Independent Expert Finds No Proof of Money Laundering in TBC Bank Case

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OPINION & ANALYSIS Independent expert finds no proof of money Does Racha need a cascade laundering in TBC bank case of hydropower plants?

FULL STORY ON Page 2-3 ECONOMICS US Assistance Strengthens Georgia’s Response to COVID-19

FULL STORY ON Page 3

By Natalia Kochiashvili

n 14th of May 14th, a local watchdog O Transparency International Geor- gia (TIG) released the assessment of the money laundering prosecution related to the TBC Bank case. The report was compiled by Australian lawyer Pauline Khazaradze: “This is a politically motivated case against Bidzina Ivanishvili, his prosecutor’s office and the judges he appointed against us.” David – an ‘independent’ expert in money laundering. According to the report, there prosecuting a person for an inappropriate international fiscal authorities and no ‘red Ana Natsvlishvili, one of the leaders is no basis to prove Mamuka Khazaradze, or artificially constructed charge (money flags’ were raised. He said the bank was of the political union Lelo for Georgia Badri Japaridze or Avtandil Tsereteli laundering) to get around the fact that the suffering an ‘orchestrated’ political attack. stated yesterday, that in the end, every- committed a money laundering offence, appropriate charge for the conduct alleged Developments around TBC Bank one unanimously says that the case of either individually or as co-conspirators. (misappropriation) is statute barred,” have brought into question the fate of Khazaradze-Japaridze-Tsereteli is ‘not After an assessment of Georgian and reads the release. the Anaklia Deep Sea Port project, a $2.5 about the administration of justice, but international laws, the Indictment, the In many jurisdictions, where the court billion investment on the Black Sea coast about political motivation.’ According to facts in issue, and accepted international has determined a prosecution is an abuse not far from Abkhazia, where Mamuka her, this report is further evidence that jurisprudence in money laundering cases, of process, the court has used its inherent Khazaradze’s TBC Holding was the lead- the Georgian Dream has not kept its key findings show that there is no evi- power to protect the court by terminating ing partner. promise of a justice system that would dence from which to infer an intention: to those proceedings. Khazaradze, who now leads a political be fair and free from political pressure. ‘legalise’(launder) any funds obtained by Note, that in November 2019, TIG union Lelo for Georgia, has ascribed his According to Khazaradze, all the con- selected David in an international open ‘persecution’ to his role in the construction clusions indicate the same fact that this way of loan; to conceal the ‘illegal origins’ competition for an anti-money laundering of Anaklia port, suggesting that the pur- case is politically motivated and there are of the loan funds; or to integrate those expert to assess the criminal prosecution pose of the investigation could be to squeeze no crimes in the case. He emphasized that funds back into the legitimate economy. related to the money laundering charges him and Japaridze out of the project. Lelo’s growth is frightening the ruling According to the information, pub- against businessman Mamuka Khaz- party, however, the results will be shown lished by TIG, even if the court found ev- aradze, Badri Japaridze and Avtandil in October elections. He reiterated that ery fact in issue in the case in favour of the Tsereteli in order to determine the extent Georgian Dream has reached the point prosecution, those facts are not capable of to which their financial transactions in where international partners have talked supporting a money laundering charge. 2008 contained elements of money laun- out loud about what’s happening in Geor- David argues that money laundering dering in accordance with international gia; the ruling party tried to discredit him and the underlying predicate crime (mis- standards and Georgian law. and Japaridze, ‘main actors of Anaklia appropriation in this case) are separate In January 2020, Pauline David, a project’, which he promised to start right offences. Proof of a predicate the crime practicing lawyer with 30 years of expe- after winning elections. of misappropriation alone is not proof of rience, a member of the Australian Bar At a press conference, Japaridze said money laundering. Even if the prosecu- Association and an expert in anti-money that the government was using a pan- tion proved misappropriation, the subse- laundering, was selected, who visited demic, trying to use it to gain political quent conduct alleged could only support Georgia this February for meetings. incentives and to continue repressing the use of misappropriated proceeds, not Khazaradze and Japaridze, founders political opponents. He also spoke of the the laundering of those proceeds. of the TBC Bank and now politicians, March 8 deal between the ruling party Internationally courts condemn the are facing criminal investigation over and opposition, saying “We should not al- practice of prosecuting for money launder- money-laundering allegations involving low the government to lead the opposition ing, when the conduct alleged extends no a $17 million transaction that took place parties to radical steps and undermine further than conduct capable of proving in 2008. Tsereteli, a businessman and the agreement reached with so much the predicate crime. Because of the statu- father of the owner of TV Pirveli, a critical effort and the great involvement of our tory time limitation, the crime of misap- voice against the ruling party, was also foreign friends.” propriation cannot now be prosecuted as charged for being complicit in the alleged The legal expert, David said she found no According to him, it is important that a stand-alone offence, nor can it be proven laundering scheme. evidence in the case indicating an intention to both agreements are implemented to have as a predicate crime. Khazaradze denies the charges, claim- “launder funds obtained by way of loan, to conceal a peaceful electoral environment: accept- “It can be an abuse of process to ing the legality of the said transaction was illegal origins of the loan funds, or to integrate ing constitutional changes and releasing circumvent a statute of limitations by inspected multiple times by the local and those funds back into the legitimate economy.” political leaders from prison. P2 | OPINION & ANALYSIS FRIDAY, MAY 15, 2020 Technological Future of the Insurance Industry after COVID-19 impact

IN THE CURRENT SITUATION, INSURANCE COMPANIES HAVE TO OVERCOME MANY OBSTACLES, BUT IN THE FUTURE THIS MAY CHANGE.

By Anastasia Sokhadze similar product. Old insurance technologies that provide more products are becoming increas- resilience in the face of future ingly unusable and can no longer pandemics. When determining he sudden changes will meet modern requirements. certain insurance options, insur- cause some shock to the T The lower-priced insurance ance companies turn to new and industry, which will inevitably products have led to the fact alternative sources of informa- lead to significant modifications. that compensation for losses, tion or new methodology for If before most people were not especially for small and medium- analyzing existing information. interested in any of the insurance sized businesses today, is often The technological solutions packages, today this attitude is inadequate. Under the conditions needed for the insurance indus- being reassessed. Businesses will of the pandemic, this problem, try will be further developed pay more attention to insurance. despite the growing demand, next year. We must assume that The insurance industry will have was exacerbated. The insurance insurance technologies and the to respond to these changes in the company must be well aware of current situation will help us to short term to make it possible the seriousness of the situation reassess the basics of insurance, to develop a long-term strategy so that it can then take the right which will have a positive impact based on the new reality we have retaliatory steps. on this industry as a whole in the to face up to. There are already insurance future. COVID-19 has dealt a huge blow to the world economy and it is impossible to restore it in a short time. First of all, it means that insurance companies have to think of other ways to make money - which they should have been doing since 2008. It is not ruled out that due to the pandemic, the regulatory authorities can introduce new rules for the The alterations and improvements technology will have to go through. capital reserve, which will speed up the reassessment process for prehensible foreign terminology change. For example, one of the insurance industry. used there remains difficult to the largest insurance brokers, Additionally, whether it is a understand to the customer. This Marsh, has had a PathogenRX person, a small or medium-sized can be corrected, but insurance infectious disease pay package business owner, or a large cor- companies will need a lot of time since 2018. Until now, its use porate buyer, it is often difficult to restore their credibility. was limited, as the package was for them to understand what is Thus, users will start looking considered one of the most expen- causing the loss. This is due to for an insurance package that sive offers. the contract and the terms, which will cover the damage caused by This case may prompt other are often too long, and the incom- the global pandemic or climate insurance companies to create a COVID-19 improving reassurance methodology. Does Racha need a cascade of hydropower plants?

By Natalia Kochiashvili well known: the right HPP - the coast of the Black Sea Basin. The right place,” reads the state- construction and operation of an he Caucasus Office of ment. As further explained, additional hydropower cascade T the World Wildlife Fund ‘righteous HPP’ means built on the Rioni will further jeopar- (WWF) publishes its position on with the latest, environmentally dize the already reduced habitat the development of hydropower friendly and minimally harmful areas for sturgeon and ultimately and protected areas in Georgia. technologies, and ‘right place’ protect and maintain sturgeon; Due to the recent construction means taking into account the The unparalleled damage will of hydropower plants in Racha results of strategic planning and be done to the genetic diversity, and the difficult situation in the all 3 components of sustainable which in this region is character- protected areas, WWF expressed development: not only technical- ised by unique agro-biodiversity general position and the views economic, but also socio-cultural and the natural-cultural heri- on the situation in Racha. and ecological. tage, namely - the rarest, unique Thus, WWF opposes all hy- “The general position of the Racha Community Organization protests the construction of the HPP in Oni. varieties of vines in the world. WWF regarding the construc- dropower projects whose plan- In addition, the tourist potential tion of hydropower plants is ning and development do not of Racha will be reduced by one meet internationally recognised sensitive geological balance, The river Rioni is an ecosys- tenth, claims WWF statement. standards and best practices. which increases the risk of pos- tem of high conservation value - “Racha does not need a cas- Friday May 15 WWF Caucasus Office lists 4 sible catastrophic developments; one of the few rivers in the world cade of HPPs, it needs a big main reasons for why the organ- Rioni floodplains are of inter- where sturgeon-endangered national park - nature will be Day Cloudy isation believes that Racha and national ecosystem importance species are still breeding in the protected, land will not be alien- the river Rioni HPP is not the (this type of habitat is included natural conditions. In this sense, ated (forest, pasture), people High: 27°C right place to build: the region in the relevant list of the Berne the river. Rioni is the only and is generally a seismically overly Convention); irreplaceable one on the east CONTINUED ON Page 3 Night Cloudy Low: 14°C

Saturday may 16 Nino Metreveli Commercial Director Day Sunny Mariam Mchedlidze Editor-in-Chief High: 29°C Natalia Kochiashvili Night Cloudy Executive Editor Nino Kavelashvili Low: 17°C Design and Layout FRIDAY, MAY 15, 2020 ECONOMICS | P3

The Messenger Staff response team) of the Fire and Rescue Forces Department at n May 14th, 2020, in Tbilisi the EMS of Georgia. Provision O at the Emergency Manage- of the tents is part of a larger ment Service, USAID/Georgia effort by the U.S. Government Mission Director Peter Wiebler to support Georgia’s immediate joined Deputy Minister of Inter- COVID-19 response and help nal Affairs Ioseb Chelidze and build its emergency prepared- Head of Georgia’s Emergency ness capacity through upgraded Situations Management Service equipment and enhanced train- Temur Mghebrishvili to hand ing. over field hospital tents pro- “On behalf of the Govern- vided to Georgia by the Ameri- ment of Georgia I would like to can people through the United take this opportunity and once States Agency for International again thank the U.S. Govern- Development (USAID). The ment for its continuous support field hospital tents will enhance to Georgia in the face of the CO- the preparedness and response VID-19 outbreak. Handing over capabilities of the Emergency these field hospital tents is one Management Service (EMS) of more signal of the strength of the Georgia and support the safety Georgian-American partnership. of communities across Georgia We hope this assistance will fur- during the COVID-19 pandemic. ther enhance preparedness and “USAID thanks to the gener- response capabilities of the EMS osity of the American people has as well as safety of communities been able to support the Govern- across the country”, Deputy Min- ment of Georgia’s response to ister of Internal Affairs, Ioseb the COVID-19 pandemic here Chelidze said on Thursday. in the country. Here with our To date, the US Government, partners at the Ministry of In- through USAID and other agen- ternal Affairs, EMS we handed cies, has deployed a range of over 2 tents that USAID and resources to contain and prevent our partners procured to help the spread of COVID-19 globally. EMS respond to cope and ulti- In Georgia, the U.S. Government mately control the spread of the has responded rapidly to the virus in Georgia. It’s obviously pandemic by partnering with important for Georgia’s immedi- porting Georgia so long to con- its partner the Association Rural than 20 m². The tents will be Georgia’s Government, civil soci- ate response to keep its citizens tinue,” USAID/Georgia Mission Development for Future Georgia deployed to quarantine zones ety, and private sector to prevent healthy and safe, but also it’s Director Peter Wiebler told The (RDFG), rapidly sourced and across Georgia and after the the spread of disease, support critical to get the country back Messenger on May 14th. procured hospital field tents crisis, will be handed over to essential public services, and on a path to economic growth In response to a request with a total area of more than the CBRN (Chemical, Biological, help prepare for the economic and stability that USAID and from the EMS of Georgia, the 45 m² and heated technical field Radiological and Nuclear) Inci- recovery from the pandemic. US Government have been sup- USAID/Zrda Activity, through tents with a total area of more dents Response Division (Rapid

CONTINUED FROM Page 2 age annual electricity production representatives of specific politi- is 780 million kWh, which is more cal parties and non-governmental will be satisfied with firewood or than 6% of Georgia’s annual organizations regarding the con- other biological resources and, electricity consumption. The total struction of the Oni HPP cascade at the same time, locals will be investment of the project is $ 330 disinformation, irresponsible and employed in the park and the million. Georgian Co-Investment treacherous, which were recently national park (as a ‘brand’) will Fund owns 10% of the project, spread by the media. attract thousands of tourists,” and 90% of the shares belong to “All the information provided says WWF CAUPO, noting that the company, “Feri” Ltd. to the population by the media the establishment of the park Criticism that the project will was a lie, absolutely everyone,” was planned considering techni- not have a positive impact and he said on May 12th. cal requests of the government, socio-economic benefits, JSC Oni Other members of the gov- yet it has not been established. Cascade at the end of the state- ernment responded to the story The World Wildlife Fund opposes all hydropower projects planning and development JSC Oni Cascade, the project of which does not meet internationally recognized standards and best practices. ment also lists several factors in of Oni Cascade. For example, implementing company issued terms of response and benefits: Roman Kakulia, chairman of the announcement after the Both hydropower plants will tests have been performed. Strengthening the country’s the Parliamentary Commit- statement of political parties, take part of the water from the Then comes the fate of min- energy independence; Imports tee on Sectoral Economics and non-governmental organisations Rioni River near the main build- eral springs in the village of of electricity reduced by several Economic Policy, said: “We get a as well as media coverage, calling ing. The remaining water is also Utsera. Environmentalists are hundred million kWh during the kilowatt hour. And the property all information false. They wrote added to the hydro resources talking about the danger of the winter; Property tax paid an- tax, which will be consumed lo- that the construction of Oni Cas- of numerous tributaries of the disappearance of these waters. nually in the local municipality cally by the population, will be cade is clearly designed for high Rioni, which in total is more “Based on the hydrogeologi- budget, which is 1% of the total ¢8 million. ” seismicity and that a detailed than sufficient during the water cal studies and also taking into investment; Employment of Economy Minister Natia Tur- seismic survey has been carried shortage period, for the smooth account the Oni 1 HPP tunnel in 300-400 local residents at differ- nava, whose ministry is to issue out, in particular, by the leading operation of the local flora and the village the distance from the ent stages of construction and the final construction permit for European company Studer Engi- fauna in winter. inscription is 2.4 km, the nega- employment of 100-150 local Oni HPPs, said the Oni HPP neering GmbH. During the flood season tive impact of the project on the residents after commissioning. project is safe, employs people JSC argues that a number of (spring-autumn), the water taken mineral waters is minimized,” it And yet members of the move- and “makes a significant contri- important HPPs have already by the HPP will be almost un- says, adding that all mineral or ment against the Oni HPPs, bution to the country’s energy been built in the high seismic noticed, so much water comes drinking water manifestations activists and part of the local independence.” zone of Georgia, including the naturally into the river. have been studied and recorded. population (including Racha Davitashvili issued an en- Shaori and Lajanuri HPPs with The next issue is landslide- Detailed monitoring of mineral Community Organization) are vironmental decision on March their reservoirs and writes: prone areas. Here, too, Oni Cas- and drinking water will be car- opposing it. Movement ‘No to 17th, 2020 (Order N2-256) on “None of the HPPs were dam- cade calls it a lie that the project’s ried out during construction and Oni Cascade’ is in the process of the construction and operation aged, neither for the environment geology was only done by taking operation, which will also be preparing a lawsuit - they plan of a cascade of Oni hydroelectric nor for the local population dur- aerial photographs, and the proj- strictly controlled by the Ministry to sue in court and thus obstruct power plants in Oni Municipality, ing the powerful earthquake that ect will negatively affect active of Environment and Agriculture. the process and to hold a protest on the Rioni River. It has also struck in 1991.” Rioni will not dry landslide areas. They claim that The Oni HPP Cascade Proj- rally in Racha as soon as the state been reported that Bidzina Ivan- up and Oni will not turn into a detailed geological surveys have ect includes two HPPs - Oni 1 of emergency ends. ishvili’s interests are behind the desert - we read in the statement been conducted three times, all HPP and Oni 2 HPP. The total Levan Davitashvili, the Min- Oni cascade, which was denied by of JSC Oni Cascade. The argu- important sites have been drilled installed capacity of the project is ister of Environment and Agricul- Prime Minister Giorgi Gakharia ment is as follows: and all the necessary laboratory 206.1 MW, and the planned aver- ture, called the statements of the in the May 11th statement.