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“Crime and Punishment”: Second wave of fines

By Ernest Petrosyan
Monday, August 13
The Georgian State Audit Agency continues to play a zero-sum game against Georgian Dream members and supporters, launching another wave of multimillion lari fines. After a week of investigating the accounts of Georgian Dream leader Bidzina Ivanishvili and the former Georgian footballer who is now the Georgian Dream’s majoritarian, Tbilisi City Court imposed a GEL 20.2 million (USD 12.3) fine on Ivanishvili and GEL 16, 944 millions on Kaladze whilst seizing the property and businesses of the latter.

Now the State Audit Service assumes that the GEL 5.5 million, which the Georgian Dream leader withdrew from his bank account in cash this year, could have been used illegally for his and the Georgian Dream coalition’s political activities. According to the audit service, such reasonable suspicion was triggered by Ivanishvili's refusal to reveal spending details of withdrawn cash and by the fact that the withdrawal of the cash coincided with an increase in the number of illegal donations to the parties within Ivanishvili's coalition.

The court upheld the “reasonably suspicious” arguments of the SAA, considering suspicious only GEL 4.4 million and imposing GEL 20.2 million fine on Ivanishvili. The amount of the fine, GEL 20.2 million, was calculated under the provision of the law, which says that the financial penalty should be five-times the sum in question

Kaladze’s case is also very similar. A few weeks ago, the SAA seized Kaladze’s accounts due to the cash withdrawals of “exaggerated sums” requiring Kaladze to provide financial proof of the expenses of the withdrawn money. The SAA claimed that Kaladze refused to provide the documented information regarding the spending of the withdrawn cash, which triggered “reasonable suspicion” that the cash was used for political activities in violation of party funding rules. The SAO said that it had the right to request from Kaladze information about spending, as the ex-football player now has declared his electoral goals.

Kaladze, however, refuses to pay the “politically motivated” fine. “I am not going to pay this fine, because I have not done anything illegal,” Kaladze told Maestro TV.

Kaladze’s lawyer argued during the court hearing that there was no legal basis for the SAA to demand from Kaladze to provide records of his spending or to demand the return of the cash back to his bank account.

According to Kaladze’s attorney, nonetheless Kaladze had declared his intention to run for a majoritarian MP seat in his native Samtredia single-mandate constituency, he was not yet formally registered as an MP candidate with the Central Election Commission. His lawyer also said that out of the GEL 3.33 million, GEL 214,000 was withdrawn in cash by Kaladze for his personal use and the rest was given by the ex-footballer to his father, Karlo Kaladze, as a gift.

The lawyer also claimed that the demand to return the withdrawn sum was ridiculous as at the time, Kaladze’s bank accounts had already been frozen by the authorities and he could not have done it even if he wanted.

The financial punishment over the recent week also concerned 16 physical entities who decided to donate funds to the Georgian Dream. The SAA claimed that those individuals failed to justify the legitimacy of the contributed funds.

Fines vary from minimum GEL 6,000 to GEL 166,720 depending on the amount of the donations, which the court and SAO deemed as illegal. Imposed fines are five times the amount of each donation.

One of the punished was the President of Cartu Bank Nodar Javakhishvili.

In July, when the government of Georgia appointed compulsory management of Cartu Bank, the state-appointed management dismissed Javakhishvili from his office and paid him compensation for this in amount of 20 000 GEL. In about two weeks, when Mr. Ivanishvili, the alleged beneficial owner of Cartu Bank and the alleged offender, paid a fine in the amount of GEL 80 million in June, the state removed state control over the bank and the earlier management was restored.

As a result, Javakhishvili, who had received 20 000 GEL for being dismissed was re-appointed. Javakhishvili decided to contribute 17 000 GEL to the political party Georgian Dream. In such situations, the State Audit Service decided that Mr. Javakhishvili failed to provide evidence – from which source he had obtained the income which he later contributed to the political party.

Almost the same has happened with regard to the other “offenders” as well. The court considered the arguments provided by the accused contributors as invalid. In addition, the court failed to allocate enough time for the defenders to prepare their position and to obtain evidence – the notice on litigation was served in the evening of August 09 when the hearing was appointed for 10 AM of August 10. The court substantiated its position upon referring to the fact that those persons had been interrogated as WITNESSES on August 06 and “they had to understand that they would be recognized as administrative offenders and promptly start preparation of their position”. The total amount of fines imposed reaches several hundreds of thousands of USD.

The resolution of the Court of First Instance has already been appealed to by all of the contributors within 48 hours upon declaring the resolution. Tbilisi Appeal Court has 48 hours to decide the case. The attorneys of the defenders do not hope that the Appeal Court will overrule the resolution of the lower Court.

This is already the second multimillion lari fine imposed against Ivanishvili over the recent two months. In June, Ivanishvili was assessed millions of financial penalty, which he initialy refused to pay. Later in an effort to contribute to the relief efforts of the regions suffering from the recent natural disaster, he did pay the sum. This step was irritating for ruling party officials as it was efficiently used as a PR campaign in favor of Ivanishvili.