Management Service, one of the companies affiliated with leader of opposition coalition Georgian Dream, Bidzina Ivanishvili, has been fined by the state audit agency with GEL 4.76 million (up to USD 3 million) for violating law on political party funding, Ivanishvili’s lawyers and the state audit agency said on May 15.
The state audit agency, Chamber of Control, which is in charge of monitoring political finances, said that services, involving renting of office spaces for the Georgian Dream coalition and renovation of those office, provided by the company in fact constituted to donation. The Georgian legislation bans corporate donations to political parties.
"Dealings [of the Management Service with the Georgian Dream] were not profit-oriented and hence were not in line with the company's entrepreneurial purposes," the Chamber of Control said in the statement.
Ivanishvili’s lawyers said at a news conference that Management Service was acting as an intermediary for several political parties united in the Georgian Dream coalition for renting offices across the country.
The company has rented office spaces at 60 locations in Georgia, which were then re-rented from the Management Service by the Georgian Dream.
One of Ivanishvili’s lawyers, Alexander Baramidze, said that the state audit agency fined the company for allegedly providing the Georgian Dream services either free of charge or under discount prices. He said that “minor renovation” works carried out by the company in several office spaces were considered by the state audit agency as such services.
The Chamber of Control said it had estimated that the renovation works carried out by the Management Service in the Georgian Dream's offices was worth at least GEL 476,619. The estimation was made, the Chamber of Control said, based on minimal market prices.
The state audit agency imposed on the Management Service financial penalty ten times the amount of the illegal donation - that is estimated total cost of renovation works, which the agency said, was carried out by the company free of charge for the Georgian Dream.
Ivanishvili's lawyers said that the Chamber of Control’s decision was “illegal” and “groundless” and lawyers would appeal against the fine in the Tbilisi City Court.
Baramidze, however, said that based on his past experience with similar cases he was sure that the Tbilisi City Court, as well as courts of higher instance would uphold the state audit agency’s decision.
“The Management Service will not be able to pay this fine… The amount of fine exceeds the company’s total assets, which means that after the decision on fine goes into force the Management Service will go bankrupt,” lawyer Alexander Baramidze said.
Eka Beselia, another lawyer for Ivanishvili, said that possible bankruptcy of the Management Service would create problems for the Georgian Dream coalition, because such a scenario might leave the opposition coalition without its 60 offices, which were rented by the Georgian Dream via this company.
“By hitting the Management Service, the Chamber of Control hits a blow to the Georgian Dream. The major reason behind this fine is to cause bankruptcy of the Management Service, which may lead to cessation of renting contracts leaving the Georgian Dream without offices,” Beselia said.
According to the Management Service its operations involve real estate, as well as management of a dolphinarium in Batumi and an amusement park in Kobuleti, both in Adjara Autonomous Republic.
This recent fine brings total financial penalties imposed on Ivanishvili or entities and individuals affiliated with the billionaire for alleged violation of party funding regulations to GEL 11.38 million (about USD 7 million).