?

A: As far as I know it was his company, however I do not know all the details.

Q: How could you buy such assets and pay a huge amount of money for them without knowing who is behind them?

A: This is not important. I am telling you what I know.

Q: But is it not strange that you pay a huge sum but do not know who to?

A: Many people ask me, was Badri behind this or not? I am telling you that I know the name of the company but I do not know its structure. As far as I know Badri had many other assets as well. I do not know.

Q: Maybe you can tell us where your investment went, for the development of an enterprise, purchasing new facilities or the reconstruction of a factory?

A: Big investment should have been made this year or next. We did not have any problems in the first half of 2008 but then the war started, which was a hard blow for the economy.

Q: Therefore you did not actually make this investment of 70 million dollars?

A: No, this is the total sum which was put in. I am telling you that this factory needed big investments of between 10-100 million. First the war came, then the economic crisis, then the steel price halved and maybe we will have to reconsider everything.

Q: Do you possess any document which says that you invested that amount of money?

A: We have documents for internal circulation within the company, which we cannot show to journalists.

Q: This all looks very suspicious. If your company and your lawyers had produced all the relevant information and not concealed the truth everything would have been clearer.

A: No - why? We have problems with Georgian Steel, we are the owners of that company but cannot manage it.

Q: But you do not know who the owners of your own company are, you have not shown us any documents, you will not tell us precisely how much you have invested and you do not specify where this money was spent.

A: All this is confidential and as I have told you, if I am allowed to speak about these details, you will be the first I will talk to.

Thomas Blake was interviewed by Khatia Orvelashvili

Thomas Blake's comments, given to The Messenger

"First of all I appreciate the opportunity to comment on the situation surrounding the recent expropriation of our assets. As I stated during our most recent press conference, according to information we obtained from the press our assets were transferred to a Georgian company called Kolkhis Business Corporation. The Kvemo Kartli Enforcement Bureau has only confirmed this in writing within recent days, over two weeks after the assets had actually been transferred.

I know the article which you have reprinted, and which claims there is a lack of information available about our company on the internet. In fact the main problem for this journalist seems to be the fact that Thames Steel has no website. This is true, simply because Thames Steel is a holding company for our Georgian steel assets, which do have a website (, although unfortunately we do not currently have control of this website, just as we do not have control of our companies in Georgia."

The Wall Street Journal article

Georgia, U.K. Officials Discuss Steel-Mill Ownership Dispute


U.K. officials are looking into claims by a British company that its steel mill in Georgia was effectively seized and sold off by that country's courts.

The issue involves a claim by Thomas Blake, a director at Thames Steel UK Ltd., that the mill was essentially given away by Georgia's courts. Mr. Blake's firm had bought the mill from Badri Patarkatsishvili, a Georgian tycoon whose death in February triggered a battle over his assets.

The dispute has gotten the attention of British Foreign Secretary David Miliband, who has taken it up with the Georgian government, a spokesman for the British Foreign and Commonwealth office said. On Thursday, a foreign-office minister met with Georgian Prime Minister Nika Gilauri during the latter's visit to London. Mr. Gilauri is in London for a conference at which he will urge British investors to do business in Georgia.

Mr. Blake says that his company, U.K.-registered Thames Steel UK, bought Energy & Industry Complex, a holding company for the mill operators, from Mr. Patarkatsishvili's Global Steel Holdings for $70 million in September 2007.

Mr. Patarkatsishvili moved to Britain in 2007 from Georgia claiming the government was trying to assassinate him, then unsuccessfully ran for president of Georgia in January 2008. The Georgian government has said that Mr. Patakatsishvili had planned a coup in their country.

Mr. Patarkatsishvili died of what a British coroner said was heart failure, and the ownership of the assets of a man once dubbed the wealthiest in Georgia has been contested since.

Mr. Blake, a British national, says that in September, Thames Steel UK discovered from a listing in a local newspaper that an enforcement process was under way to transfer the mill to a creditor called Kolkhis Business Corp. Having failed to find any records for the firm, Mr. Blake says he believes this company was created to make the transfer claim. In October, a Georgian court tried to auction Thames Steel's mill. No bids came through, and the mill was later passed to Kolkhis, Mr. Blake said.

Kolkhis's contact information couldn't be found and the company couldn't be reached to comment.

The Georgian Ministry of Economic Development didn't respond to emailed questions and government agency Invest in Georgia declined to comment.

"We are very much aware of the issues and we do continue to raise it at an official and ministerial level," a spokesman for the U.K. Foreign and Commonwealth Office said.

Mr. Gilauri met with British foreign-office minister Chris Bryant on Thursday. Mr. Bryant brought the issue of the mill up in the meeting and Mr. Gilauri said he was aware of the issue and noted the U.K.'s concern, a foreign office spokeswoman said.

Mr. Gilauri is in London to kick off a three-city international investment roadshow that will hit New York on Dec. 1 and Abu Dhabi two weeks later. The roadshow will present "Georgia's unique investment opportunities" and give executives a chance to "hear success stories from foreign investors," according to a Georgian government news release.

The U.K. was Georgia's most vocal ally among the large European nations when Georgia was invaded by Russia in 2008. Britain blamed Russia for the war, but stopped short of backing U.S. calls to kick the country out of forums such as the Group of Eight.

With Georgia's economy hit hard by the war and the global recession, the Georgians have been keen to attract investment. Before these events, Western-style overhauls had helped the economy more than double in five years as the country worked hard to create a business-friendly environment, including a lower corporate-tax rate. That helped to encourage foreign investment to rise to $2 billion in 2007 from $336 million in 2003. British oil major BP PLC is one of the country's largest foreign investors.

Write to Alistair MacDonald at

Printed in The Wall Street Journal, page A10

"I have also asked that you reprint an article published on Wednesday 25th November in the Wall Street Journal because the situation surrounding our business, and indeed the general business environment in Georgia, is of interest to a wider audience outside of Georgia. Our case has once again been raised by the UK Government which has expressed serious concerns at meetings with Prime Minister Gilauri in London last week. I have also had a chance to discuss our problems directly with Prime Minister Gilauri, and I am pleased at his willingness to meet with me back in Tbilisi to follow up on this. I hope that this and ongoing discussions in Government and diplomatic circles will change the attitude of the Georgian Government towards the continuing devastation of our assets in your country."