Prosecutor’s office said one former and four serving officials of the Ministry of Defense and general staff of the armed forces were arrested on charges of misspending GEL 4.1 million in what the prosecution claims was a sham tender.

MoD said in a statement released after this announcement by the prosecutor’s office that procurement process by the ministry is carried out “in full compliance of the Georgian legislation.”

Among those arrested are former head of MoD’s procurements department, who held the post in July, 2013-January, 2014, and two serving officials from the same department, as well as head of the communications and IT department of general staff of the armed forces and an official from the same department.

The prosecutor’s office said that detainees are accused of arranging sham tender in 2013 on laying fiber optic cable and procuring networking equipment.

The process, prosecution claims, was arranged in a way “to give advantage” to country’s one of the largest telecommunications operator Silknet, which was awarded with GEL 6.7 million contract, while the “actual market price” of services to be provided stood at GEL 2.6 million.

“Investigation is ongoing to reveal other officials of the Ministry of Defense, who were partaking in this crime,” prosecutor’s office said.

In response the Ministry of Defense released a written statement saying: “Procurements department of the Ministry of Defense carries out procurement process in full compliance of the Georgian legislation. Numerous steps have been undertaken in the ministry to make procurement process maximally transparent.”

“Representatives of the non-governmental organizations attend tender commission meetings as observers. The Ministry of Defense is part of NATO’s Building Integrity Programme. In 2013 experts from [NATO’s] North Atlantic Council gave positive assessment to anti-corruption reforms carried out by the Ministry of Defense and asked to share successful experience with other NATO partner countries,” MoD said.

“Even in case of covert procurement, even thought the MoD has the right to negotiate with a single company, examination of pricing is still being carried out. That was the case with fiber optic tender too,” the MoD said. “This particular procurement is classified as secret… We offer to declassify this procurement in order to provide transparency to the process. MoD is interested in thorough investigation and expresses full readiness to continue intensive cooperation with all the stakeholders.”

Defense Minister Irakli Alasania is in a foreign trip and is not expected to be back in Georgia till early November, according to the Ministry of Defense. He met his French counterpart in Paris on October 27 and after Paris, according to MoD, he plans trip to Germany. Chief of General Staff of the Georgian Armed Forces, Maj. Gen. Vakhtang Kapanadze is now paying a three-day visit to Estonia.

Silknet said in a statement that it acted in “full compliance” with legislation and terms of the tender announced by the MoD. 

When in early May, 2013 several officials from the Agriculture Ministry were arrested on charges of misspending of public funds through mishandled tender, then agriculture minister Davit Kirvalidze resigned. But nine months later, misspending charges in this highly controversial case were dropped from the ministry officials.