Member Info for Looed

This is from April last year so I will only post a very small section - it could almost have been written today. I mention it as its an interesting read if you have a few spare minutes - and it includes a detailed response from Seth Char of Iconia Capital (in the comments section)

The main speaker is Fady ASLY, Chairman of International Chamber of Commerce

"Unfortunately, foreign direct investment [FDI] is stalling; the stories of many investors who were defrauded, harassed and prohibited from completing their investments are circulating all over the world now. It takes one failure to destroy one hundred success stories; but when you have hundred failures and no success stories the problem becomes huge and unsolvable.

Unfortunately Georgia has lost its attractiveness for foreign investors; we have to keep in mind that Georgia has to compete for foreign investment with more than 120 emerging countries! Why would anyone come to Georgia and deal with harassment, pressure, lethargy of the authorities, and corruption in the judiciary, when they can go to more attractive destinations with better terms and investment conditions?"

https://english.caucasianjournal.org/2019/04/fady-asly-of-icc-georgia-unfortunately.html

Hi Aurora1 - The GD can try to pass this off as FRR lobbying, but the GD and GOGC have themselves spent millions on lobbying and so far with little success.

I think the optics of this will be far more damaging than any $$$ amount. Its easy for us to see everything through our FRR glasses on, but the timing of this Bill is very interesting - and can you imagine the position we would be in had the Bill lost the vote!

Pt.3

“Many in Congress still remain not fully comfortable with Georgian Dream and Ivanishvili in particular. Frontera has helped push that, but so too has the Georgian opposition, which remains close to many on Capitol Hill,” Stronski told Eurasianet.

Stronski added that the issues that Georgia faces now parallel those of a decade ago, when the government and then-president Mikheil Saakashvili were becoming increasingly authoritarian before being ousted by Georgian Dream.

“Georgia is held to a higher standard than most, given its track record of reform and democratic progress. It has been a recipient of a tremendous amount of assistance over the years, but seems stuck in an endless cycle of democratic promise, then backtracking,” Stronski added. “Events over the past year certainly have amplified existing concerns about Georgian Dream and Ivanishvili's non-transparent and oversized influence in the country.”

It would be a mistake for the Georgian government to minimize the warnings from the U.S. as the result of a few lobbyists, said Kornely Kakachia, director of the Tbilisi think tank Georgian Institute of Politics.

“This is giving them [the government] some food for thought, and it’s clear that the pressure is not going to stop, but will only increase, so the government sooner or later needs to get engaged on this because Georgia cannot afford a row with the United States,” Kakachia told Eurasianet. “It is essential for Georgia to keep a bipartisan consensus in Congress, which seems like it is crumbling now,” he said.

“One thing that is clear is that Georgia’s status as a frontrunner in terms of reforms has been shattered, and it’s unlikely that the government can change this narrative,” Kakachia said.

https://eurasianet.org/threat-of-conditions-on-us-aid-roils-georgia

Pt.2

Support from Washington is vital for Georgia, which sees the U.S. as its patron and protector against its overbearing neighbor, Russia. The news from Congress was interpreted in Tbilisi in sharply partisan terms, with the ruling party and opposition each blaming the other. The opposition seized on the threat as evidence that the ruling party is losing the U.S.’s trust, with the government countering that it is the opposition itself that is deliberately blackening Georgia’s name in Washington.

“In Washington, the capital of our strategic partner, there is already a well-established opinion that Ivanishvili’s rule runs counter to both Georgian and American interests,” Giorgi Kandelaki, a member of the opposition European Georgia party, told reporters. (Bidzina Ivanishvili is the leader of the ruling Georgian Dream party.)

“I don’t remember a [U.S.] threat to freeze aid since the time of [former president Eduard] Shevardnadze. There are indeed lots of similarities between the Shevardnadze period and Ivanishvili’s rule,” Kandelaki said.

Members of Georgian Dream, however, played down the threat of the aid blockage, while also blaming the opposition. “This is an opinion of one group, which has to go through one committee, then another committee, then go to the full session,” Gia Volski, the deputy speaker of parliament, told the local Radio Maestro. Volski said the opposition has been trying to monopolize relations with the U.S. and make the strategic partnership with Washington into a partisan issue. “Such destructive actions are unheard of and it is unfortunate to see this happening in Georgia,” he said.

Ruling party officials also have blamed Frontera, a U.S. oil company, for campaigning against the Georgian government in Washington.

Frontera lost an international arbitration case in April after failing to fulfill its contract with the Georgian government and not paying workers for months. Several members of Congress (in particular, ones who have taken campaign contributions from the company) have responded by undertaking a campaign to portray the Georgian Dream-led government as a Russian puppet, and they have been cheered on by many Georgian opposition figures.

“Everyone needs to understand that this is just one group that believes that the issue of Frontera is of special importance and they don’t care that they [Frontera] failed to meet their contract with the state [of Georgia], left many people without jobs and pay,” Volski said.

In Washington, though, the issues are bigger than Frontera alone, said Paul Stronski, a senior fellow in the Russia and Eurasia Program of the Carnegie Endowment for International Peace, a Washington, DC, think tank.

Pt.1

Threat of conditions on U.S. aid roils Georgia

A United States congressional committee has proposed blocking some aid to Georgia unless Tbilisi takes measures to “strengthen democratic institutions,” do more to fight corruption, and protect foreign businesses operating in the country. The threat is perhaps the most vivid evidence yet of a growing lack of trust between the U.S. and Georgia, long Washington’s closest partner in the region.

On July 9, the House Appropriations Committee approved a spending bill that would give Georgia $132 million from the State Department and the U.S. Agency for International Development – more than the aid packages for the rest of the Caucasus and Central Asia put together.

But the committee bill included a condition on the aid, mandating that some of the money be withheld unless the Secretary of State certifies to Congress that Georgia has fulfilled three conditions: that it is taking “effective steps” to “strengthen democratic institutions,” “combat corruption within the government,” and “ensure the rule of law in the private sector is consistent with internationally recognized standards, including protecting the rights of foreign businesses to operate free from harassment and to fully realize all due commercial and financial benefits resulting from investments made in Georgia.”

The bill would withhold 15 percent of the money except for programs aimed at promoting “democracy, the rule of law, civil society and the media, or programs to reduce gender-based violence and to protect vulnerable populations.”

The aid bill still has many hurdles to overcome before it becomes law, and the condition seems likely to be removed at some point before the legislation is adopted. Even if it isn’t, the bill as it is now allows the Secretary of State to waive the 15 percent deduction if it is “important to the national interest of the United States.” Similar waivers have allowed the U.S. to continue to provide aid to countries like Azerbaijan and Uzbekistan in spite of congressional attempts to block it.

Nevertheless, the threat represents a shot across the bow from Washington, where policymakers have watched in dismay over the past year as the Georgian government has violently cracked down on protests, reneged on a key electoral reform promise (before agreeing to it months later), and engendered suspicions about the independence of the judicial system.

"There is definitely a shift in Congress, with more concerns being raised among members on rule of law and corruption issues in Georgia," one congressional aide, speaking on condition of anonymity, told Eurasianet. "It’s best to view it as a signal that Congress is looking for action from Georgia, which it still considers a friend, to strengthen institutions and combat corruption."

Pt.2

A 2019 study by Trace International revealed that over the past three years, the risk of business bribery in Georgia has increased by three percentage points. The prospect of containing this corruption is one of the biggest risk factors in the country, the study reports.

A similar conclusion was conducted in 2019 by the Economic Freedom Index of the Heritage Foundation. Despite successes in the fight against petty corruption, high-level corruption by government officials still remains a problem in Georgia.

High-level corruption in Georgia was also mentioned as an urgent problem in the European Parliament’s 2018 resolution.

No help from the US to those who violate the territorial integrity of other countries

The bill also says that the United States will refuse to help the governments of those countries of the former Soviet Union that “commit any actions that violate the principle of territorial integrity of other countries in the post-Soviet territory.”

In Georgia’s case, this applies to both Abkhazia and South Ossetia. These territories declared their independence from Georgia and are recognized as independent by Russia and several third world countries. Georgia and most of the international community insist that they remain part of Georgia.

https://jam-news.net/us-to-withhold-15-percent-of-georgias-aid-unless-anti-corruption-conditions-are-met/

Pt.1

US House committee approves bill that will withhold 15% of $135 mln in aid to Georgia

The U.S. House Appropriations Committee has passed a bill that will withhold 15% of $135 million in aid to Georgia in 2021 as, the authors of the bill argue, the Georgian government is not taking sufficient measures to combat internal corruption and ensure the independence of the judiciary.

The Georgian authorities, however, consider this decision to be the result of lobbying in Washington by the opposition.

The same assumptions are made about Frontera, an American investment company operating in Georgia which has long accused the Georgian government of discriminating against US investments.

The House Appropriations Committee’s approval of the bill is only an interim decision. The final vote will be held in congress in August 2020.

If the bill is approved, Georgia will receive approximately $20,000,000 less than the total planned aid of $132,025,000.

Georgia turning away from the West? US legislators claim foul play against US business in Georgia

US oil exploration company Frontera accuses Georgia of ‘anti-Americanism’

What does the US government think is wrong with the administration in Georgia?

In a document published by the US Congress, representatives urge the Georgian government to turn its attention to the following issues:

Strengthening democratic institutions, including the independence of the judiciary, accountability and transparency of government activities, including free access to public information.

Protecting the rights of civil society, political opposition parties, and independent media.

Redoubling efforts against corruption in the government, including the implementation of anti-corruption laws.

Ensuring adherence to the rule of law in the private sector in accordance with internationally recognized standards, including protecting the rights of foreign business and preventing foreign businesses from being prosecuted.

If these conditions are met, the Georgian government will receive the full amount of funding.

However, funding to civil society will still be paid in full

The bill clarifies that this suspension of funding does not apply to programs that support “democracy, the rule of law, civil society, media, or programs aimed at reducing gender-based violence and protecting vulnerable groups.”

“There have been no reforms for years” – non-governmental organizations urge authorities to change their approach immediately

A group of non-governmental organizations note that no significant reforms have been made in Georgia over the past few years, and that the fight against corruption is dwindling every year.

The US decision to reduce funding for Georgia is directly related to poor governance on the part of the ruling Georgian Dream Party and its leader, the shadow ruler of the country, oligarch Bidzina Ivanishvili.

The sanctions are limited so as not to hurt the people of Georgia. The GD are forever playing up their pro-democracy status and the strength of the relationship with the USA. So I think it's quite a rebuffal to be viewed as more Lybia than Luxembourg. The committee can always amend the terms as could the House.

This is what Wiki says about the committee that just passed the Bill -

"The bills passed by the Appropriations Committee regulate expenditures of money by the government of the United States. As such, it is one of the most powerful of the committees, and its members are seen as influential."

https://en.wikipedia.org/wiki/United_States_House_Committee_on_Appropriations

The Committee on the Associations of the House of Representatives of the United States Congress has approved a bill that will also talk about funding Georgia. The bill was supported by 29 lawmakers, against 21.

According to the document, Georgia will receive more than $ 132 million in aid in 2021, and 15% of aid may be suspended until the Secretary of State submits a report to the State Committee that the Georgian government is taking effective steps to strengthen democratic institutions, fight corruption and the rule of law in the private sector. In terms of the protection of the supremacy, including the rights of foreign business.

https://rustavi2.ge/ka/news/169809

Short version - its all a bit murky.

Only 13 of the 19 political parties received private donations. More specifically, the political parties received a total of GEL 8 362 581 from 450 individuals and 26 legal entities, of which GEL 7 036 166 (84% of all donations) went to the ruling Georgian Dream party. The Lelo Movement was second with GEL 520 000 and the European Georgia was third with GEL 289 982. The data show that the private donations received by the Georgian Dream are about 14 times higher than the donations of the second-ranked Lelo and five times higher than the donations received by all 18 other political parties;

From January 1, 2019 to May 1, 2020, nine legal entities donating Georgian Dream and 15 companies related to individual donors (who donated a total of GEL 1 745 000) got simplified public procurement contracts amounting to GEL 15 750 924. During the same period, they also won public tenders of GEL 126 092 739.

Over the years, several major groups have been formed among the ruling party's donors, contributing large sums of money to the Georgian Dream in almost every election. All such groups have a common story when a large part of its members donate money to the ruling party on the same day or 1-2 days apart. It raises some doubts about whether such collective action is organized in advance by someone. Georgian legislation prohibits third-party donations, so the SAO should be interested in such suspicious circumstances.

Full article here - https://www.interpressnews.ge/en/article/108312-ti-georgia-georgian-dream-alliance-of-patriots-and-european-georgia-enjoy-the-biggest-revenues/

And the full report is here - https://docs.google.com/viewerng/viewer?url=https://transparency.ge/sites/default/files/georgias_political_finance_in_2019_0.pdf

There are many interesting articles on corruption, political parties etc on the main site - https://transparency.ge/en

"Mikheil Saakashvili: I promise I will be holding your hands during Ivanishvili's defeat and Georgia's victory in October"

"The U.S. Congress has imposed sanctions on us for the first time since our independence. We had always been the major recipient of American assistance in the world. We had been an exemplary country and now Ivanishvili has embarrassed our country all over the world,” Saakashvili said"

Full article here - https://www.interpressnews.ge/en/article/108316-mikheil-saakashvili-i-promise-i-will-be-holding-your-hands-during-ivanishvilis-defeat-and-georgias-victory-in-october

"Salome Samadashvili: This is a message scrupulously written in Washington and intended for the Georgian Dream and Bidzina Ivanishvili"

"As Samadashvili told reporters, it is noteworthy that Congress considered it necessary to explain in detail what the issues of democracy and the rule of law mean."

Full article here - https://www.interpressnews.ge/en/article/108314-salome-samadashvili-this-is-a-message-scrupulously-written-in-washington-and-intended-for-the-georgian-dream-and-bidzina-ivanishvili

And for the Govt 'Much Ado About Nothing' point of view -

"Gia Volski: It is a lie that Congress made that decision. It is only a bill"

"One group has submitted this resolution to Congress, but it is a lie that Congress has already made a decision. It is only a bill, there have been such bills referring to oligarchic governance earlier too, but nothing has been proved."

https://www.interpressnews.ge/en/article/108313-gia-volski-it-is-a-lie-that-congress-made-that-decision-it-is-only-a-bill

Thanks EkXoc for posting.

Sorry can someone help to check and cut and paste if of interest as on phone -

https://civil.ge/archives/358914

Thanks in advance

Thanks welloiled - I totally missed that small but vital detail!!

Sonnyclimes - the FRR arbitration was held according to UNCITRAL rules. This is the international standard.

As far as I can recall we have never discussed this company? I found this on the Georgian public registry.

It seems it was set up by Zaza (50% ownership with another person) in August 2019. I can't find any info about it on the web but I am still checking.

This from 7/8/19 -

I request that you register a new entity
Legal form: Limited Liability Company

Name: Knowledge

Please, in accordance with Article 41, Paragraph 41 of the Law of Georgia on Entrepreneurs,

Register as the legal address of the subject to whom the e-mail notified will be considered as officially submitted
Registration as a VAT payer:

I do not want to register as a VAT payer

Attached documentation:
Charter
P / m copies
Open a bank account:

Please ensure that the enterprise account is opened in the following bank (s):
Bank of Georgia
By signing the application, I agree that the bank should provide the National Agency of Public Registry with information on the opening of the enterprise account.

And this is from 8/8/19

Knowledge Ltd.
Limited Liability Company 437072267
08/08/2019
LEPL National Agency of Public Registry
Georgia, Ozurgeti district, village. Gurianta, 10th st., N 19

The person providing the information is responsible for the authenticity of the additional information.
Information on the liquidation / reorganization / insolvency process
it's not registered
Leadership / Representation
Director - Zaza Mamulashvili, 33001006621
Trademark:
Legal form:
Identification number:
Registration number, date:
Registration authority:
Legal address:

Owner share
Elizbar Kvaratskhelia, 39001027159
Zaza Mamulashvili, 33001006621
Partners
Share manager
50%
50%

Ring any bells with anyone ?

Note - Pirveli radio is one of the two national radio stations run by the Georgian Public Broadcasting service.

And another one -

"The government does not allow us to operate under this contract and make investments" - Mamulashvili

Zaza Mamulashvili, director of Frontera, said that Georgia's business environment sanctioning act, which is joined by more and more congressmen every month, has been initiated, arguing that the business environment in Georgia is unfavorable for American investment.

According to him, due to these reasons, the company is no longer able to invest in Georgia, which means that the "Georgian Dream" violates the terms of the agreement with the company.

"The authorities are preventing us from allowing the terms of the contract, which we negotiated with the Georgian government in the free environment a long time ago, to operate and invest in this contract. The environment is very bad for American companies and investments like ours. Initiated by this bill we talked about today. Georgia's Business Environment Sanctions Act, which is joined by more and more congressmen each month, is expected to increase support for the act, Mamulashvili said.

http://pirveliradio.ge/?newsid=146948

Here is another article that seems to have the full quote from Zaza. The wording helps clarify the "company can no longer invest" statement

Zaza Mamulashvili, director of Frontera, also spoke about Georgia's business environment sanctioning act, which is joined by more and more congressmen every month, arguing that the business environment in Georgia is unfavorable for US investment and the government is doing nothing to correct it. According to him, for these reasons, the company is no longer able to invest in Georgia, which means that the Georgian Dream violates the terms of the agreement with the company.

(This is Zaza's quote) "The authorities prevent us from agreeing that the terms of the contract, which we agreed on in the free environment with the Georgian state a long time ago, do not allow us to operate under this contract and make investments. In general, the environment is very bad for American companies and investments like ours. In addition to this bill, which we talked about today, the Georgian Business Environment Sanction Act, initiated by more and more congressmen every month and supported by this act, seems to be growing" - says the president of "Frontera Incorporation".

https://infonews.ge/????????????-??????-????/