Input Paper on Anti-Corrup­tion Envi­ron­ment in Georgia

Im Rahmen unseres Pro­jek­tes „Öst­li­che Part­ner­schaft Plus“ ver­öf­fent­li­chen wir eine erste Reihe von Input Papers zum Thema Korrup­ti­ons­be­kämp­fung in der Ukraine, Georgien und Moldau. Die Autoren aus der Region (Kateryna Ryzhenko, Ion Guzun, Sandro Kevkhish­vili) analy­sieren die Rolle der Euro­päi­schen Union bei der Unter­stüt­zung der Korrup­ti­ons­be­kämp­fung und formu­lieren Ihre Hand­lungs­emp­feh­lungen an die Entschei­dungs­träger in Berlin und Brüssel. 

By Alexander Kevkhishvili

Input Paper on Anti-Corrup­tion Envi­ron­ment in Georgia

Trans­pa­rency Inter­na­tional Georgia (TI Georgia)

(3 May 2021)

The current situation vis-à-vis corrup­tion in Georgia is charac­te­rized by impres­si­vely low levels of petty corrup­tion combined with near total impunity for high-level corruption.

After the Rose Revo­lu­tion in 2003, Georgia underwent a series of sweeping reforms that successfully curbed petty corrup­tion in the previously graft-plagued public admi­nis­tra­tion. They included a total overhaul of the tax system and the police force, creation of a one-stop-shop approach to the provision of govern­ment services, and the complete digi­ta­liza­tion and opening up of public procurement.

These reforms were hailed indi­vi­du­ally as mile­stones worldwide. More importantly, they succeeded: process digi­ta­liza­tion, auto­ma­tion and centra­liza­tion drama­ti­cally reduced oppor­tu­ni­ties for bribe-taking, bringing petty corrup­tion down to a minimum. This achie­ve­ment has been main­tained to this day – in annual surveys commis­sioned by TI Georgia over the past several years, the percen­tage of respond­ents reporting that they or a family member had been asked to pay a bribe for a public service has never exceeded 1%.^[1]

However, the last 18 years have not seen similarly ambitious reforms targeting high-level (so called ‘elite’) corrup­tion. As a result, both of the two admi­nis­tra­tions that have governed in this period have faced serious accu­sa­tions of creating an envi­ron­ment of impunity for high-level corruption.

Of parti­cular concern is that Georgia has seen a marked dete­rio­ra­tion of its anti-corrup­tion envi­ron­ment over the past several years, combined with a near total halt to efforts to carry out anti-corrup­tion reforms.^[2] This is evidenced by the following:

• There has been no signi­fi­cant impro­ve­ment in Georgia’s score in the Corrup­tion Percep­tions Index since 2012. In its 2020 assess­ment,^[3] Trans­pa­rency Inter­na­tional high­lighted “state capture and undue influence over key insti­tu­tions as the main chal­lenges to political integrity in Georgia”.
• Georgia has made little progress in imple­men­ting inter­na­tional anti-corrup­tion recom­men­da­tions and commit­ments over the past four years. The national action plans developed by the Georgian govern­ment to implement the anti-corrup­tion part of the Asso­cia­tion Agenda have focused largely on orga­ni­zing various types of training sessions, while failing to implement important aims, such as effective inves­ti­ga­tion of cases of high-level corrup­tion and adoption of a law on freedom of infor­ma­tion.^[4] In its latest report (2019),^[5] OECD ACN judged that Georgia had made no progress in imple­men­ting the majority of the 81 recom­men­da­tions. Considerable short­co­mings remain in terms of fulfilment of GRECO recom­men­da­tions as well.
• The National Anti-Corrup­tion Strategy repea­tedly fails to address the key challenge of high-level corrup­tion, despite being regularly updated.
• Key anti-corrup­tion mecha­nisms have yet to be imple­mented in practice: (1) Whistle-blower protec­tions exist only on paper; law enforce­ment agencies are effec­tively exempt from the relevant law.^[6] (2) There are no effective mecha­nisms to enforce conflict-of-interest and revolving-door provi­sions.^[7]
• Public percep­tions of the preva­lence of and response to high-level corrup­tion are very different from those relating to petty corrup­tion: 63% of survey respond­ents believe that abuse of power by public officials is common or very common, and 47% are of the opinion that corrup­tion cases involving high-ranking officials or ruling party asso­ciates are not inves­ti­gated properly (29% believe that they are).^[8]
• Recent years have seen incre­asing numbers of cases in which alle­ga­tions of high-level corrup­tion have failed to elicit any response from inves­ti­ga­tive bodies. As of March 2021, TI Georgia listed 50 un-inves­ti­gated high-profile cases of corrup­tion involving high-ranking public officials or persons asso­ciated with the party in power.^[9]
• The only signi­fi­cant new element to be intro­duced into the country’s anti-corrup­tion legis­la­tion since 2016 is the Law on Faci­li­ta­ting the Preven­tion of Money Laun­de­ring and the Financing of Terrorism (2019). Although a mechanism to monitor asset decla­ra­tions by public officials went into operation in 2017, the process does not include any steps aimed at iden­ti­fying conflicts of interest or illicit enrich­ment.^[10]

The basic expl­ana­tion for this slowdown in anti-corrup­tion reforms and the unwil­ling­ness to address high-level corrup­tion lies in the political system in Georgia, which has allowed each subse­quent govern­ment to concen­trate all political power in its own hands. However, this state of affairs is currently rendered even more alarming by clear indi­ca­tions for the existence of informal power struc­tures centring around the founder of the current ruling party, billionaire Bidzina Ivanish­vili, that operate in parallel to demo­cratic insti­tu­tions. After analysing all available evidence for an influence by informal power struc­tures on formal struc­tures, TI Georgia has concluded that Georgia is expe­ri­en­cing state capture, which is the ultimate form of corrup­tion for a demo­cratic context.^[11]

Bidzina Ivanish­vili is the founder of the current ruling party. The richest man in Georgia, he has an estimated worth of USD 5.5 billion,^[12] or about 30% of Georgia’s GDP,^[13] though he prefers to use proxies and offshore companies to keep this wealth out of the public eye.^[14] While Ivanishvili’s 2012–2013 term as prime minister was the only time he has ever held public office, no one, including the ruling party officials, has ever made any secret of the fact that he has continued to play an active role in making major decisions, such as dismissal and appoint­ment of prime ministers, since his resi­gna­tion. In fact, the highest positions in key bodies of the executive branch in Georgia are filled by persons who are loyal to Ivanish­vili or have worked for him in the past.^[15]

The two main agencies respon­sible for addres­sing corrup­tion in Georgia can serve as examples here. The current head of the State Security Service has held top jobs in a number of Ivanishvili’s companies in the past; his prede­cessor had been Bidzina Ivanishvili’s personal chief of security. The current Prose­cutor General also has ties to Ivanish­vili, and his prede­cessor had previously acted as Ivanishvili’s personal attorney. Under such circum­s­tances, it is impos­sible for existing anti-corrup­tion agencies to combat high-level corrup­tion free of political and undue influence.

While they realise that no single reform can address the sheer scale of the problem described above, TI Georgia and its partner orga­niza­tions in Georgia believe that the reform with the largest potential to bring at least some results in combating corrup­tion is the creation of an inde­pen­dent, multi-function anti-corrup­tion agency tasked speci­fi­cally with addres­sing high-level corrup­tion. A legis­la­tive initia­tive to establish such an agency, prepared by TI Georgia, was intro­duced in Parlia­ment in 2020.^[16] However, the convo­ca­tion of the Parlia­ment elected in the autumn of that same year refused to carry the proposal over for further consideration.

Recom­men­da­tions to the European Union

The EU continues to be the gravi­ta­tional centre for Georgian politics and society. Public opinion polls consis­t­ently show that the majority of the Georgian popu­la­tion remains in favour of closer ties with the EU. In its enga­ge­ment with Georgia therefore, the EU should consider intro­du­cing condi­tio­na­lity on key anti-corrup­tion reforms, such as the estab­lish­ment of an inde­pen­dent anti-corrup­tion agency and creation of a bene­fi­cial ownership registry, both of which are necessary precon­di­tions for any future efforts to combat high-level corrup­tion and state capture. The EU’s recent efforts proved decisive in helping to bring Georgia out of six months of political impasse, suggesting that more direct enga­ge­ment combined with stricter mecha­nisms, such as condi­tio­na­lity, would have a good chance of success without many drawbacks.

In addition to condi­tio­na­lity, without which painful anti-corrup­tion reforms are highly unlikely, the EU should consider employing the model of enga­ge­ment that it used during the visa libe­ra­liza­tion process to help improve the anti-corrup­tion envi­ron­ment in general. The success of the visa-regime libe­ra­liza­tion process proved that, given the prospect of a concrete benefit and a clear roadmap to attaining it, Georgia’s political elite is capable of fulfil­ling all requi­re­ments stipu­lated by the EU. Employing a similar approach in the area of anti-corrup­tion, i.e. deve­lo­ping more specific bench­marks and deadlines, as well as follow-up mecha­nisms to keep track of imple­men­ta­tion, should guarantee long-term success. Basing these bench­marks on the new best-practice-based metho­do­logy developed by OECD ACN should be considered.

^[1] Trans­pa­rency Inter­na­tional Georgia, Corrup­tion and Anti-Corrup­tion Policy in Georgia: 2016–2020, 21 October 2020, https://bit.ly/2QBINS4

^[2] Ibid.

^[3] Trans­pa­rency Inter­na­tional, Georgia’s Anti-corrup­tion Reforms Stall Amid Political Crisis and Alle­ga­tions of State Capture, 28 January 2021, https://bit.ly/3xE3SM0

^[4] Trans­pa­rency Inter­na­tional Georgia, Georgia’s Anti-Corrup­tion Policy Fails to Fulfill Asso­cia­tion Agreement and Asso­cia­tion Agenda Commit­ments, 11 June 2019, https://bit.ly/3vxnvnf

^[5] OECD-ACN, Georgia Progress Update, March 2019, https://bit.ly/3aQNoXs

^[6] Trans­pa­rency Inter­na­tional Georgia, The Dysfunc­tional Whist­le­b­lo­wing Mechanism in the Georgian Public Service, 25 June 2020, https://bit.ly/3xwV36Z

^[7] Trans­pa­rency Inter­na­tional Georgia, “Revolving door” Problem in Georgia: Short­co­mings of Legis­la­tion and Enforce­ment, 15 July 2019, https://bit.ly/3vtO2Ss

^[8] Trans­pa­rency Inter­na­tional Georgia, Corrup­tion in Georgia: Results of Public Opinion Survey, 10 June 2020, https://bit.ly/3vxogN7

^[9] Trans­pa­rency Inter­na­tional Georgia, Unin­ves­ti­gated Cases of Alleged High-Level Corrup­tion in Georgia – A Peri­odi­cally Updated List, 30 March 2021, https://bit.ly/333GeuA

^[10] Trans­pa­rency Inter­na­tional Georgia, The Georgian Asset Decla­ra­tion System is in Need of an Update, 29 September 2020, https://bit.ly/332nJ9H

^[11] Trans­pa­rency Inter­na­tional Georgia, Is Georgia a Captured State?, 11 December 2020, https://bit.ly/3gWYeit

^[12] Bloomberg, Bloomberg Billionaires Index – Bidzina Ivanish­vili, 9 December 2020, https://bit.ly/342wuS1

^[13] National Statis­tics Office of Georgia, https://www.geostat.ge/en

^[14] Trans­pa­rency Inter­na­tional Georgia, Offshore Companies and Other Business Connec­tions of Bidzina Ivanish­vili, 2 November 2018, https://bit.ly/36YsHXW

^[15] Trans­pa­rency Inter­na­tional Georgia, Ivanishvili’s Companies – the Forge for Govern­ment Officials, 1 May 2015, http://bit.do/ePTzY and Trans­pa­rency Inter­na­tional Georgia, Ivanishvili’s Companies – Public Officials’ Talent Pool Three Years Later, 8 October 2018, http://bit.ly/2sr9Fb7

^[16] Trans­pa­rency Inter­na­tional Georgia, A new legis­la­tive initia­tive, if supported, to greatly improve anti-corrup­tion capacity of Georgia, 1 September 2020, https://bit.ly/3eJukeH

Alexander Kevkhish­vili joined the Trans­pa­rency Inter­na­tional Georgia team in October 2019 as the senior analyst of the anti-corrup­tion team. Since May 2020, he holds the position of Project Manager of the same team. 

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