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Transparency International publishes overview of offshore companies in Georgia

By Tsotne Pataraia
Thursday, November 28
“Transparency International Georgia” (TI) has published a review of offshore companies and their subsidiaries. According to the organization, there are about 3,000 companies in Georgia, the founders of which are registered in the offshore zones - the so-called "tax paradise."

According to "Transparency International", most of the offshore investment in Georgia in the first half of 2019, $ 59 million came from Panama, and are linked to Bidzina Ivanishvili (head of the ruling party “Georgian Dream” who is also the richest man in Georgia), in particular the “Tourism Development Fund,” which is implementing several projects in Georgia its 100% stake is owned by Panama-registered company FRANKSTON INTERNATIONAL.

Following the study ”Offshore and Georgia” published on November 27 by the organization, the association of this Panamanian company with Bidzina Ivanishvili is also confirmed by the fact that the former and acting directors of the fund projects are persons related to Bidzina Ivanishvili. Also, according to public registry records, “Tourism Development Fund” and “Cartu Bank” are registered at the same legal address. FRANKSTON INTERNATIONAL also owns 100% of Bidzina Ivanishvili's main investment company, the “Co-Investment Fund.”

Transparency International notes that banning entry of the offshore capital into the country is not justified and no country bans it at all, but it is unacceptable for the political culture of developed countries to have a politician or someone strongly related to a political party with such relation to the offshore companies. The NGO cited the “Panama Papers” scandal as an example when the British Prime Minister had to explain the sale of a ? 30,000 offshore company:

“In recent years, developing countries have been actively considering opportunities to reduce future offshore risk and are gradually adopting a high standard of disclosure to offshore companies, which is one of the recommendations of the Organization for Economic Co-operation and Development (OECD) anti-corruption network. Georgia is also a member of the Anti-Corruption Network, so this recommendation applies to it as well. Moreover, due to the high level of corruption, the fulfillment of this recommendation is a must," states the report.

Transparency International believes that Georgia should comply with the OECD's anti-corruption network recommendations and require disclosure to offshore companies at least when these companies, or their subsidiaries, participate in state procurement, “Partnership Fund” projects or other state programs.

The NGO also provides an overview of the general situation regarding offshores in Georgia:

“Offshore in Georgia is a hot topic, as many offshore companies or its subsidiaries operate in the country. There are currently 3,000 companies registered in the Georgian Entrepreneurial Register, all of which are owned or partially owned by an offshore company. For example, about 1,000 companies are registered in the UK offshore, there are about 250 companies in the Virgin Islands, 280 in Cyprus, 74 in Panama, 63 in Seychelles, 80 in American Samoa, 12 in the Bahamas and so on,” reads the report.

Bidzina Ivanishvili and former Defense Minister Davit Kezerashvili were among the mentioned in the 2016 “Panama Papers.” In April 2016, Transparency International published an article stating that Bidzina Ivanishvili had not mentioned an offshore company in a declaration that he had filled when holding the post of Prime Minister.