In the past years Georgia has been praised for its consistent improvement in the fight against endemic corruption after the Rose Revolution. Important reforms in government institutions, such as a complete overhaul in the police and measures to improve the business environment, are believed to have contributed to its achievements. Despite such positive developments, however, some things did not change. This is what the book Who Owned Georgia, published jointly by Transparency International Georgia and the journalist Paul Rimple, brings to light: how the close (and intransparent) relationship between government and business interests was maintained during the Saakashvili administration.
The book examines in detail the persons and companies who own large shares in the advertisement, broadcasting, telecommunications, privatisation, mining, oil import and distribution, and pharmaceutical sector during the period 2003-2012. According to their findings, the collapse of the Shevardnadze regime was indeed followed by a restructuring of main economic sectors in the country, but during this process the close connections of politicians in the new government were benefited from the re-privatisation efforts conducted by Saakashvili. As mentioned in the book, “The new government, its friends and their relatives became owners of newly emerging companies built on the ashes of the old” (p. 6).
According to Mr. Rimple, a strong motivation for the book was the fact that so little of the connections between company owners and government is publicly known in Georgia. That does not mean, however, that citizens are oblivious to such relationships – gossip on who owns what is widespread, and many people even make deliberate decisions to avoid certain services or products based on the rumors they hear. Due to the need for public and reliable information on this topic, Transparency International initiated a project to collect ownership information of main companies in the aforementioned sectors, which culminated in the publication.
One of the main obstacles for the research work was the fact that many of the registered owners are offshore shell companies, thus making it difficult to identify the true owners of some large companies in Georgia. This phenomenon was observed in many of the sectors under scrutiny. In the telecommunications sector, for instance, the research found that ownership of the two biggest internet providers in Georgia is quite obscure. The company Silknet, which holds 76% of broadband subscriptions in the country, was owned by a company registered in the British Virgin Islands. Another artifice used by Silknet to further conceal its owners was a change in its status from limited liability to joint stock company, whereby it was not obliged to reveal its shareholders. The other big internet company, Caucasus Online, has a similar story: its main owner is a company also registered in the British Virgin Islands, which in turn is partly owned by other two companies on which no ownership information is available.
This interesting initiative is an important contribution in identifying considerable transparency gaps in main business sectors in Georgia. According to the authors, the goal was to offer readers “a travel guide into the amorphous labyrinth of who owned Georgia” (p. 8), and this is done a very innovative way. This publication can also serve as a good example for initiatives in many other countries where the close and obscure links between business and politics pose serious corruption risks.
The picture featured above is from www.thehindubusinessline.in.