Rebuilding an Icon: Mtatsminda Funicular Station

Investor.A MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE IN GEORGIA geISSUE 34 AUG.-SEP. 2013

Obstacles for Tourism Issue: Education Challenge Facing Hospitality Industry

Agriculture and the Agribusiness Sector: Problems and the Need for Change

A Magician in the Kitchen

Rebuilding an Icon: Mtatsminda Funicular Station

Investor.ge

AUGUST-SEPTEMBER 2013 3 Investor.ge Investor.ge CONTENT

AmCham Executive Director 6 Investment in Brief 25 Education Challenge Facing Amy Denman A brief synopsis of new investments Hospitality Industry and business news. Georgians’ love of guests and Editor in Chief hospitality has failed to cross over Molly Corso 8 Finance Minister Nodar from culture at home to practice in Khaduri: Georgian Securities business. Copy Editor Market in “Embryonic” Stage Alexander Melin An interview with Minister Nodar 28 The Travel Advisory Khaduri about the government’s Conundrum Marketing & Promotion plans to recharge the local stock Georgia is a gem for tourists, but Sophia Chakvetadze market. foreign embassy travel advisories paint a less than tempting picture. Promotional Design Investor.ge looks at why, and what Levan Baratashvili 10 TI Georgia: Georgia’s Procurement System impact it is having on tourism. Magazine Design and Layout Transparent but Loopholes Giorgi Megrelishvili Remain 30 Shopping for Souveniers Transparency International Why is it so hard to spend money Writers published a report on Georgia’s on souvenirs outside of Tbilisi? Emil Avdaliani, Helene Bedwell, Avtandil procurement system in June. Chedia, Molly Corso, Maia Edilashvili, 32 Independence of the Judiciary Alexander Melin, Nino Patsuria 13 ISET: Agriculture and the in Georgia: Trends and Agribusiness Sector Challenges Photographs A report by ISET about the BGI’s Otar Kakhidze looks at Helene Bedwell, Molly Corso, AmCham agriculture sector’s problems and changes and challenges for the Picnic photographers the need for change. judiciary in an editorial. Special thanks to the AmCham Editorial Board and the AmCham staff, as well 16 Reforming the Civil Service 34 Siemens Brothers in Georgia as to BGI Legal and ISET for their Investor.ge spoke with Irakli Historian Emil Avdaliani provides submissions. Kotetishvili, the head of the Civil another fascinating look at Service Bureau. Georgia’s business history.

17 U.S.-Georgia COmmerical 36 A Magician in the Kitchen Diplomacy Training to Helene Bedwell interviews Black Strengthen Georgia’s Lion (Shavi Lomi)’s Meriko © The American Chamber of Diplomatic Corps’ Expertise Gubeladze about her take on Commerce in Georgia, 2011 traditional Georgian cuisine. All rights reserved. No part of this magazine 20 Five Questions with Vano may be re-printed, or reproduced or utilized Sturua, founding partner of 38 My City, Tbilisi: Rebuilding in any form or by electronic, mechanical or Villa Dzara Capital Tbilisi’s Icon other means now known or hereafter invented, Investor.ge speaks with Vano For the first article in a new including photocopying and recording, or in any Sturua of VD Capital, a chain of Investor.ge series about Tbilisi, information storage or retrieval system without eight restaurant brands. permission. GMT Group’s Irakli Baidashvili speaks about the developers’ The opinions expressed in this magazine do not reﬂ ect the opinion of the American Chamber of 24 Radisson Plans Ten Hotels in newest historic property. Commerce in Georgia nor its Board Members or Georgia Over Next Five Years staff, unless otherwise stated. AmCham Georgia Investor.ge interviewed Tom neither endorses, nor can be held liable for any Flanagan, Area Vice President for eventuality arising from the use of any product or Eastern Europe for the Carlson service advertised within the pages of this issue. Rezidor Hotel Group. Investor.ge is printed by CEZANNE ...... 44 AmCham Georgia 36a Lado Asatiani Street, 3rd ﬂ oor AmCham Georgia Patron Members: Tel: 2 22-69-07 [email protected] [email protected], www.amcham.ge www.investor.ge

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AVTANDIL CHEDIA highway, which will connect Tbilisi and Investment the Black Sea, easing transit and trans- Georgia, EU Conclude DCFTA portation costs. in Brief Talks On July 22, the European Commis- Number One Investor in sion announced that the European Union Georgia: Japan and Georgia have completed talks on a Geostat reported, based on prelimi- Deep and Comprehensive Free Trade nary data, that in the fi rst quarter of 2013, Agreement (DCFTA). The agreement, Japan was the country’s largest foreign part of Georgia’s Association Agreement direct investor, with $46.3 million. Com- with Brussels, will be signed as soon as ing in second was Azerbaijan, with $38.4 “internal EU and Georgia procedures” million, followed by the Netherlands are completed, the commission reported. with $34.9 million. Specialists have estimated that the DCFTA could increase exports to the IFC Extends $4 Million Credit EU by 12 percent, and imports by 7.5 Line to Finca percent. The International Finance Corpora- tion (IFC) has opened a $ 4 million credit Three Year EU/UN Project to line to microfi nance organization Fincato Aid Ministry of Agriculture spend on loans to small- and medium- The European Union and the United sized businesses. Nations Food and Agriculture Organi- zation (FAO) have announced a new Millennium Challenge three-year project to provide technical Corporation Approved Second assistance to the Ministry of Agriculture. Compact to Georgia The project, and 2 million euros in aid, The Georgian Ministry of Education will focus on improving the competitive- and Science reported on June 19 that the ness of the agricultural sector through the board of the US Millennium Challenge development of effective policies. Corporation approved a fi ve-year compact with Georgia worth $140 million. Georgian American Alloys The program includes three projects: Invests in Mines improvement of general education qual- Over the course of 2013, Georgian ity, development of production skills and American Alloys has invested more than labor force, and STEM (Science, Tech- 10 million lari in its mining holdings, nology, Engineering and Mathematics) including 600,000 lari spent to improve higher education. social conditions for miners. The bulk of the investment was for new equipment. Radisson Plans New Park Inn Hotel in Tbilisi World Bank Allocates Another Carlson Rezidor, the parent company $75 Million for East-West of Radisson Hotels, announced plans for Highway a new Radisson Park Inn Hotel in Tbilsi Georgia and the World Bank signed on July 9. the fourth fi nancing agreement for the The 200-room hotel is scheduled to East-West Highway project in June. open mid-2015 on Rustaveli Avenue. The World Bank has committed a total Radisson currently operates two hotels of $292 million to construct the modern in Georgia, in Tbilisi and Batumi.

6 AUGUST-SEPTEMBER 2013 Ernst & Young will now be known as... Investor.ge

Finance Minister person goes groping in the darkness, ment: our enterprises go to the European and when a person enters a lighted room market to trade,” he said. Nodar Khaduri: where they see where investment oppor- “We must create conditions here to tunities are, what is the value of this or develop the securities market … We Georgian that enterprise,” he said. should encourage our neighbors, Arme- Securities Market in “The price of and demand for a nian and Azeri entrepreneurs, to trade on company’s shares provides opportunities our stock exchange. The most important “Embryonic” Stage to analyze the market and invest in this thing is to create proper institutions that country. We might attract many more we lack at the moment.” The Georgian Stock Market has investments…” Khaduri added that creating a pension failed to ignite investor’ interests in the past, but Finance Minister Khaduri, appointed to the Ministry of market will play an important role in Nodar Khaduri is betting that new Finance (MOF) last October, is not the the process. The Ministry, together with reforms could bolster investor fi rst member of the cabinet to see poten- parliament, the Economy Ministry, and confidence and create new tial in the country’s sluggish securities the National Bank of Georgia are already opportunities for portfolio investors. market. Trade skidded to a near standstill working on creating the new legislation after a 2006 effort to reform the Georgian to support their efforts. Stock Exchange; today just state entities He stressed that creating better insti- and the Bank of Georgia are listed. tutions for the securities market and more But mere reform, noted the minister, effective legislation – as well as learning is not enough: the new law has to encour- from stock market success stories like age private companies to look locally for Poland and the Baltic States – will be the opportunities they are currently fi nd- crucial to rebooting the country’s securi- ing abroad. To date, the Bank of Georgia ties market. NINO PATSURIA has already been listed on the London “[Over the past 20 years] we lost an Stock Exchange and TBC Bank is eyeing important institution that might attract or Finance Minister Nodar an initial public offering on the Warsaw very important investments and lay the Khaduri, the Georgian Stock Stock Exchange in 2014. groundwork for economic development FExchange is something akin to a Georgian companies who tried to of the country,” he said. fl ashlight for investors: when it works, it raise capital on the Georgian Stock “There are a lot of joint stock com- shines a light on all the country’s oppor- Market were met with silence in the past. panies … operating in Georgia but tunities. When it doesn’t, potential inter- Now, stressed Khaduri, the government nobody trades on the GSE … therefore, est in the country’s enterprises and joint needs to create a law that will attract in- we should properly create institutions stock companies fades into darkness. vestment and bring portfolio investment. to keep this mechanism going perma- “[It is like the] difference when a “We face a serious problem at the mo- nently.”

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MAIA EDILASHVILI system: simplifi ed electronic tenders – a TI Georgia: procedure with shorter deadlines that can Georgia’s eorgia fundamentally over- be used for smaller purchases of no more Procurement hauled its government tender than 200,000 lari – and electronic ten- Gsystem in late 2010 when it ders, which are used for larger procure- System introduced centralized and comprehen- ments. Tenders and awarded contracts sive electronic procurement system. under both types of procurements are Transparent Regularly procured government tenders publicly available for registered users are announced on one central website and guest users. but Loopholes (procurement.gov.ge) and the whole In the report, TI Georgia found that Remain process, starting from the date when the a key strength of the system is the of- tender is announced until the contract is fi cial electronic procurement website awarded, is publicly visible. which is very innovative and transparent “Georgia has a very innovative elec- and, thanks to increased effi ciency, has Transparency International (TI) tronic procurement system and most “severely” reduced red tape and wasted published a report on Georgia’s government contracts are tendered in time. According to offi cial fi gures, to Procurement System in June. Investor.ge spoke with Gerard a competitive and transparent way on date more than 400 million lari have de Boer, an author of the a centralized website, tenders.procure- been saved since the introduction of the report, about TI’s findings and ment.gov.ge,” Gerard de Boer, an author platform in 2010. Another important recommendations – and the of the report, said. advantage is that the platform allows a organization’s new online platform “There are only few countries at this useful appeal mechanism: any person to track tenders and procurements, point that have switched to fully elec- can fi le electronic complaints that are www.tendermonitor.ge. tronic bidding.” reviewed by a Dispute Resolution Board, There are two types of tenders which can force the procuring entity to conducted through the e-procurement adjust or cancel the tender. The Board,

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AUGUST-SEPTEMBER 2013 11 consisting of three representatives from plifi ed Procurement Tenders, consisted of tem, but also elements like the appeal the Competition and State Procurement procurement conducted via the president/ mechanism, allowing everyone to appeal Agency (CSPA), and three representa- government consent clause. In 2012 this a tender they think violates the law, as tives of civil society, reviews complaints amount increased to 800 million lari. well as the dispute resolution board, are within ten working days. Consequently, the report recommends very innovative and positive attributes of A potential issue, however, is that that these exceptions should be revised. the system. That is why we say if some the system is currently geared to reward de Boer told Investor.ge that “the adaptations are made this system really tenders to the lowest bidder. TI Georgia’s most important loophole” is a provi- can be one of the best in the world.” experts reckon that the procurement sys- sion that allows tenders to be awarded On June 14, TI Georgia also launched tem should better refl ect the quality of a directly, bypassing the procurement sys- tendermonitor.ge, a new website which product or the expertise and experience tem.” A reform initiative by the CSPA, gives an in-depth look at government of a supplier, “to ensure that taxpayer however, should address the problem, he spending in Georgia by allowing the pub- money is spent to maximize the value noted. “We found that many contracts, lic to search, explore and monitor public for the public.” especially for large construction projects, procurement online. While the CSPA has CSPA has developed a Two-Stage have been procured in this way, raising done a good job of providing informa- Electronic Tenders Module to attach the risk of wasteful spending and corruption, it is still diffi cult to understand the more weight to quality; however, it has tion,” de Boer said. “big picture” of government spending, not been offi cially launched. “The Competition and State Pro- de Boer said. The main loophole identifi ed by TI curement Agency has started to publish “The offi cial tender website has all experts is that “too many exemptions” these contracts online, allowing anyone the contracting data, but you cannot get in the law on state procurement allow to see what has been spend on what and the big picture there,” de Boer said. certain state-owned entities -- Georgian for how much and who won these non- “[We] wanted to make a website Railways, Georgian Lotteries, Georgian competitive contracts.” that civil society, but also businesses Oil and Gas Company, Partnership Fund, He added that this was TI Georgia’s or students, can use to fi nd for example the Government’s and President’s Re- only major criticism of the system. tenders with an increased corruption risk. serve Funds and the Ministry of Defense “In general the electronic procure- Tendermonitor.ge is designed so that -- bypass the electronic procurement ment system in Georgia, as well as users can get the big picture, and see, platform which “have resulted in mis- the regulatory framework, is a great for example, how government spending conduct and corruption.” improvement and can be a best practice priorities change over time, and get a bet- In 2011, according to TI Georgia, 600 model for other countries,” he said. ter understanding of the relationship be- million lari, which is two-thirds of Sim- “The transparency, the bidding sys- tween businesses and the government.” ISET STAFF niques, and poor storage, packaging and n addition to producing food, the transportation — all of which lead to very agriculture sector in Georgia pro- low agricultural output. Ivides a social safety net to a very large part of the population, including Private Sector Capacity to Agriculture those who are unemployed and whose Resolve Coordination Failures and the qualifi cations are a poor match for cur- in Agriculture rent market needs. Any future reform of From an economist’s perspective, the Agribusiness the Georgian agricultural sector has to persistence of fragmentation refl ects two take these facts into account. Failure to types of market failures: fi rstly, failure to Sector: achieve coordination among small farm- achieve coordination among small farmers and failure to coordinate between ers, and secondly, failure to coordinate Problems and smallholder farmers and other market between smallholder farmers and other players is one of the biggest issues in market players (aggregators, processing the Need for the sector. While the private sector is plants, large retailers, hotel chains, etc.). Change able to solve these problems to some However, the truth is that in quite a extent, the role of the government can be number of cases the market has been able crucial. From promoting infrastructure to fully “internalize” the issues plaguing and vaccination programs, to conduct- the Georgian agricultural sector. The ing research, establishing education and most prominent recent successes in over- vocational trainings, and dealing with the coming the fragmentation impediment cost of fi nancing or promoting farmers’ are associated with major international cooperatives, the government can play a brands such as Hipp, Carrefour, and Fer- signifi cant role. rero Rocher. Launched in 2007, Hipp’s Productivity in the agricultural sector plant in Gori makes organic apple juices is embarrassingly low. Adam Pellillo, for world distribution from Georgian Ph.D., an assistant professor at ISET, apples. By acting as an integrator it has noted that it is remarkable “that Geor- drastically improved quality standards gia seems to be the only former Soviet and yields in organic agriculture. Like- republic in which agricultural produc- wise, the French hypermarket chain tivity hasn’t returned to or exceeded its Carrefour is already procuring most of level in 1992. As of 2010, agricultural the fresh produce for its store locally, productivity stood at only 77 percent of imposing its rigorous quality standards where it was at nearly two decades ago.” on the Georgian producers. This fi nding is even more puzzling if we Aggregators such as Hipp and Carre- consider that during the same period agri- four provide guarantees of long-term de- cultural productivity has grown by nearly mand and offer technical assistance with 200 percent in neighboring Armenia. choosing crops, as well as with growing A major issue for Georgia’s future ag- and post-harvest treatment methods. This ricultural development is fragmentation. provides farmers with stronger incentives This has several aspects: highly frag- to learn (i.e. to invest in their own human mented land ownership, as a result of the capital), to invest in improved facilities land privatization of the 1990s; and weak and machinery (i.e. to invest in physical links, if any, between different actors in capital), and very importantly, to cooper- the various value chains. The result is ate. Cooperation allows the exploitation depreciated or nonexistent machinery, of economies of scale in many areas, obsolete and ineffi cient cultivation tech- including the procurement of inputs, cul- Investor.ge

tivation, storage, and transportation. The as refl ected by Georgia’s performance in that, fi rst, the government should spend presence of guaranteed demand reduces the Global Competitiveness Index (GCI), its scarce resources in ways that ad- the market risk for related investment country risk ratings, and FDI dynamics. dress market failures and coordination projects, lowers the cost of fi nance and Political risks, in turn, have translated externalities across the entire economy. speeds up the process of technological into high lending interest rates, which One obvious example is the negotiation upgrading in agriculture. have affected the entire economy. Not of free trade agreements and the use of only do they slow down investment and WTO arbitration mechanisms to improve Social Risk as an Externality job creation in the non-agricultural sec- market access to the EU, Russia and oth- If the market is able to internalize tors (limiting its ability to absorb surplus er neighbor countries. Another example coordination externalities in agriculture, agricultural labor), but these risks limit is investment in strategic transportation are there any reasons for the government smallholder farmers’ access to credit, infrastructure, which has positive reper- (government and foreign donors) to stalling their productivity and disenfran- cussions for the entire economy (e.g. see “meddle” with free-market dynamics to chising them even further. We contend post by Eric Livny, “Roads and Rural try and speed up the (inevitable) process that the government should attempt to Development: the Case of Samtskhe of consolidation in Georgian agriculture? resolve this vicious circle. Javakhet,” ISET Economist blog, http:// The primary reason for intervention, Endorsed and supported by the in- www.iset.ge/blog/?p=1033). in our view, has to do with the natural role ternational donor community, the new Next in the order of priorities are of the agricultural sector as a buffer zone, Georgian government’s general strategy interventions that address the cost of which poses an important socio-political — to promote rural development and entry and market failures that are spe- externality. The slow pace of productiv- agriculture — is, indeed, consistent with cifi c to the agricultural sector and yet ity growth in agriculture has left large our analysis. are broad in nature. Examples of this swathes of Georgia’s rural population are vaccination programs, and preven- far behind the urban middle class, often The Role of Government in tion, monitoring and control of animal in poverty and with no or limited access Addressing the Social Risk and plant diseases. While already in to high-quality education and healthcare. Externality place, relevant programs could be further The result has been political uncertainty In considering potential interven- strengthened to boost productivity and to and risk through protest voting or worse, tions, we adhere to our general approach meet the requirements for the Deep and

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Comprehensive Free Trade Agreement Fourth, investment in irrigation and training and research to establish proper with the EU. drainage systems would increase the criteria for judging the agricultural risks Other areas of concern include re- supply and quality of arable land. While that are specifi c to Georgia, like the dif- search, education and vocational training the “last mile” of irrigation infrastruc- ferent types of Georgian agriculture, soil in relevant fi elds. Government-provided ture could be undertaken by individual and climate zones. scholarships and the new Millennium farmers (or farmer cooperatives), the The possibility for the government to Challenge Corporation multi-year agree- construction of dams and irrigation ca- promote farmer cooperation, as a means ment with the Georgian government, nals are clearly a matter for government of overcoming fragmentation at the level both targeting technical education, are (or donor) attention. of the primary agricultural producer, is excellent examples of the latter type of Last, but not least, the government one of the most debated issues regarding intervention. The agricultural-education and donors could choose to address the Georgia’s smallholder agriculture. In- component is also included in the EU’s cost-of-fi nancing impediment affecting deed, farmer organizations could exploit new European Neighbourhood Pro- Georgia’s agriculture. economies of scale by undertaking joint gramme for Agriculture and Rural De- Lending interest rates and collateral investment in machinery and equip- velopment program that seeks to support requirements are generally very high in ment, procurement of inputs, processing, Georgia’s rural development, including Georgia. On top of that, given the very branding, bargaining and marketing. agriculture. small volume of lending to the agricul- However, successful farmer organi- Third, to complement investment in tural sector, the fi nancial sector (banks zations are almost nowhere to be seen in education, extension centers could help and insurance companies) do not have Georgia because cooperation requires a increase the general level of expertise the skills to properly assess agricultural common vision, mutual trust and excel- available to the agricultural sector, facili- risks. lent management skills – issues that will tating the introduction of new crops, thus The government could try address- hopefully be tackled by the new govern- improving yields and incomes. ing this obstacle by supporting relevant ment and aid programs.

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Reforming the eorgia has struggled with are not selected because they are skilled, a tradition of nepotism for because they are educated, because they Civil Service: An Ggenerations, but over the past are experienced; they are just picked several years the effort to force govern- because they have a relative in the gov- Interview with Irakli ment agencies to hire based on ability, ernment,” he said. Kotetishvili not family ties, has been growing. “This type of civil servant, he or she Having clear procedures for hiring, cannot provide good service to the citizen Georgia is working on creating fi ring, job descriptions and promotions or to business in general. So I think weak a modern civil service based on are a key element of eliminating nepo- and unprofessional civil servants have a professionalism, not nepotism. tism in the public service. direct impact on the smooth running of Investor.ge spoke with the head of the Civil Service Bureau, Irakli Irakli Kotetishvili, the head of the any type of business in any part of the Kotetishvili, about the reforms and Civil Service Bureau (CSB), is working world.” their potential to help the economy with USAID, NATO and HR heads from In addition to the HR manual, CSB and business. ministries and state agencies to create the has also created a website, www.hr.gov. country’s fi rst human resource handbook ge, to make recruitment more transpar- for public service. ent. State agencies use the site to post “[I]f you take an example of the civil jobs for public servants. There are 86,000 service and the civil servants who are public servants working in Georgia, appointed via nepotism, that means that who are fi ve percent of the country’s they don’t do their job well because they workforce, according to offi cial statistics.

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“[T]alks about the reform of the Georgian civil service have been going U.S.-Georgian Commercial on for years now. The previous govern- Diplomacy Training to Strengthen ment made huge improvements in re- shaping the whole civil service. And the Georgia’s Diplomatic Corps’ services that our citizens receive today Expertise are of much higher quality than they were years ago,” Kotetishvili said. ALEXANDER MELIN “However, I think that the core of the civil service, which doesn’t have the small crowd of diplomats leave the comfy confi nes of an air- face-to-face communication with busi- conditioned training room at the Ministry of Foreign Affairs ness -- which works every day behind A (MFA) with cups of coffee to brave the hot summer temperatures doors -- it still needs to be reformed.” for a smoke or chat outside, milling about in their dark suits and high heels CSB is working with the government between commercial attaché training sessions. They represent a veritable and parliament to improve legislation: menagerie of Georgia’s diplomatic missions strewn across the world, as a policy-making organization it can everywhere from the Netherlands to Uzbekistan. Different as they are lobby for change but not make laws. geographically, after a few minutes they reassemble in the training room “[W]e are a policy-making agency, with a unifi ed sense of purpose: to deepen the skills necessary to promote which means we are drafting legislation Georgia’s exports and Georgia as place of investment. and some other policy documents and It is no secret that Georgia’s fortunes are intricately tied to its external can go to the parliament and lobby them trade, and this is not lost on the Georgian men and women who are on the and talk to the government,” he said. front line of Georgia’s diplomatic corps. Georgia remains an attractive “We don’t have the power of issuing location for investment with a highly educated and cheap labor force, and legal acts, the vast majority of the work a structurally sound investment framework. From the standpoint of trade, we do is to talk with the stakeholders on Georgia has a wide variety of exports that are highly competitive on world the importance of the issues.” markets, some with which readers may be familiar, such as mineral waters One of the issues Kotetishvili has and wines, but others with which they may not be, such as live sheep and been discussing is a special school to nuts (Georgia is the world’s third-largest exporter of hazelnuts!). train public offi cials. Training and job Yet the lack of knowledge about Georgian products and investment shadowing, he said, are the keys to creat- opportunities on the world market is a distinct challenge. Georgia has ing effective-human resource managers historically faced diffi culties in trade promotion due to the small size of its and public servants. diplomatic corps (some attendees mentioned the diffi culty in being perhaps “I think that the first part of the one of just two people in their respective posts handling commercial af- reform should be focused more on the fairs, compared with the enormous services of some larger countries like education of the civil servants, on the the U.S. and China) and a lack of trained commercial attachés. But that is modern practices of how to run offi ces, something the Ministry of Foreign Affairs is taking active steps to improve. how to do better management in the of- From July 9 to 11 the Diplomatic Training Center of Georgia held a fi ces,” he said. high-level training workshop in Tbilisi on commercial law, trade, and the “For this reason, educational train- skills necessary for Georgia’s economic diplomats. This is the second ings are required but this is not enough. phase of training for a core group of MFA and Ministry of Economy and They need to do lots of job shadowing Sustainable Development (MOESD) offi cials, following the fi rst phase, with their colleagues abroad and it would which was held in Washington, DC in May of this year. also be a good idea to bring some really The workshop, now being held in its second year, is part of a multi-year good, experienced experts here so they joint project among the Commercial Law Development Program (CLDP) can talk with each other and look at ex- of the U.S. Department of Commerce, the Ministry of Foreign Affairs of amples on how to run effi cient offi ces.” Georgia, the U.S. Embassy Georgia, and the MOESD. Maia Kipshidze, the Director of the MFA’s Diplomatic Training Center,

AUGUST-SEPTEMBER 2013 17 Investor.ge

described the goals of this partnership on the commercial map; the more invest- presentation and negotiation skills. training as twofold: fi rstly, to deepen the ments, the more economic growth — that Desai arrived for two days of the pro- experience of and provide knowledge is, there is a proportional link; the more gram to lecture on a variety of topics and to commercial attachés to increase their qualifi ed and experienced staff that the engaged in a bilateral dialogue with his skills to promote Georgia abroad and Ministry will have, the more prospects Georgian counterparts. He emphasized Georgian exports; and secondly, to help there will be for Georgia,” she told the importance of the program to Inves- put together a commercial development Investor.ge. tor.ge, “The goal [of the program] is to curriculum for the Diplomatic Training Training topics included areas as help Georgia become a global player in Center to provide a short-term training diverse as WTO trade law, negotiating world markets. If you look at any govern- course on commercial diplomacy for free trade agreements, fi nancing trade ment, any country that has these types potential attachés before they leave for and insuring against political risk, dis- of programs — like the United States, their posts — in short, to turn the working pute resolution, export promotion, trade where … for every dollar that’s invested core group into working trainers. fairs, and presentation skills, among in export promotion, the return was 142 Kipshidze sees a link between “the many others. The areas of training are dollars, that’s tremendous,” he said. skills and the experience of the commer- indicative of the high level of Georgian “[W]e have seen that each of those cial attachés and the economic attachés, commercial development, which has countries has gained. The UK has a pro- whose direct duty and responsibility it improved immensely. Training, accord- gram, the Canadians have it, the U.S. has is to facilitate the process of attracting ingly, is specifi cally tailored. Manoj De- it — almost every country that is either investments to Georgia from abroad” sai, the Principal Commercial Offi cer of developing or developed has a program and improving the Georgian economy. the U.S. Consulate General in Istanbul, where they are leveraging their foreign “I think [commercial diplomacy] indicated that the training had become services to grab business. Business has is crucial, very important. Georgia is a tailored according to Georgian needs and become part of diplomacy; countries that small country and needs to put its name feedback, focusing on areas this year like trade usually don’t go to war.”

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Five Questions with… Vano Sturua Founding Partner of Villa Dzara Capital

Vano Sturua, a founding partner of MAIA EDILASHVILI of restaurants and our revenues have Villa Dzara Capital (VD Capital), Q: You started in the restaurant increased as well... manages eight restaurant brands business in 1998, a time when Georgia I think we made the right decision in Georgia. He spoke with Investor. was widely considered a failed state at the beginning to be very aggressive ge about VD Capital’s secret for and few people dined out. Today you success and the importance of and [we] kept opening new restaurants, having well-trained staff. have expanded to eight brands, includ- even though we did not have our own ing Taghlaura, Machakhela, Samikit- resources. We cooperated with banks . no, Texas Chicken, Jaffa Shawarma, . . and succeeded in taking a good part Café de Paris, New York Burger and [of the market]. We are not stopping: Pizzeria Fiorino. How quickly has our brand Taglaura, for instance, is a the hospitality industry developed in large-scale restaurant chain with four Georgia over the past 13 years? restaurants. Since it would be costly to A: We started in 1998 with a small expand such a large brand, we decided café with just ﬁ ve tables. The turnover to introduce a small brand as well . . . We was approximately 300 lari a day. We called it Samikitno and merged it with had ﬁ ve service employees at that time; another brand, Machakhela, which is a today we have 800 people. The number traditional Georgian pastry chain. The Machakhela brand started two years ago and it’s pretty successful; we recently opened the eighth restaurant in the chain . . . By the end of the year we plan to open two more. Q: All your brands are quite different in terms of cuisine and concept; what has been your strategy? A: When we started working on the Taglaura concept, everyone warned us against creating spacious dining halls since Georgians prefer to sit down in small booths for more privacy. We took a risk and it has proved to be a success: over the years, the culture of dining out has changed. People are happily dining in a big hall now, instead of locking themselves up in small booths. Concerning the demand, it’s always higher for Georgian cuisine, although European and American [cuisine restaurants] are performing well, too . . . what played a key role in making our

20 AUGUST-SEPTEMBER 2013 Investor.ge

brands popular is just the quality of the service, the quality of meals: we have a monitoring system to constantly check cleanliness, food quality, the service level, every detail. Most important, as I mentioned already, has been our aggressive approach. Today taking the same market [share] would be much more difﬁ cult than it was when we started. Intuition and passion for work also help. I am myself a great cook and can prepare and assess any type of meal… Q: Even though Georgians are known for their hospitality, the service quality at Georgia’s restaurants, cafés and hotels is continually criticized – even by locals. Why? A: The service quality is really a big problem, starting from restaurant staff to hotel personnel. The problem stems from our past — we are a post-Soviet country. It will require several generations to change to the mentality that being a waiter/waitress is a profession. In Western countries people are waiters for their whole lives. I think that people here need to have serious training and, over time, the perceptions will also change. Q: How do you select your waiting staff? A: People in this industry are . . . mostly changing from one restaurant to another. The majority of them have experience, but not a diploma. We plan to open a training center to increase their qualiﬁ cations but it is not an easy task. At the same time, we are talking with several institutions about opening training centers . . . I think very soon the time will come when no waiter can get hired without a diploma. Command of foreign languages is also a big problem. Almost no one speaks English among the waiting staff. I will tell you an interesting story: we have a plan to expand and open Georgian restaurants in European cities . . . So we

AUGUST-SEPTEMBER 2013 21 Investor.ge

needed a chef with a command of English ing the mentality takes time. But what ate prices. Otherwise it would not work. as he/she would need to communicate should restaurant/café owners do right I myself travel a lot, spending half with foreign staff there . . . we can’t now to create a pleasant, inviting at- of my time abroad . . . Our country’s big fi nd one. This is an indication of how mosphere so customers return? problem is the lack of qualifi ed service bad the situation in the whole country A: In the fi rst place, the quality of staff and due to this tourists suffer a lot is, in this regard. meals and service play a role. However, . . . Renting a car and getting around the Next year we will move to a new of- something which is even more important city is not even a matter to discuss, it’s fi ce where we will have a training center. in Georgia is the price. Georgia is a low- so complicated. So, the lack of quali- We may not be able to launch profes- income country and price is the most fi ed service personnel on the market is sional courses for waiters and chefs — important factor . . . For instance, re- a problem throughout Georgia, not just that requires special infrastructure — but cently we opened a Ukrainian restaurant, for our chains. we will certainly offer English classes Kobzar, near the Dry Bridge (Mshrali The number of tourists is increasing and send all our personnel there. Basic Khidi), which offers high quality both in in Georgia and the service quality should English language skills will be obligatory terms of interior design and service, and follow suit. If the service level can’t for everyone. we brought a very high-class chef from catch up with the pace of visitor infl ow, Q: You have mentioned that chang- Ukraine. Despite all this, we set moder- interest may die down.

22 AUGUST-SEPTEMBER 2013 Investor.ge

AUGUST-SEPTEMBER 2013 23 Investor.ge

ith two hotels in the country, two more in the pipeline, and Radisson plans for several more, Tom Flanagan, the Area Vice President Wfor Eastern Europe for the Carlson Rezidor Hotel Group, said Plans Ten Georgia is the fastest growing market in the region for the hotel group, after Russia and Turkey. Hotels in Georgia, noted Flanagan, is a country where seeing is believing. He was in Tbilisi in June for the group’s annual conference – a one-a-year Georgia opportunity for Radisson hotels to host executives and to showcase their facilities. He noted that after bringing a group of large event brokers to Georgia, Over Next Radisson received several bookings instantly. The norm is a couple bookings after several weeks. Five Years “I think one of the main factors is defi nitely the access, but even before you get to the access, it is the awareness… you have to see it to believe Tom Flanagan, the Area Vice it,” he said, noting that the reaction of the 75 guests for the hotel group President for Eastern Europe for the conference was amazed from the moment they arrived at the airport. Carlson Rezidor Hotel Group, was in Tbilisi in June for the group’s If Georgia increases its investment to bring business in, thereby ad- annual conference. Investor.ge vertising Georgia,“that is really going to one key factor to developing the spoke with him about Radisson’s business [hotel industry] even before we ask people to book a fl ight to projects in Georgia and its vision for get here,” he said. the hospitality industry in the region. Bringing Russian tourists will be the “big kahuna” for the Georgian tourism sector if it can capture the winter and summer tourists. “Now it is predominately business [tourists from Turkey, Germany]… Now the Russians, I think, will be their number one clientele, even after summer,” he said. “We are working now on a program especially for the Russian holidays because that is a really an interesting capture period because everyone travels anyway so it is easy to convince them but what we are really working on is the business clientele.” Nostalgia and niche tourism should help Georgia’s tourism sector continue to grow, he noted. “[W]e were discussing how Georgia could compete with Turkey and I think they shouldn’t. The south of Turkey is very much like the Cote D’Azur, it has its own tourism, its own prices -– I think we have to go with more boutique tourism here and they are defi nitely doing that and retaining these resorts, ecologically,” he said. Georgian wine, in particular, could have mass appeal. “[T]his week we had a huge amount of different varieties of suppliers here to show the general managers and to experience Georgian wine. It is stunning and it is extremely different. We had fl avors that I have never personally tasted before. There were so many international general managers looking for wine shops!” he said. “You want to try something that is from the newer world and this is the oldest newest world together.” He noted that Radisson’s project with partner Silk Road Group in Tsin- andali has the potential to be “one of the classist experiences” in Georgia. “In three or four years time, we want ten hotels in Georgia,” he said. “And we are going to do it.”

24 AUGUST-SEPTEMBER 2013 Investor.ge

Education Challenge Facing Hospitality Industry

Despite a love for guests, Georgians have struggled to overcome their Soviet past and create efficient, professional –- and civil –- hospitality staff for the growing number of tourists coming to the country. A new program by Tbilisi City Hall, however, hopes to increase standards and create a warm welcome for tourists and locals alike.

MAIA EDILASHVILI has jumped over the past nine years, management schools providing training from 7,920 in 2004 to 23,630 in the in the hospitality industry, specialists From Host at Home to a fi rst quarter of 2013. like Tbilisi City Hall’s Arianna Briganti Professional Hospitality Sector Rather, it is more likely that poor believe modern training — and higher eing a gracious host is an art salaries and low prestige associated standards — are vital to improve the form in Georgia, where being with jobs in the service sector have level of service available in Georgia Bhospitality is a considered a exacerbated the lack of quality. While today. Tbilisi City Hall, together with birthright and nurtured from childhood. the average monthly salary in the hotel the German Development Cooperation But despite the priority placed on and restaurant business increased (GIZ), the Italian Embassy in Georgia, hosting at home, in the commercial from 155 lari ($93) per month in and Ingrao Tradizione e Innovazione, sector, Georgians are still struggling to 2004 to 462 lari ($280) per month in is working on a project to strengthen create a culture of hospitality. 2013, it is quite low compared with Georgia’s tourism industry, particularly Hotels that lack basic amenities, the average monthly salary in the its culinary sector. The multifaceted boring tour guides, and cafés with trade sector and in the transportation project, which tackles the development surly wait staff that serve more snark and communications sectors, at 676 of occupational standards in line with than sandwiches may mar otherwise lari ($409) –- and 991 lari ($600), EU regulation, capacity building, and fabulous trips to gorgeous Georgian respectively. the Vocational Education and Training destinations. However, Eka Ketsbaia, a manager (VET) Center development, started A 2011 Value Chain Assessment at Piano, an Italian restaurant in Tbilisi, earlier this year. report from USAID’s Economic said that a good waiter should earn 50 “The aim of the project,” explained Prosperity Initiative (EPI) found lari ($30) a day. Good, she noted, is Briganti, the Integrated Expert of the several reasons for these problems, more about service with a smile than Centre for International Migration including the fact that workers are know-how. and Development and an advisor in undertrained, young people are “Bringing a fork in a timely economic issues at the City Hall, uninterested working in the service manner is not the main thing, more “is that the labor force acquires industry, and employers are reluctant to important is that a waiter is nice to the experience and capacities — hire potential employees over the age our guests so that they want to come both professional and ethical skills of 40. again,” Ketsbaia said. “Even a smile — sought by national as well as The problem is not due to a lack of has a huge role.” international employers...” demand: GeoStat, Georgia’s offi cial But experts in the tourism and Management schools and statistics body, reported that the hospitality fi elds note that education vocational training centers for tourism number of jobs in the hospitality sector is also necessary. While there are and the hospitality sector already exist.

AUGUST-SEPTEMBER 2013 25 Investor.ge

Lika Vashakashvili, the manager employers: she noted that when emphasis on gastronomic science and of programs and quality at Icarus, research indicated employers needed food culture. The study program will a vocational college in Tbilisi staff with strong English language be based on the ISO 22.000 Food specialising solely in the tourism skills, the school increased English Safety Standard. industry, noted that of the 369 students classes in the curriculum. Better prepared students, noted who graduated in 2012, all the chefs But Briganti believes that the Briganti, will not only increase service are already employed. existing VETs (vocational education standards in Georgia, but could lead Students like Nino Ajiashvili, training centers) are not doing enough to more jobs as improved services 23, praise the school for its practical to prepare their students. Graduates develop the tourism and hospitality approach. Ajiashvili, who graduated from state and private VET centers sectors. with a degree in tourism management “fall below the requirements of [EU] “Tourism is labor-intensive and from a Georgian university, turned to standards, lacking those professional therefore has the potential to impact the vocational school to increase her skills and general abilities required a large number of lives through the skills and, hopefully, ﬁ nd a job. to be appropriately employed in both generation of employment,” she said. “I realized I needed more practical the local and international tourism “It produces considerable potential training; I would like to start from sectors.” linkages, especially with the rural and housekeeping — the lowest position The Tbilisi City Hall project will agricultural sector and communities — and pass through every stage in this create the ﬁ rst Academy of Tourism through the food and wine industry. It profession,” she told Investor.ge. and Gastronomic Science in Georgia. creates initial demand for goods and Vashakashvili said the school The academy’s curriculum will focus services that can themselves develop prioritizes feedback from potential on the hospitality sector with a special into growth sectors.”

26 AUGUST-SEPTEMBER 2013 Investor.ge

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or anyone who has ever been to alarmist in light of Georgia’s low crime The Travel Georgia, or lived in Tbilisi, the rates. The country has one of the low- Fonly mystery about travel jour- est crime rates in Europe, based on the Advisory nalists’ new love affair with the country fi ndings of a 2011 survey funded by the is why has it taken so long for them to European Union, less than a percent of Conundrum fi gure it out. the 3000 people surveyed nationwide This year, even British Airways had been a victim of robbery or assault. listed Tbilisi, alongside Las Vegas, Rio While the Georgian government Georgia is a gem for tourists: de Janerio, and Seoul, as one of its top has reportedly lobbied hard to have the a relatively inexpensive, ten destinations for travelers, naming it travel advisories toned down in light of unexplored, beautiful country a “a fascinating smorgasbord of cultural the reality on the ground, diplomats note that still welcomes foreigners infl uences.” But the British government that foreign governments are obliged to and prides itself on keeping them safe. Travelers, airlines, views travel to the country through less err on the side of caution. The policy is and international investors rose-tinted glasses: its latest advisory across the board, one diplomat said, add- have already fallen under its warns travelers against driving at night ing that there are even dire travel warn- charms: why, then, are the travel and even mentions the threat of terror- ings from some governments against advisories for visitors so alarmist? ism – even though there has not been visiting towns within the United States. a single major terrorist attack or threat The British government warns travelers against Georgia, while large-scale attacks to the US about terrorism threats; the have, unfortunately, been carried out in Canadian government warns travelers London, New York, and other foreign to Miami about potential “break-ins, as- capitals. The Canadian and U.S. gov- saults and pickpocketing” and instructs ernments are equally cautious. The U.S. citizens to “exercise caution” and “[r] State Department echoes London’s warn- emain alert and discreet while in en- ings about traveling at night, and urges tertainment areas.” There have been U.S. citizens to “vary” times and travel reports that travel advisories issued by routes, travel in groups, avoid public the U.S. State Department has discour- transportation and “keep a low profi le.” aged tourists from coming to Georgia. While warnings about travel to Tourism specialists, however, noted the separatist regions like South Ossetia and negative travel advisories have not af- Abkhazia could be justifi ed since the fected tourism to Georgia: the number regions are not under Tbilisi’s control of international tourists grew 38 percent and embassy staff has little access or from 2010 to 2011, from 2.03 million to infl uence there, the fears about crime, 2.82 million, and increased an additional robbery, and attacks on foreigners seem 56 percent in 2012.

28 AUGUST-SEPTEMBER 2013 Investor.ge

AUGUST-SEPTEMBER 2013 29 Investor.ge

for the average tourist to buy and take Shopping for Souvenirs home. But he is one of the few to branch out into the business: the lack of produc- Georgia’s tourism industry is in overdrive as the number of international tion facilities in Georgia mean souvenirs visitors – and domestic tourists - continues to grow. But while investors are have to be mass produced abroad, a building hotels and the government is paving roads, there are a surprisingly complicated procedure for many small limited number of places for visitors to spend money outside of major urban areas like Tbilisi and Batumi. businesses, Gotsiridze noted. In addition, private fi nancing is still expensive and relatively difficult to ntricate rugs, beautiful handcrafted part of the problem. obtain for rural households. Organizing jewelry, t-shirts, magnets, and min- Irakli Toloraia, the Rural Economic and educating tour guides about newly Iiature fl ags: artisans and entrepre- Development Advisor for the USAID- opened facilities is another stumbling neurs in Tbilisi are fi nally catching on to funded Georgia New Economic Oppor- block, Kvachantiradze noted. the souvenir business. But travel to any tunities (NEO) Initiative, noted that an “People in the village don’t know one of Georgia’s breathtaking regions, initial study into tourism in the Kazbegi how to create businesses and develop and the opportunity to buy things quickly region uncovered a real demand for cafes this [sector] and they need someone who evaporates. and shops near the church. will be more active in this [process],” she Natalia Kvachantiradze, the chair- While busloads of tourists travel to said, noting that GTA, as well as other man of the Georgian Tourism Associa- the site on a regular basis, not all the tourism associations, NGOs and donors tion (GTA), said the lack of souvenirs is a travelers make the trek to the church, have created a tourism advisory board “problem” for the rural tourism industry. leaving them to sit on the bus for hours, with the government to tackle issues like “[Villagers] want to sell but there waiting for their fellow passengers to creating souvenir shops and workshops are not enough shops where the tourists return so they can fi nish their trip. in rural communities. can come and spend money – it is a big As part of the four-year Rural Eco- Toloraia, however, remains optimis- problem,” she said. nomic Development program, NEO tic that Georgian entrepreneurs are up for “We want to help people who live in worked with locals in Kazbegi, awarding the challenge. He noted that at popular the regions to increase their incomes.” grants to individuals and businesses that destinations like Vardzia cave complex, Around the world, the commercial could fi ll that gap. services for tourists have started to open. trappings of tourism – the money spent One of the recipients, Luka Got- “Nothing is happening in one day. In on hotels, restaurants, shops, and local siridze, built the fi rst modern souvenir- Svaneti for example, they used to have services – is a multi-billion dollar indus- making factory. Located in Aragvispiri, tourists during the Soviet times so they try. And Georgia is missing out: a 2011- Dusheti municipality, Combimap em- know how to behave with tourists. But 2012 survey by the Georgian National ploys 16 people and has sold 200,000 a couple of years ago, we had places in Tourism Agency found that international souvenirs locally – as well as 60,000 Georgia where if you asked a guesthouse visitors spent just 546 lari ($330) during souvenirs internationally. owner to take money from guests for their trips, far below other countries. Gotsiridze told Investor.ge he de- food, they were ashamed or angry about The lack of facilities around popular cided to start producing small souvenirs it because these were guests,” he said. tourist destinations, like the Holy Trinity in 2008 after he realized that the items for “But I think everything will come (Sameba) Church in Kazbegi, could be sale for tourists were too big and bulky little by little.”

30 AUGUST-SEPTEMBER 2013 Investor.ge

AUGUST-SEPTEMBER 2013 31 Investor.ge

OTAR KAKHIDZE, BGI Independence of Corruption

ne of gravest problems the the Judiciary in former government inher- Oited was an utterly corrupt judiciary. Low salaries and corruption Georgia: bogged down the courts. Honest judges, often marginalized, lived in poverty and were forced to supplement their meager Trends and Challenges income by academic activities. Whether it concerned the registration of a busi- Over the past 15 years, the judiciary has gone through several waves of ness, “legalization” of property, lesser reforms. Throughout this period, Georgian society never stopped talking sentences for criminals or the settlement about the independence of the court system, the degree of trust toward of civil disputes, nepotism and bribery it and the need for its further reformation. In this editorial, I will address infested the system. the following questions: how has the court system changed in recent Combating corruption in the judi- years? What does the independence of courts mean? How should a better judiciary be achieved? ciary was a far tougher challenge than other reforms, including, e.g., the police reform. Yet, this fi ght was won. Since 2005 up to 20 judges have been pros- ecuted for bribery, standards of ethics and for confl icts of interest were drafted and implemented and the salaries of judges pointed by the Chairman of the Supreme positions were decided by the Confer- signifi cantly increased. As a result, ac- Court. The Justice Minister and chairmen ence of Judges. cording to the research conducted by of the supreme courts of the autonomous Other changes included making the UNDP in 2009, 92 percent of Georgian republics of Adjara and Abkhazia were Chairman of the Parliamentary Com- citizens no longer consider corruption to ex-offi cio members of the council, while mittee on Legal Issues an ex-officio be a problem in the courts. the secretary of the High Council of member of the council, and stipulating Justice was appointed by the president. that one of the three members elected to Institutional Independence The appointment and dismissal of the council by parliament one was from To establish whether the courts are judges, as well as issues concerning the the parliamentary opposition. independent, several questions need to management of the court system, fell New amendments to the rules on the be raised, including who appoints and under the control of the executive branch. membership of the High Council of Jus- dismisses judges, and based on what Under the reforms implemented tice have increased the body’s autonomy: procedures; how are judges disciplined; since 2007, the High Council of Justice the new rule allows each and every judge and how are the courts fi nanced? became part of the judiciary and the rules to nominate candidates for membership The High Council of Justice, the main for service on the council were funda- of the council to the Conference of administrative body in the court system, mentally changed: The president and the Judges, which is the judicial self-gov- plays a key role in regulating these is- justice minister were fully disengaged erning body. In addition, it establishes sues. Prior to the 2007 reform, the High from the council and the Chairman of the a procedure for secret ballots, strips the Council of Justice was a consultative Supreme Court became the head of the executive branch of the right to appoint body of the President of Georgia. Out of body, nominating a pool of candidates a member, and allows parliament to elect the 12 members of this council, four were for the positions of secretary of the High non-judge members of the council. The appointed by the president and another Council of Justice and the majority of new law stipulates non-judge members four by parliament. One member was ap- its members. Following the reforms, the should be representatives of the legal

32 AUGUST-SEPTEMBER 2013 Investor.ge

field – academics, the Georgian Bar cially worth noting in this regard, in the about blackmailing of a court clerk by Association and the non-governmental area of criminal law, is the protraction an offi cial of the Ministry of Internal sector –- rather than politicians, mean- of both jury trial reforms and the correc- Affairs, summoning a district court judge ing that Parliamentary members will no tion of the progressive norms of the new on the case decided by him, assaulting of longer serve on the High Council. Criminal Procedure Code (the chapter the court building in Akhaltsikhe, report- Allowing parliament to appoint on secret investigative activities and the edly by activists of the Georgian Dream members of the High Council of Justice new rules for interrogating witnesses), Coalition, etc.); defi ning clear and uni- is a means of balancing the judiciary. which led to the stagnation of reforms form criteria for resolving controversial The regulation of the council, decisions and harmed the interests of justice. procedures (such as secret investigative on disciplinary issues and the appoint- It can also be argued that the judicial activities, pretrial detentions, etc.); and ment of judges are approved with the corps was reluctant to take responsibility continuing to build up public trust while participation of the non-judge members and enjoy its institutional independence: delivering justice and demonstrating that of the council. 99% of the motions from Prosecutor’s is equitably and appropriately. It should be noted that out of the six side were approved and judicial control We could very well be witnessing non-judge members of the council, two was often purely formal in substance. the birth of a judiciary that is truly are elected by the parliament by two- At the same time, the judiciary could independent of the government, both thirds of its composition. This requires not reposition itself as a transparent and institutionally as well as factually, after the participation of the parliamentary trustworthy body, a problem likely aggra- years of reforms. This is the result of minority in the decision-making process. vated by the decision to close the courts the transfer of power via elections, the However, the parliamentary majority can to members of the press. Around 95 reforms implemented by the former refuse to approve candidates supported percent of Georgian citizens have never government and the forward-facing by the minority and, in such a case; these be inside a courtroom, and have never steps taken by the new government that two seats will remain vacant. had the opportunity to watch and assess fi nally strengthened the independence ongoing cases. The subsequent lack of of the courts by providing them with a Challenges transparency created more opportunities new source of legitimization and setting After the Rose Revolution, the gov- for the often unsubstantiated attacks that a standard of transparency. ernment was faced with a failed state and were intended to discredit the authority Otar Kakhidze is a Director at BGI simultaneously had to rebuild the country of the judiciary in general. advisory services Georgia, specializing on all fronts. We witnessed the construc- Nevertheless, it must be said that the in criminal and administrative law. tion of new state institutions, often from courts gained institutional independence Prior to joining BGI, Mr. Kakhidze held scratch. The Rose Revolution govern- during the rule of the former govern- several key positions at the Ministry of ment did not view the real redistribution ment. This was clearly seen after the Justice of Georgia, including serving of power as a priority; rather it focused October parliamentary elections when as a Deputy Minister of Justice, where on the rapid implementation of reforms. the court system proved to be a stable, he chaired the drafting group and co- The main driving force was a hyperactive self-sustaining body. Presented with authored the new Criminal Procedure executive branch, which brought about this golden opportunity, it seems the Code. Otar was centrally involved in the fast progress in almost every direction. judges have realized that they are really drive to liberalize criminal justice poli- In so doing, however, it diminished the independent and do not have any “moral cies, particularly towards juveniles and role of the legislature and the judiciary. obligation” to toe the line of any political those accused of ‘white collar’ crime. His While it is not serious to talk about conjuncture. professional experience also includes the deterioration of judicial indepen- The current challenges facing the four years with the Georgian Young dence compared to the judiciary prior judiciary include withstanding the ap- Lawyers’ Association (GYLA), a lead- to 2004, it is true that the court system parent political pressure coming from ing legal aid NGO in Georgia, where he during the previous government often the executive and the legislature (e.g., served as a Parliamentary Secretary of failed to perform its role of balancing the one may recall statements of Justice the organization. Otar teaches criminal executive branch and providing checks Minister Ms. Tsulukiani, vice speaker law, legal writing and trial skills at the on the arbitrariness of its conduct. Espe- of Parliament Ms. Kobakhidze, reports Free University of Tbilisi.

AUGUST-SEPTEMBER 2013 33 Investor.ge

sible to earn money, if you understand her well. You should fi nd friends and Siemens Brothers acquaintances there,” wrote Werner from Berlin to his brother Karl in St. Petersburg. After a number of successfully accomplished projects in the im- in Georgia perial capital, the Siemens established their mission in Tifl is (Tbilisi). They Few people know that the founders of Siemens made their business in understood perfectly how important, in Georgia and two of them are actually buried in Tbilisi. From oil drilling to geographical terms, the location of the setting up a telegraph line, the influence of the Siemens brothers brought Transcaucasus was — the city would Georgia in closer contact with the outside world. provide them with much easier access to reach the Middle East and India. The Siemens brothers also used Poti, and from 1878 on, Batumi, as port cities to export their products to Europe. EMIL AVDALIANI In 1858, in cooperation with Grigol Orbeliani, the fi rst telegraph line, Kojori- iemens was established in 1847 Tifl is, was established in Georgia. Two by Werner von Siemens and his years later, in 1860, Werner’s brother Sfriend Johann Georg Halske. Walter took charge of the Tifl is-Kutaisi- Eventually, Werner’s entire family would Poti telegraph line. In 1863, the Tifl is- play a role in the business, especially his Moscow line was established, and, in seven brothers (Hans, Ferdinand, Wil- 1865, the Siemens company finished liam, Friedrich, Karl, Walter and Otto). works on the Tifl is-Yerevan line, com- Together they invented the inert regulator pleting the network in 1868 with the for a steam engine that enabled engineers Tifl is-Baku line. to check the pressure level in pipelines, At the same time, Siemens was build- as well as the fi rst “electric railway” — ing the Caucasus telegraph line. In 1867, otherwise known as a tramway — and Siemens brought its branches in Berlin, the fi rst elevator. London, and St. Petersburg together to work on the longest telegraph line in the “Russia is a country where it’s world, a network that would stretch from Carl Siemens possible to earn money…” London to Calcutta. In the late 19th century, the Russian By 1869, Karl Siemens brought the Empire was predominantly agricultural. telegraph line to Georgia to be installed Social and economic reforms imple- under the Black Sea, connecting the mented by the Tsar Alexander II changed two sides of the worldwide network, little and development in the empire was as well as the underground line for the considerably behind that of countries in Tifl is-Moscow line. The latter project Western Europe. Nevertheless, the Rus- was fi nished only in 1880-81. The so- sian elite supported capital infl ow from called 11,000-kilometer-long “Indian such mighty families as the Siemens, telegraph” was completed in 1870. Con- Nobels and Rothschilds to effectively necting 34 countries, including Georgia, use the country’s natural-resource and it was the longest terrestrial line in the industrial-potential. world. And, until recently, traces of the “Russia is a country where it’s pos- Werner Siemens telegraph (Siemens-Patent-London)

34 AUGUST-SEPTEMBER 2013 Investor.ge

were still visible in some parts of the to Iran to ensure the local government’s country to receive news from abroad in country. In his memoirs, Werner Siemens commitment to the “Indian telegraph” just one or two days instead of weeks, the provides rich details of working on the project. Siemens brothers were also innovators in “Indian telegraph” on the shore of the Following Walter’s tragic death in the oil industry by drilling the Tsitelts- Black Sea and in Georgia. Particular 1868, his brother Otto became the head karo and Mirzaani oilfi elds in Kakheti. favorites among his memories were of the German mission in Tifl is, eventu- Georgian nature and the ancient cities ally becoming the consul of Prussia in Legacy of Kutaisi and Mtskheta. the Transcaucasus. When the Russian Revolution began The “Indian telegraph” project was Otto also passed away in Tifl is in in 1917, work on the company’s oil and also overshadowed by tragedy: in 1868, 1871 from unknown cases. Both broth- ore holdings stopped abruptly. Werner’s brother, Walter Siemens, aged ers were buried in the cemetery in the While Soviet propaganda depicted 35, died in Tifl is (he accidentally fell Vera Garden. the Siemens family as robbers who off a horse). exported gold and silver, the company’s Walter had lived on Sadovaia Street Technical Progress in Georgia partnership with the government con- (currently Lado Asatiani) in the historical In addition to connecting Georgia tinued, culminating in the Siemens’ Sololaki neighborhood for nearly eight with major European cities via the construction of the Zestafoni Ferroalloy years. During the stay he had to travel “Indian Telegraph,” which allowed the Plant in 1930. Investor.ge

HELENE BEDWELL

One Ghobi, Chadukebi and Green Elarji Please… veryone who admires Georgian cuisine also knows just how mo- Enotonous it can become after a while! Have you ever noticed, just when you are just about to order a meal in your regular restaurant, the wait staff simply brings you and your friends one menu for all, assuming that everyone knows what to order: khachapuri, khinkali, peasant-style green salad, cheese rolls, and garlic-fried chicken? Well, here is some good news for those who are in Georgia and are seek- ing something different, something unusual and unique: Shavi Lomi (The Black Lion). This is a place where diners can exercise their taste buds with new deli- cacies, according to Meriko Gubeladze, The Black Lion’s renowned chef and Georgian television personality. I visited her restaurant some time ago, when a friend suggested trying something different from the famous — and famously traditional — riverside restaurants and modern Chardin eateries. The only real problem we had is that we couldn’t fi nd the place! Meriko admitted that The Black Lion is not well advertised, but insisted that is not because she’s trying to keep it a secret. She offered me some samples from the menu in her restaurant, which is in the bohemian design of a basement diner that, at fi rst glance looks more like a cellar, than an upmarket establishmen. Where a diner can enjoy what they have to offer. A Magician in the Kitchen: Meriko was very young when she began to develop her cooking abilities, Meriko Gubeladze Takes on thanks to the help of her mother and grandmother. Traditional Georgian Cuisine While her fi rst attempts at cooking

36 AUGUST-SEPTEMBER 2013 Investor.ge

were not always successful — like the concept. “The most diffi cult part was discover more forgotten recipes from time she threw an eggplant into a boiling to convince the traditional cooks to use across the country: for many years Geor- soup pan (her mother was not pleased) — something different than all those known gians were trapped by the idea that just today all that has changed. She pleases ingredients,” Meriko said. “I was called a handful of standard recipes exist and her customers with such creations as crazy, insane, and everything under the all others were just made up or adopted khachapuri prepared quesadilla-style, sun, but I persisted.” from abroad. with meat, mini chadukas, and almond Meriko’s protests about Georgian “I categorically denounce the idea of sauce. food being too bland and sometimes mayonnaise usage in Georgian restau- Meriko was twenty-three when she even harmful to weak stomachs is eas- rants. We can do better than the Soviet- moved to the United States for non- ily understood when one tries one of her style salad recipes,” she said. food-related studies, but was shocked creations. She fries the corn fl our for The Black Lion, named after Niko to discover that despite coming from the famous Georgian cornbread, chadi, Pirosmanishvili’s eponymous painting, such a colorful and spice-loving country which darkens the dish and gives it a is one of the pioneers of the new era of like Georgia, she was still discovering slightly lighter taste than the traditional Georgian food, along with Mandari and more and more new tastes. Her curiosity golden-fried patties. the cooking academy at the Agricultural landed her jobs in various restaurants and She uses almonds, instead of tradi- University of Georgia, founded by Kakha reignited her desire to become a chef. tional hazelnuts, for the famous Bajhe Bendukidze, a former economic minister She then went on to study profes- sauce, another shocker for the conven- and current chairman of the Free and sional cooking and kitchen management tional Georgian kitchen. Her ghomi is Agricultural Universities. at the Vienna Tourism College. green, full of mint fl avor, and simply Meriko’s culinary fi ndings certainly When Meriko fi nally returned from divine when served with mouth-watering represent the future of Georgian cuisine, America, she happily accepted a man- gebjhalia (sulguni and cottage cheese something visitors and Georgians alike aging position at a restaurant that was wraps). will miss and crave when away from very different from the usual Georgian Meriko said that she would love to Georgia.

AUGUST-SEPTEMBER 2013 37 Investor.ge

My City, Tbilisi: Rebuilding Tbilisi’s Icon

38 AUGUST-SEPTEMBER 2013 Investor.ge

For the past year, Investor.ge has series to bring Tbilisi’s grand history, For the ﬁ rst installment in the series, brought you a series of six guides about graceful streets, and great cultural life Investor.ge spoke with Tbilisi native Tbilisi, from what to do with children to alive for all readers, whether local, expat, Irakli Baidashvili, one of the developers a tour of the city’s 1930s architecture. For or visitor. Investor.ge welcomes readers’ behind the renovation of the Mtatsminda the next six issues, Investor.ge will speak input; if you have any ideas or sugges- Funicular Station and restaurants –- as with locals about different neighbor- tions for the series, please contact the well as other cultural gems in the city’s hoods and events in the city in a six-part editor at [email protected]. historic center.

AUGUST-SEPTEMBER 2013 39 Investor.ge

Restoring Tbilisi’s Great Buildings – And Businesses

or over a decade, Irakli architecture without sacriﬁ cing modern with our investment, to contribute Baidashvili and his partners business sensibilities. to the developing of the country, to Fat GMT Group have worked GMT Group stepped in when the contribute to bringing back the glory to restore, renovate, and revitalize city’s treasures were languishing, after of those businesses that were existing Tbilisi’s greatest buildings and most years of war, civil strife, and poverty, before,” Baidashvili said. famous businesses. and purchased a package of real estate, “So it is a combination of the Baidashvili, who also serves as including the collapsed funicular history, the emotions of Tbilisi, and the treasurer and vice president on the station and the ruins of the Hotel the many generations who were raised AmCham Board of Directors, said Tbilisi (now Tbilisi Marriott). with this.” the GMT Group is motivated by a “Our vision is not only to make Tbilisi’s wide avenues like desire to restore the jewels of the city’s proﬁ t … our ambition is that we want, Rustaveli and Aghmashenebeli are

40 AUGUST-SEPTEMBER 2013 Investor.ge

relatively new additions to the ancient Garejeli founded his building here, and restaurant, a library, and a nursery. city, he noted. Tbilisi started in the then this place became a sacred place, “All the generations were spending eastern neighborhoods of Narikala and a place of pilgrimage. When he became the whole day here,” Baidashvili said. Ortachala and developed around the one of the patron saints of Tbilisi, The graceful columns began to river in a spiral. It was not until the Tbilisians started to call this mountain defi ne the city. 19th century, when Georgia became Mtatsminda, which means Holy “For Tbilisians, this became part of part of the Soviet Empire, that avenues Mountain, and they somehow mentally their life. For the kids, it was a reward and grand squares were added. and emotionally they understood this to be taken here, and for the adults it The Mtatsminda Funicular Station as a counterpoint to Athos Mountain in was for having rest and to see other is just the latest cultural treasure to be Greece,” he said. people.” rebuilt and reopened by GMT Group: The mountain, which used to be they also rebuilt the Tbilisi Marriott just rock with no trees or greenery, Balancing a Thin Line and the block on Freedom Square that was slated for development by the city Baidashvili and his partners took holds the Courtyard Marriott and the at the turn of the 20th century, when the responsibility of restoring the city’s GMT Plaza. Georgia was still part of the Russian icon very seriously. Together with While it was not the group’s fi rst Empire. Baidashvili said at fi rst the city investors from the United States and project, Baidashvili said it is one of the thought to turn it into a residential area investment from the Overseas Private most “sophisticated and complicated” but eventually the authorities decided Investment Corporation, they spent $20 of GMT Group’s efforts to date. to make it a city park. The funicular million and several years studying and “In our approach to our projects, was commissioned in 1906 and, as the rebuilding the three-story building. in the concepts, in the task for the upper station started to function, small “Our approach and our vision architects, we try to blend the old town eateries appeared for people to have a was derived from its past. It was the and the old historical values, with the cool drink and lunch. number one restaurant of the town, top modern quality, technology, and By the time the Communists came, therefore it should remain as it was. architecture,” Baidashvili said. in 1917, the site was well established. This was a historical building and it “Our approach to Mtatsminda is When the Communists developed should remain as it was,” he said. even more complex and sophisticated Shabatoba (Subotnik in Russian), the “Our approach was very careful. than with our other businesses because obligatory volunteering on Saturday, We studied everything, every single the property itself is very sophisticated. residents were happy to be assigned the remnant that was historical in the It is also practically an identifi er for the chore of planting trees and greenery on building … this was a challenge, a town. This became like the Eiffel tower Mtatsminda, Baidashvili said. challenge which some people told of Tbilisi.” “Therefore this place became us this was “mission impossible” to also part of their lives, because they maintain the historical value of the The Eiffel Tower of Tbilisi contributed to this and now we have a building and to maintain its spaces While GMT Group based its green mountain,” he said, adding that .. and to make it an effi cient, viable, reconstruction on the station building by the 1930s, the Communists decided income generating building.” opened in 1938, Tbilisians’ ties to the to capitalize on the site’s value as a But, after years of work, the group site and the mountain are based on meeting place. unveiled three fl oors –- 7000 square hundreds of years of Georgian culture “In the late 1930s, the Communists meters –- of dining, accessible for all and religion. decided to have the restaurant of the income levels. Mtatsminda, which means “Holy restaurants, one of the top restaurants “Our core approach was that this Mountain” in Georgian, has been a in the Soviet Union. Lavrenti Beria should become a showcase of the holy site for Tbilisians for centuries, was personally supervising it.” Georgian cuisine since it is an integral Baidashvili said. The building, opened in 1938, part of the Georgian culture -- maybe “This mountain was always became the trademark of Tbilisi. one of the main parts -- of the Georgian considered a holy place. In the It was famous as a restaurant, but culture,” Baidashvili said. medieval centuries, Saint Davit also included, among other things, a “And luckily, the investors

AUGUST-SEPTEMBER 2013 41 Investor.ge

agreed with us.” It has not been easy, GMT Group brought in an international everything from weddings to business however. Every detail had to be studied drink expert from the UK, Drinks conventions. and reviewed. GMT Group sought Fusion, to create local cocktails based Turning a city icon from a ruined out masters to carve out Georgian on Georgian products and international memory into a viable business in the ornamentation on the plaster works standards. A London drinkmeister has 21st century requires balancing a “thin and foreign consultants to help create relocated permanently to help develop line,” Baidashvili said. restaurants that combined the best of mixed drinks and cultivate a bar culture “This is a thin line but I would both Georgian culture and modern in Tbilisi. say it is a mandatory line to walk technology. The second-fl oor restaurant, and challenge. You have to respect The fi rst-fl oor bakery, Puri Guliani Funicular, requires a reservation, and everything that is valuable for the (Bread with Heart), uses state-of- offers diners the only Spanish Josper buildings. This is a challenge that you the-art-ovens to bake the fi nest in charcoal oven experience in town, as have to face,” he said. Georgian traditional baked goods well as the best views over the city. “On one side you really have to like khachapuri, as well as cakes and And the third fl oor, a banquet respect whatever is embedded as a sandwiches. Chela (which means cow hall, combines the site’s historical historic element, the historic value of in Megrelian) hits a striking balance terrace with the modern demands of those sites. And, at the same time, you between upscale American steakhouse a conference hall: glazed walls allow should bring a modern element into it. décor and great Georgian grilled dishes guests to enjoy breathtaking views The core is that it should be viable … like mtsvadi, kebabi, and khinkali. over Tbilisi, and the latest technology whether we will succeed or not, time For the second-fl oor bar/lounge, allows the room to be converted for will tell.”

42 AUGUST-SEPTEMBER 2013 Investor.ge

AUGUST-SEPTEMBER 2013 43 CONTENT

54 AmCham’s Annual Fourth of July Picnic

46 Practical Advice Workshop for 48 CLT Committee Updated 51 AmCham Thank You to Picnic Members Members on Rule of Law Sponsors Project 46 Lobbying for an Effective 52 Membership Directory Labor Code: An interview with 48 CSR Committee Represented Lasha Gogiberidze in Baku Workshop 54 Social: AmCham Fourth of July Picnic 47 AmCham Georgia, BAG 49 Improving Performance in Host Presentation of MCA- Emerging Markets: ISPI EMEA 56 Social: APM Terminals’ Georgia’s 2nd Compact Conference Community Outreach

47 Forensic Accounting and 49 KPMG Specialist on FATCA 57 Social: American Friends Fraud: An Overview of Offers Workshop for of Georgia and Brazilian Worldwide Trends Government, Banks Embassy Event

48 AmCham’s two corporate A 50 Member Profile: Asseco 58 Board of Directors members re-elected to board Georgia of directors

44 AUGUST-SEPTEMBER 2013 Information is power. Get informed by using Business Catalogue! around 10,000 companies over 500 industries up to 30 search criteria

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BUSINESS CATALOGUE the largest and continuously updated online database of businesses registered in Georgia

www.bia.ge www.bcat.ge 47/57 M.Kostava str. 0179, Tbilisi, Georgia Tel: (+995 32) 219 55 55 E-mail: [email protected] Practical Advice Lobbying for an Effective Workshop for AmCham Members: Labor Code: An interview How to most effectively and efficiently comply with Lasha Gogiberidze with the new Labor Code AmCham Georgia, particularly term contracts.” The proposed draft would Lasha Gogiberidze, partner at BGI the Labor Committee and Board have eliminated fi xed term labor contracts, Law Firm and Chair of AmCham’s Labor Member Lasha Gogiberidze, except some very specifi c circumstances. Relations Committee, and Maia Tsereteli, spent months working with After AmCham’s successful lobbying, it is Executive Director of Key Management the government and business now possible for the employer to make an Solutions (KMS Georgia), led an informa- associations to produce a labor initial one-year contract for two consecu- code that provides adequate tional workshop on the topic of the recently tive times, plus a six-month trial period, protection for both employers and enacted Georgian labor on July 19. before hiring an employee for an indefi nite employees. Investor.ge spoke with In his presentation, Gogiberidze high- him about the experience, and period of time. lighted the most relevant and salient Georgia’s new labor code. Another important issue for our mem- changes in the amended labor code. He bers was shift work. Proposed amendments specifi cally discussed requirements that eliminated the possibility to negotiate certain contracts be in writing, essential amount of working time between parties contract terms, details regarding employee and set it at a maximum 40 hours per week. handbooks, overtime, warning and termi- AmCham suggested to the authors of the nation requirements, and notifi cation re- draft law to add a special provision for quirements in company policies, in contract shift work. Our suggestion was accepted changes, and in terminations. Lasha Gogiberidze, a partner at BGI and now employers can make contracts Gogiberidze and Tsereteli discussed a Legal, helped AmCham Georgia’s efforts for shift work, where working time can host of other matters essential for company to negotiate for a balanced labor code. actually exceed 40 hours in one certain directors and HR managers doing business Talks with the government, business as- week but it will be compensated for by in Georgia and entertained many questions sociations, and labor union representatives rest time in next week or the week after from the audience. Tsereteli mentioned that lasted for months, and AmCham staff, with that. Moreover, overtimes can now be while there is no grace period specifi ed in Chamber President Sarah Williamson, Ex- compensated by additional rest time instead the new labor law, being in compliance ecutive Director Amy Denman, and Lasha of overtime pay. “Termination at will,” a with the law is an issue of utmost topical Gogiberidze, attended hours of discussions, major element of the 2005 Labor Code, has importance and interest for AmCham mem- debates, and meetings in an effort to voice now been removed. bers and the business community at large. the business community’s concerns. The new labor code, Lasha Gogiberidze Tsereteli answered a number of ques- Lasha Gogiberidze noted that with said, should not cause too many headaches tions on topics ranging from employee the exception of a few “minor hiccups,” for businesses. warnings to employee leave and answered the process of working together with the “The biggest concern initially was in practical questions from the audience on government on the new law was positive. several drafts that were fl oating around issues that may arise due to the new regu- “We were generally rather pleased with which were, for a lack of a better word, out- lations. AmCham received many positive the cooperation and the level of responsive- right wrong and dangerous. If those were comments on the event and its practical ness from the government and the deputy to be adopted, Georgia would effectively utility for the members companies. minister of justice, in particular,” he said. lose the labor market and everything would Gogiberidze underlined that the com- Out of 35 initial amendments, 17 were have been reverted back to the shadow ar- plexities of the new labor law require that identifi ed as unacceptable by AmCham’s rangements or outsourcing,” he said. any business with concerns rely on appro- labor relations committee and a dozen were “I think, in general, the fi nal form of priate professional advice and that labor prioritized for change. what was adopted is fi ne and businesses code presentation was for informational, One of the most important amendments generally operating in good faith should not legal purposes. would have ended the policy of “fi xed be able to continue functioning normally.”

46 AUGUST-SEPTEMBER 2013 AmCham, BAG Co-Host AmCham Business Presentation of MCA-Georgia Roundtable 2nd compact Forensic Accounting and Fraud: An Overview of Worldwide Trends

Clinton Hagfeldt, the head of the At the invitation of the American tion, and better position Georgia to be a advisory department at KPMG Georgia, Chamber of Commerce in Georgia (Am- strong trade partner of the United States.” spoke to AmCham members about ten- Cham) and the Business Association of For its subsequent compact, the Gov- dencies in fraud in private, public, and Georgia (BAG), Millennium Challenge ernment of Georgia conducted an analysis non-governmental organizations over the Account - Georgia presented the MCC’s that identifi ed the quality of human capital past three years during the roundtable event Second Compact in Georgia to the business as a binding constraint economic growth, for AmCham members at the Sheraton community on June 24 at Radisson BLU particularly acute in science, technology, Metechi Palace Hotel on July 10. Iveria hotel. This presentation reported on engineering, and math (STEM). Bridget Brink, US Embassy in Geor- the progress made in the preparations for To improve the quality of education in gia Deputy Chief of Mission, opened signing and launching the compact agree- these fi elds and increase earning potential, the meeting with a frank, off-the-record ment, as well as on the milestones achieved the proposed compact will make strategic discussion about local and international so far. Over 100 of the largest companies investments from the start of a student’s current events. In his presentation, Hagfeldt in Georgia attended. general education to graduation from highlighted three years of research into The opening remarks were delivered technical training and advanced degree frauds worldwide, paying special attention by the Vice Prime Minister and Minister programs, including a focus on increasing to how the complexity of modern busi- of Education of Georgia, Giorgi Mar- women’s participation in STEM profes- ness, coupled with the unique challenges gvelashvili, H.E; the Ambassador of the sions. The compact, expected to be signed of working in a developing economy like United States of America to Georgia, during the summer of 2013, consists of Georgia, impacts the situation for busi- Richard Norland; and Minister of Finance three projects: nesses and the government. Nodar Khaduri. The presentation was led The Improving General Education Hagfeldt noted that 86 percent of fraud by Resident Country Director in Georgia, Quality Project seeks to improve the qual- discovered around the world over the past Jim McNicholas and the Acting CEO of ity of general education through rehabilita- three years was perpetrated by male em- MCA-Georgia Gia Zurabashvili. tion of deteriorating schools, training for ployees who have worked at their organiza- On June 19 the U.S. Millennium Chal- educators and school managers and support tion for one to fi ve years. Statistics indicate lenge Corporation Board of Directors ap- for education assessments. that most fraud is discovered 18 months proved a fi ve-year, $140 million compact The Industry-Led Skills and Work- after the fact, and in 35-42% of the cases, with Georgia to increase the quality of force Development Project aims to im- two or more employees are collaborating human capital by investing in science prove the link between market-demanded together, a situation that complicates the and technology education and workforce skills and the supply of Georgians with ability to discover fraud. development. those technical skills. Most cases of fraud are typically dis- “One of the key ingredients to eco- The STEM Higher Education Project covered after management gets a tip, and nomic growth is equipping citizens with proposes to attract one or more American continued, diligent oversight is necessary the education and skills they need to suc- university partners to modernize science, to protect any organization from fraud. ceed in a modernizing economy,” MCC technology, engineering, and math educa- Studies have found that $3.5 trillion CEO Daniel W. Yohannes said, stressing tion by offering high-quality degree pro- was lost due to fraud in 2011, based on that “this compact will strengthen teach- grams that boost productivity and growth fi gures from the Association of Certifi ed ing, learning and educational intuitions in and increase employment opportunities. Fraud Examiners. During the meeting, Georgia so that students can learn skills that MCC’s Board selected Georgia as several members made announcements. are directly matched to industries driving eligible to develop a second compact in BDO announced it has hired Clifford Isaak growth. A better-educated workforce will January 2011; the country successfully as a partner and BGI Legal announced that accelerate economic growth, stimulate job completed a fi ve-year, $395.3 million com- Otar Kakhidze has been named the new creation, reinforce democratic participa- pact in April 2011. legal director at the fi rm.

AUGUST-SEPTEMBER 2013 47 General Assembly of AmCham Georgia AmCham’s two corporate A members re- elected to board of directors BP’s Neil Dunn and TBC Group’s Badri Japaridze were re-elected on June 19 as directors on the Board of Direc- tors for the term of two years during the AmCham General Assembly meeting at Radisson BLU Iveria Hotel. With a quo- rum of 43 percent, AmCham corporate A members had to choose among four candidates. The meeting was opened by Am- Cham President Sarah Williamson who AmCham ﬁ nances and member informa- also sought member approval for the gave a general overview of AmCham’s tion for year 2012 by Treasurer Irakli Chamber’s ﬁ nancial auditors for years activities and achievements over the past Baidashvili. 2012, 2013 and 2014. KPMG was unani- year, which was followed by a review of At the General Assembly AmCham mously approved.

CLT Committee Reports on CSR Committee Represented Rule of Law Project in Baku Workshop

AmCham’s Commercial Law and Tax Committee discussed On July 15-16 the Amcham CSR Committee attended various legislative issues and undated the committee members the “Post-2015 and Sustainable Development Goals (SDG)” on the status of the Eurasia Partnership Foundation-funded Rule workshop organized by the Northern Alliance for Sustainability of Law project during a meeting on July 5. (ANPED), International Eurasia Press Fund (IEPF) and Global George Welton, the Rule of law Project Manager, introduced Compact Network-Azerbaijan, in Baku. the newly hired staff members of the project to the CLT com- The goal of the workshop was to develop a regional plat- mittee members and brieﬂ y discussed the arbitration system, form to discuss the green economy in the context of sustainable the dispute resolution system, and a range of issues related to development, poverty eradication and governance in relation to government initiatives towards correcting alleged commercial/ the SDGs, in line with the perspectives of CSOs from Central administrative injustices. Ketti Kvartskhava also updated the and Eastern Europe. committee members about the competition law, which is cur- The CSR Committee Chairman, Margo Zhiznevskaya, rently pending at Ministry of Economy. AmCham’s lobbying participated in the panel discussion on “Challenges for the Cau- effort will continue in the Ministry of Economy and move to casus Region” along with experts from Azerbaijan and Russia, parliament when a draft bill is introduced. Ketti also briefed the and gave a presentation on “Green Business and its Effect on committee on lobbying efforts concerning the securities law. Globalization in the Context of the Regional Development.”

48 AUGUST-SEPTEMBER 2013 Improving Performance in Emerging Markets

On September 26-28, for the ﬁ rst conducted by performance improvement conference workshops facilitated by time in the Caucasus, Tbilisi will host experts from around the world. Partici- leading international experts and also the ISPI EMEA 2013 annual conference, pants will also have the opportunity to social events to provide participants with the support of USAID, Chemonics interact with a panel of senior executives time outside of the conference to learn, and AmCham. with diverse backgrounds in a special socialize, and enjoy themselves. The International Society for Perfor- two-hour question and answer session: ISPI EMEA conferences are unique mance Improvement (ISPI) is the leading Farooq Siddiqui, General Director of the and highly-interactive events with a international association working to im- Rustavi Metallurgical Plant; David Lee, track record of high value and the open prove individual and organizational pro- President of Magticom; and Michael exchange of knowledge, experience, and ductivity in the workplace. ISPI unites Cowgill, President and Co-Founder of innovative ideas in the ﬁ eld of human and more than 10,000 members from more Georgian American University. organizational performance. than 40 countries, and ISPI’s Europe, Conference participants will also Please visit the conference website Middle East, and Africa (EMEA) chapter have a chance to work with diverse to learn more: www.ispiemea2013.com. aims to share and expand the knowledge multi-national teams to help a real client Participants from Georgia are eligible of ISPI practitioners in other geographi- in a simulated consulting assignment. for reduced registration rates and should cal areas. This year’s simulation client is the Na- contact [email protected] for a This year’s conference topic is “Im- tional Center for Educational Quality customized registration form. AmCham proving performance in emerging mar- Enhancement. members are also eligible for a 10% kets.” The conference sessions will be The conference also includes pre- registration discount.

KPMG Specialist on FATCA Offers Workshop for Government, Private Banks

Dmitry Chistov, a specialist on the US government’s Foreign to report income on investment and dividends earned in the Account Tax Compliance Act (FATCA), provided two days United States. The law, which will be introduced in steps, of workshops on the new legislation for the government and requires compliant banks to fi lter their clients and identify ac- private banks on July 16-17. counts belonging to either American citizens or individuals who Chistov, director of Risk & Compliance at KPMG’s Moscow match a set list of qualifi cations. The fi ltered list will be sent to offi ce, walked banks through the law and its requirements for the IRS, where American tax specialists will determine if the foreign banks during a two-and-a-half-hour presentation at the account holder is liable for taxes on income he or she has not Tbilisi Marriott Hotel on July 17. FATCA was created by the disclosed. Banks that do not comply with the law risk losing U.S. Congress in an effort to recoup an estimated $100 billion 30 percent of gross payments related to revenue and income lost every year due to tax evasion by U.S. taxpayers who fail obtained by investing in the United States.

AUGUST-SEPTEMBER 2013 49 50 AUGUST-SEPTEMBER 2013 AUGUST-SEPTEMBER 2013 51 AmCham Company Members as of August 2013

PATRON MEMBERS Chartis Europe S.A. Georgia Gryphon - FK Sheraton Metechi Palace Hotel Branch 8603 Westwood Dr. Suite 310 20 Telavi St. BP Exploration Georgia 7 Bambis Rigi St., 0105 Vienna, Va 22182, USA Tel: 2772020; Fax: 2772120 38 Saburtalo St. Tel: 2439025; Fax: 2439026 Tel: 1 703 992 8664 www.sheraton.com/tbilisi Tel: 2593400; Fax: 2593488 www.chartisinsurance.com www.gryphonairlines.com www.bp.com T&K Restaurants (McDonald’s Chemonics International Georgia) 6a N. Ramishvili St., 0179 GT Group Exxon Azerbaijan Ltd 48 B. Cholokashvili St. 1 Dzmebi Kakabadze St. Landmark Suite 300, 95 Nizami St., Tel: 2234311; Fax: 2234309 Tel: 2921246; Fax: 2251422 www.chemonics.com Tel: 2740740 Baku, AZ1010 Azerbaijan www.gtgroup.ge www.mcdonalds.ge Tel: (994-12) 4982460; Fax: (994-12) Dechert Georgia LLC 4982472 7th fl oor, Pixel building, TBC Group Iberia Refreshments, JSC www.exxonmobil.com 34 Chavchavadze avenue 7 Marjanishvili St. Tetri Khevi Hesi District, Orkhevi Tel: 2334719 Tel: 2272727; Fax: 2228503 Tel: 2241091; Fax: 2241090 PricewaterhouseCoopers www.dechert.com www.tbc.com.ge www.pepsi.ge 7 Bambis Rigi St., 0105 Tel: 2508050; Fax: 2508060 Deloitte TBSC Consulting www.pwc.com/ge 36a, L. Asatiani St., 0105 KPMG CIS Ltd. Tbilisi Branch 3, Rapiel Eristavi Street, IV Floor Tel: 2244566; Fax: 2244569 3rd Floor, Besiki Business Center, Tel: 2959019; Fax: 2420215 UGT www.deloitte.ge 4 Besiki St., 0108 www.tbsc.ge 17a Chavchavadze Ave., 7th fl oor Diplomat Georgia Tel: 2935713; Fax: 2982276 Tel: 2220211; Fax: 2220206 65, Kakheti Highway www.kpmg.ge www.ugt.ge Tel: 2984950 CORPORATE B MEMBERS www.diplomat.ge Maersk Georgia LLC Assecco Georgia 6 Khetagurov St. 7 Bambis Rigi St. CORPORATE A MEMBERS DLA Piper Georgia LP Tel: 2200800; Fax: 2200815 Tel: 2720901 10 Melikishvili St. Alliance Group Holding, JSC www.maerskline.com www.assecco.ge 47/57 M. Kostava St., 0179 Tel: 2509300; Fax: 2509301 Tel: 2424181; Fax: 2998112 www.dlapiper.com Magticom Aliance Georgia Ltd www.agh.ge Economic Prosperity Initiative 5 Politkovskaya St. 33 Samurzakano St. (EPI) Tel: 2243773 Avon Cosmetics Georgia LLC Tel: 2171717; Fax: 2171171 6 Samghebro St. www.magticom.ge www.groupaliance.com 117 Tsereteli Ave. Tel: 2438924 Tel: 2226805; Fax: 2226806 www.epigeorgia.com www.avon.com Marriott Hotels, Resorts & Suites GZ American Academy in Tbilisi EY 13 Rustaveli Ave. Lisi Lake surrounding territory F H Bertling Georgia Ltd. 44 Kote Abkhazi St. Tel: 2779200; Fax: 2779210 Tel: 2227441; Fax: 2227889 10 Shevchenko St. Tel: 2439375; Fax: 2439376 www.marriott.com www.aat.ge Tel: 2252287 www.ge.ey.com APM Terminals www.bertling.com Microsoft Georgia LLC FINCA Georgia 52 D. Aghmashenebeli St., Poti 34 Chavchavadze Ave. 71 Vazha-Pshavela Ave. 3rd fl . Tel: 493-20660; Fax: 493-20688 Betsy’s Hotel / Prosperos Books Tel: 2970123 Tel: 2207410 www.apmterminals.com 32/34 Makashvili St. / 34 Rustaveli www.microsoft.com Ave. www.fi nca.ge Bagebey City Group Tel: 2987624, Fax: 2923592 Frontera Resources Georgia MSD (Schering Plough Central 49b Chavchavadze Ave. www.betsyshotel.com 12 Paliashvili St. East AG) Tel: 2913152; Fax: 2290169 Tel: 2252412 Offi ce 1/3, 3rd Floor, 1 Tabidze St. www.bagebeycity.com Booz Allen Hamilton, Inc. www.fronteraresources.com 4 Freedom Sq. Tel: 2953388 Tel: 2481348; Fax: 2481349 Georgian American Alloys, Inc. www.merck.com Baker Tilly Georgia Ltd. www.boozallen.com 200 S Biscayne Blvd Suite 5500, Meidan Palace, 44 Kote Abkhazi St. Miami FL 33131 USA NRC Tel: 2505353; Fax: 2505353 British American Tobacco Tel: (1)3053757560 9 Khvichia St. 0160 www.bakertillyinternational.com 71 Vazha Pshavela Ave. www.gaalloys.com Tel: 2244141, 2382825 Tel: 2157500/01/02; Fax: 2157503 www.nrccintl.com Bank Constanta www.bat.com Georgian American University 139 Tsereteli Ave. 8 Aleksidze St. Tel: 2401401 Pfi zer Luxembourg SARL Catoni & Co. Georgia Tel: 2206520; Fax: 2206519 www.bankconstanta.ge Representation Offi ce in Georgia 3 Lesia Ukrainka St. Apt.7 www.gau.ge 58 I. Abashidze St. Tel: 2989230; Fax: 2922264 Bank of Georgia Georgian Audit & Consulting Tel: 2252986 www.hapag-lloyd.com 3 Pushkin St. Company www.pfi zer.com Axis Business Pl, 2 Gamrekeli St. Tel: 2444134; Fax: 2983269 Caucasia Trading Tel: 2904522; Fax: 2904523 www.bog.com.ge Philip Morris Apt 11, Bld 7, 16 Krtsanisi St. www.gacc.com.ge Tel: 14433050083; Fax: 1 Tabidze St. Bank Republic 14433788388 GMT Group Tel: 2439001; Fax: 2439005 2 Gr. Abashidze St. www.caucasiatrading.com 4 Freedom Square www.philipmorrisinternational.com Tel: 2925555; Fax: 2925544 Tel: 2988988; Fax: 2988910 www.republic.ge Caucasus University www.gmt.ge ProCredit Bank 77 Kostava St., Bld.6, 4th fl . 154 Agmashenebeli Ave. Basis Bank JSC Gosselin Moving Georgia Tel: 2377777; Fax: 2313226 Tel: 2202222; Fax: 2202222-2226 1 Ketevan Tsamebuli Ave. 3 M/D, Didi Digomi www.cu.edu.ge www.procreditbank.ge Tel: 2922922; Fax: 2986548 Tel: 2596601/02/03; Fax: 2596600 www.basisbank.ge CGS Group www.moving.gosselingroup.eu 4 Freedom Sq. Radisson BLU Iveria Hotel Batumi Oil Terminal Grant Thornton LLC 1 Rose Revolution Sq. Tel: 2433410 3 Mamardashvili St. GMT Plaza, 4 Freedom Sq. www.cgsgroup.ge Tel: 2402200; Fax: 2402201 Tel: 2241818; Fax: 2241817 Tel: 2604406 www.radissonblu.com www.grantthornton.ge www.batumiport.com CH2M Hill 5th Floor, GMT Plaza, Freedom Greco Group SEAF Management LLC BDO LLC Square 1 Nutsubidze St. 7, Niko Nikoladze St. II Floor. Pixel Center 8th fl oor Tel: 2474040; Fax: 2470210 Tel: 2393138; Fax: 2311107 Tel: 2998115; Fax: 2923533 Tel: 2545845; Fax: 2399204 www.ch2m.com www.greco.ge www.seaf.ge www.bdo.ge

52 AUGUST-SEPTEMBER 2013 BGI Advisory Services Georgia Globalink Logistics Group New School - Int-l House VD Capital 18 Rustaveli Ave., II fl oor 14-A Shartava St, 2nd fl , Suite 7 35 Tskneti Highway, Bagebi 77 Kostava St., 0175 Tel: 2997292; Fax: 2996615 Tel: 2253262; Fax: 2439002 Tel: 2231728 Tel: 2363672; Fax: 2364302 www.bgi.ge www.globalinkllc.com www.newschoolgeorgia.com Wimm-Bill-Dann Georgia Ltd BLB (Business Legal Bureau) Goodwill (G-Mart) Nodia, Urumashvili & Parnters Village Ponichala, Tbilisi 0165 1 Shevchenko St, Apt.1 1 Parnavaz Mepe Ave. 0131 Offi ce #28, IV Block, Tel: 2475290 Tel: 2995797 Tel: 2243673; Fax: 2243673 71 Vazha-Pshavela Ave. www.wbd.ru www.blb.ge www.goodwill.ge Tel: 2207407 www.nplaw.ge Wings and Freeman Capital BLC Law Offi ce Gvinadze & Partners LLC Green Building, 6, Marjanishvili St. 4 Gudiashvili Sq. 44 Kote Abkhazi St, Tbilisi 0105 Orifl ame Georgia Tel: 2940051; Fax: 2940053 Tel: 2922491; Fax: 2934526 Tel: 2438970, Fax: 2438971 57 Uznadze St. www.wfcapital.ge www.blc.ge www.gvinadzeandpartners.ge Tel: 2911064; Fax: 2911068 www.orifl ame.ge Wissol Georgia Capto Group Holiday Inn 74b Chavchavadze Ave. 67 Aghmashenebeli Ave. 1, 26 May Sq., 0171 Overall Management Group Tel: 2915315; Fax: 2915615 Tel: 2558899 Tel: 2300099 (OMG) Inc. www.wissol.ge www.rsmcapto.ge www.hi-tbilisi.com 29 Marjanishvili St. Tel: 2436052; Fax: 2436052 Casino Adjara Hualing International Special 1, 26 May Sq. Economic Zone Paine Stevens LLC NON-PROFIT ORGANIZATIONS Tel: 2335519; Fax: 2334520 25 Apt. 34/36 Kobuleti St. 1 Ivane Javakhishvili Sqr. Agricultural University of www.casinoadjara.com Tel: 591005900 Tel: 2903211, Fax: 2903291 Georgia www.hualing.cn www.painestevens.com Caucasus Online LLC 13 km. David Aghmashenebeli Alley, 71 Vazha-Pshavela Ave. Imedi TV Policy and Management 0159 Tel: 2480048; Fax: 2480048 51 Ljubljana St. Consulting Group (PMCG) Tel: 2594901 www.caucasus.net Tel: 2464646 57 Uznadze St., 4th Floor www.agruni.edu.ge www.imedi.ge Tel: 2921171 Château Mukhrani, J.S.C. www..pmcg.ge American Friends of Georgia III fl oor, Didube Plaza, Imperial Tobacco International 77 Nutsubidze St. 116 Tsereteli Ave. Limited Representative Offi ce in Publicis Hepta Tel: 2397174; Fax: 2388495 Tel: 2201878; Fax: 2201878; Georgia 17 V. Jorbenadze St. www.afgeorgia.org www.mukhrani.com 12 Dariali Turn, 0162 Tel: 2745672; Fax: 2745671 Tel: 2232438 www.publicishepta.com CARE International in the City & Co. www.imperial-tobacco.com Caucasus 4 Besiki St. Rakeen Development LLC 37 Tsagareli St., 0162 Tel: 2920921 JTI Caucasus 20 Telavi St. 5th Floor Tel: 2291941 VII Floor, Pixel Business Center, Tel: 2933393; Fax: 2933993 www.care-caucasus.org.ge Crystal, MFO JSC 34 Chavchavadze Ave. www.rakeen.ge 72 Tamar Mepe St. Kutaisi, 4600 Tel: 2604111 East West Management Institute, Tel: 431253343 www.jti.com Rustavi Azot Ltd. Inc (EWMI) www.crystal.ge 2 Mshvidoba St. Rustavi-3702 3rd Floor, 5 Marjanishvili St. Kordzahia, Jgenti Law Firm Tel: 995341270900 Tel: 2505404; Fax: 2202441 David Tvildiani Medical Univesity 10 Petriashvili St. www.azot.ge www.ewmi-gpac.org 2/6 Ljubljana St. Tel: 2921878 Tel: 2516898, Fax: 2527196 www.kjlaw.ge Rustavi Steel LLC Eurasia Partnership Foundation www.aieti.edu.ge 12 Y. Gagarin St., 3700 Rustavi 3 Kavsadze Str. KSB Bank Tel/Fax: 260 66 99 Tel: 2253942; Fax 2252763 (ext. 112) Dexus 3 Ketevan Tsamebuli Ave. www.rmp.ge www.epfound.org 150 David Agmashenebeli Ave. Tel: 2550000, Fax: 2507707 Tel: 2207887 www.ksb.ge Silknet Ltd. www.dexus.ge 95 Tsinamdzgvrishvili St. Free University of Tbilisi Legal Partners Associated LLC Tel: 2910345; Bedia St., 1st Micro District Dika Ltd. Offi ce #203, Besiki Business Center, www.silknet.com Nutsubidze Plateau, 0183 40 Rustaveli Ave. 4 Besiki St. 0108 Tel: 2200901 Tel: 2990994; Fax: 2990994 Tel: 2200203; Fax: 2250458 Simple as That LLC www.freeuni.edu.ge www.lpa.ge 3rd Floor, 36a Lado Asatiani St. GeoCapital Microfi nance Tel: 2945568 Georgian Wine Association Organization Ltd. Liberty Bank JSC www.simple-georgia.com 5 Marjanishvili St. 5 Tsereteli St, Kutaisi 74 Chavchavadze Ave. Tel: 2505456 Tel: 431 267070 Tel: 2555500; Fax: 2912269 SRG Investments LLC www.geocapital.ge www.libertybank.ge 49a Chavchavadze Ave, 3rd fl oor International School of Tel: 2253581 Economics at TSU Luca Polare Geocell www.silkroad.ge 16 Zandukeli St. 54 Oniashvili St. 3 Gotua St. Tel: 2507177; Fax: 2984815 Tel: 2990399 Statoil Tel: 2770100, ext. 7435; www.iset.ge GMT Plaza, 4 Freedom Sq. Fax: 2770119 www.lucapolare.com Tel: 2471002 QSI International School of www.geocell.ge Marilisi Jewelry House www.statoil.com Georgia 8 Lebanidze St. GeoEngineering LLC Village Zurgovani, Tbilisi Tel: 577797919 Teliani Valley JSC 15a Tamarashvili St. Tel: 2537670; Fax: 2322607 www.marilisi.com 2 Marshal Gelovani Ave. www.qsi.org Tel: 2311788; Fax: 2311787 Tel: 2313245; Fax: 2313249 www.geoengineering.ge Mgaloblishvili Kipiani Dzidziguri www.telianivalley.com Salvation Army (MKD) 16 Ikalto St. Georgian Airways 71 Vazha-Pshavela Ave., Theco Ltd. Tel: 2333786; Fax: 2330227 12 Rustaveli Ave. Offi ce 24 16 Chikovani St. www.salvationarmy.org Tel: 2999730; Fax: 2999660 Tel: 2553880/81; Fax: 2973884 Tel: 592107515 www.georgian-airways.com www.mkd.ge www.tbilisia.ru Transparency International Georgian Resources Company Mina JSC Thermarsenal Ltd. Georgia 3-5 Kazbegi St. 4 Besiki St. 101, Tsereteli Ave. 26 Rustaveli Ave. 0108 Tel: 2936676 Tel: 2449981/82/83; Fax: 2449980 Tel: 2473112 Tel: 2932129 www.georgianresources.com www.mina.com.ge www.arsenal.ge www.transparency.ge

AUGUST-SEPTEMBER 2013 53 AMCHAM CELEBRATES 11th Amcham US Independence Day Picnic

On June 29, the American Chamber of Commerce in Georgia, together with the U.S. Embassy in Georgia, hosted a family-style picnic to celebrate the 237th anniversary of the signing of the U.S. Declaration of Independence. American and Georgian families enjoyed an American style BBQ, a blues band, and games and toys for the children. The event closed with a brilliant display of fireworks.

54 AUGUST-SEPTEMBER 2013 G

AMCHAM CELEBRATES

AUGUST-SEPTEMBER 2013 55 AMCHAM CELEBRATES APM Terminals Poti Reaches Out to the Community

APM Terminals Poti organized a special reception and concert dedicated to ‘Day For Persons with Disabilities.’ As many as 50 Children were invited to attend the concert; some of them have participated in the concert where they performed songs together with local music groups. A lovely decorated Tree of Wishes and a red carpet reception were a highlight of the event. In addition, a volunteer artist helped the children to paint pictures and SEAMEN Puppets made the evening unforgettable. At the end of the concert, cookies and chocolates were given to the children.

56 AUGUST-SEPTEMBER 2013 G

AMCHAM CELEBRATES

Every year APM Terminals Poti contributes to protect the environment and to create the place that everyone can enjoy. Poti Sport department, Kolkheti National Park and public schools joined APM Terminal staff to clean the public beach. In addition, on June 5 our Environment Protection Department delivered a presentation under the theme “THINK, EAT, SAVE” dedicated to World Environment Day for local educational centers and high school students.

On July 15, the Ambassador of Brazil in Georgia Carlos Alberto Asfora, together with Kees Gelderblom, hosted a wonderful Bossa Nova concert to celebrate 20 years of Diplomatic relations Brazil –Georgia and to help children suffering with leukemia. Donations went to help the Leukemia Children/Parent’s House at the Children’s Republican Hospital in Tbilisi, a project that was developed and funded -- and is currently financed -- with help from the American Friends of Georgia.

AUGUST-SEPTEMBER 2013 57 Sarah Williamson, PRESIDENT In Tbilisi since June 1998, Sarah Williamson is the co-owner and Vice President of United Global Technologies (UGT), the largest IT company in Board Of Directors 2013 Georgia.

R. Michael Cowgill, Irakli Baidashvili, First Vice-President Vice-President & Treasurer In his 15th year in Georgia, Michael Cowgill is the Irakli Baidashvili is the Senior Vice President of President and co-founder of Georgian American Univer- sity (GAU) in Tbilisi, Georgia, with schools of business, GMT Group. The company is one of the largest US law & social sciences, natural sciences & engineering and direct investments in Georgia, the owner of two liberal arts & humanities. He also continues to develop Marriott hotels, production facility SANTE and international energy projects which he has done for the several major real estate sites in Tbilisi . past 38 years in over 40 countries.

Neil Dunn, Director Esben Emborg, Director Neil Dunn is the general manager of BP Esben Emborg has been in Georgia since 1999. He Georgia since October 2008. He has 30 years of has worked a General Manager for Caucasus Region experience in the oil and gas industry, having for Cadbury Schweppes and Nestle until 2008. Now various engineering and operations assignments. he is working as Principal Partner for an Investment Fund (SEAF) that is currently managing a 30 mil USD portfolio of investments all over Georgia.

Lasha Gogiberidze, Director Badri Japaridze, Director Lasha Gogiberidze is a founding partner of BGI Badri Japaridze has been the Deputy Chairman of Advisory Services Georgia and the director of the Supervisory Board of TBC Bank since 1999 BGI Legal. Previously, Lasha worked at Ernst & and the Vice-President of Young’s Georgian ofﬁ ce. Lasha graduated from Georgian Glass and Mineral Water Co. (GG&MW) Tbilisi State University, has a LL.M. from the since 1995. University of Illinois, and is licensed to practice law in NY state.

Steve Johnson, Director Ted Jonas, Director Steve Johnson is the proprietor of Prospero’s Ted Jonas is the Managing Partner of DLA Piper’s Books and the General Manager of The Hotel Tbilisi ofﬁ ce. He advises clients on international Betsy. Prospero’s Books and Caliban’s Coffee business transactions, energy and infrastructure House is the leading English language bookstore projects, government relations, and dispute in Georgia. resolution.

Ketti Kvartskhava, Director Robin McCone, Director Ketti Kvartskhava is a Partner of BLC Law Ofﬁ ce. Robin McCone is a NZ lawyer. He leads PwC’s Her professional experience includes her work as tax and legal practice in Georgia and Armenia. He a Commercial Law Advisor at the USAID Georgia has been with PwC mainly based in CEE countries and as an instructor at Tbilisi State University. for over 16 years. Prior to moving to Tbilisi he She also worked as a Legal Counsel for the US- spent two years in New York as the leader of Georgian Commercial Bank JSC Absolute Bank the CEE Desk. He looks forward to utilising his and JSC Transcaucasia Bank. large international network in his role as a board member.

David Lee, Chairman Emeritus John Ashworth, Ex-Officio Member David Lee is the General Director of Magticom, the John Ashworth is the Deputy Chief of Political largest telecommunications operator in Georgia and and Economic Affairs and Senior Economic/ took up his position March 2004. David is also the Commercial Ofﬁ cer at the U.S. Embassy. He Chairman of the Eurasia Partnership Foundation worked previously in Uzbekistan, Barbados, and is a Chartered Accountant with an MBA from and on the State Department’s India Desk in Warwick Business School. A Russian speaker, he Washington. has worked extensively in the former USSR and served as a Royal Naval Ofﬁ cer for 9 years.

Betsy Haskell, Founding Advisor Amy Denman, Exec. Director Betsy Haskell is an 18 year resident of Georgia who Amy Denman came to Georgia in 1996 from Chicago started four successful businesses, and is currently where she worked in the Marketing Department in the developing a resort hotel and villas in the wine secondary education division of publishing company country. For the past 15 years, she has been the Houghton Mifﬂ in. After working for the IFRC for a Georgia Contractor for Metrica, Inc, a US Treasury year, she became the coordinator then the founding Department sub-contractor. Executive Director of the Chamber.

58 AUGUST-SEPTEMBER 2013 AUGUST-SEPTEMBER 2013 59 DLA Piper #1 globally for overall M&A deal volume (2012) – mergermarket #1 in global transactions for the middle market (2012) – Thomson Reuters

DLA Piper’s Global Corporate team remains one of the leaders in its field. With its strong local presence in Georgia and international breadth DLA Piper stands apart from the crowd in terms of diversity and complexity of the transactions it handles. The team retains a unique ability to provide national and cross-border advice to Georgian and international corporates and financial institutions, together with many of the region’s leading entrepreneurs.

Ted Jonas, Office Managing Partner Otar Kipshidze, Partner T +99532 2509 300 | [email protected] T +99532 2509 300 | [email protected]

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