Draft Law Limits Offshore Ownership of Broadcasters
Civil Georgia, Tbilisi / 12 Nov.'10 / 15:40

The ruling party tabled a draft law, which, if approved, will limit offshore-registered firms’ ownership in broadcast media outlets in Georgia.

According to the proposed draft to the law on broadcasting, which was formally initiated by the ruling party lawmakers on November 12, a broadcast license holder cannot be a legal entity in which more than 10% of shares are owned directly or indirectly by offshore-registered entity or entities.

The provision, if approved, will have direct effect on Georgia’s most-watched television station Rustavi 2.

According to the Georgian National Communications Commission (GNCC) 70% of Rustavi 2 TV shares are owned by Degson Limited, which is registered in British Virgin Islands and no further information is about this firm is available. 30% of shares in Rustavi 2 TV are owned by Georgian Industrial Group (GIG), a conglomerate founded by lawmaker from the ruling party, Davit Bezhuashvili - a brother of Gela Bezhuashvili, chief of the Georgian intelligence service.

If the proposed draft is approved by the Parliament, Rustavi 2 TV will have to re-distribute its ownership shares so that to reduce Degson Limited’s shares to 10%.

Deadline for this procedure is set for June 1, 2011, according to the draft.

Lack of transparency of broadcast media ownership, in particular in respect of two largest broadcasters – Rustavi 2 and Imedi TV – has long been an issue of controversy in Georgia.

After years of reluctance to address the issue, the Georgian authorities announced on October 26 that draft law would be developed to make media ownership “fully transparent.”

Davit Bakradze, the parliamentary speaker, said on October 26, when announcing about the initiative, that financial transparency would also be addressed.

The draft law initiated on November 12, however, addresses only broadcast media ownership issue.

“With the proposed draft we are not aiming at additional amendments related to transparency of finances. But there will be consultations and there may be some novelties [introduced in the draft] as a result of these consultations. At this stage, our goal is to tackle one concrete issue related to transparency of ownership,” MP Chiora Taktakishvili, a deputy chairperson of parliamentary committee for legal affairs, said on November 12.

“Allowing 10% ownership for offshore-registered firms will be a loophole in the law; coupled with absence of financial transparency, [the proposal] will fail to address the problem properly as we still won’t be able to track financial channels, which will be available [for a broadcaster] from the offshore-registered firm,” legal expert, Vakhtang Khmaladze, told Civil.ge.

Khmaladze is a member of a group of media activists and legal experts, which developed more comprehensive package of media-related draft laws, which was formally submitted to the Parliament also on November 12.

The package of the group addresses not only ownership transparency issue, but also involves issues like easing access to public information – the problem over which many journalists are increasingly complaining recently.

The proposal also offers measures for reducing timeframe of lengthy practice of court deliberations into the cases when journalists are denied access to public information and waiving court fees for such cases. It also addresses broadcasters’ licensing issues, as well as problems related with conflict of interest in the broadcast media and clear-cut regulations for media advertisement.

The group is actively lobbying for its package of proposals meeting with various interest groups, as well as with ruling party and opposition lawmakers. On November 12 the group met with representatives of foreign diplomatic corps in Tbilisi.

Ruling party MP Pavle Kublashvili, who chairs parliamentary committee for legal affairs, said that it was possible to take into consideration those parts of the group's proposals, which deal only with media ownership transparency.

Parliamentary speaker, Davit Bakradze, said that the lawmakers should engage in consultations with media and legal experts before the ruling party-proposed draft law undergoes first reading discussions in the Parliament.

“Before discussing it with the first reading, I request you [referring to senior lawmakers] to meet with experts, local and international organizations to brief them about the planned amendments and to take into consideration recommendations that they may have,” Bakradze said.

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