Mayor of Tbilisi Davit Narmania said that the loss of more than 10 million GEL from the capital city’s budget was the result of a corrupt deal between former municipal authorities and a local commercial bank.
Accusations levied at former city leaders
By Tatia Megeneishvili
Monday, September 15
Narmania stated that in 2013, former city officials allegedly engaged in a corrupt deal with Tbilisi-based Liberty Bank when they amended a contract the Tbilisi Mayor’s Office signed with the bank in 2010. The mayor said the obtained documents will be sent to investigation bodies for further analysis.
According to Narmania, Liberty Bank was chosen among the other financial institutions due to its high interest rates, which is 16.5% for the national currency, but as the mayor said, the contract was amended in 2010 and according to the new contract, these rates would be in force only in case the balance of the municipal funds exceeded GEL 40 million. This balance is always more than 40 million, and the interest rate added to the balance was only 4%. Consequently, the interest rates were reduced for dollar and EURO accounts as well.
Narmania said changes to the contract looked like a "corrupt deal” that stemmed from the private interests of former authorities.
The Mayor’s Office’s former head of the Department of Finance and Budget Davit Alavidze, the person who signed the contract with Liberty Bank, said that the mayor’s accusation was irresponsible and incompetent, and added that his dignity and business reputation, as well as the banking sector’s reputation, had been abused and Namania should apologize.
Alavidze said the previous contact’s term was over and a new contract needed to be signed in 2013.
"Interest rates in the banking sector were significantly reduced in this period. Thus Liberty Bank did not want to continue its contract with the Mayor’s Office with the same terms and conditions,” stated Alavadze.
Alavidze claimed that other commercial banks offered interest rates at 8% and after long-term negotiations, the contract was signed with Liberty Bank again, as it still had the best conditions – 16 percent for funds up to 40 million GEL and four percent for funds higher than this amount.
Liberty Bank also denied Mayor’s Narmania’s accusations. It is worth to remember that one of current bosses of Liberty Bank Lado Gurgenidze was Georgia’s Prime Minister during the UNM governance.
The bank stated that the Mayor’s Office deposited more money than anticipated into its account and consequently the deal was no longer profitable for the commercial bank.
The bank said it decided to terminate the contract and notified the Mayor’s Office about its decision in a written message sent to Tbilisi City Hall in 2013.
Liberty Bank said it would allow the Mayor’s Office to make this letter public in order to clear up all misunderstanding.
The bank said once the contract had been terminated, the Mayor’s Office looked at investing with other banks, but returned to Liberty Bank as "it still had the best conditions in comparison to other commercial banks”, the statement reads.