Georgia - Corruption

Organized Crime [OC] is very powerful in Georgia and the intertwined ties there between the government and OC began under former President Shevardnadze, when a paramilitary group served as a de facto shadow presidency. Although there were improvements under President Saakashvili, there were still "limitations" in Georgia's efforts to combat OC. Investigators from other countries complain of feeling "completely abandoned" and "betrayed" by Georgia and the explanations that they received from Georgia regarding its lack of cooperation are "more pathetic than the betrayal itself."

By 2015, through dramatic police and institutional reforms, the government had mostly eradicated low-level corruption. According to a 2015 Georgia Messenger poll, only 2 percent of the population reported that they had to pay a bribe in the previous year to receive a government service or decision. In 2005, the government eliminated 84 percent of licensing requirements, and Georgia ranked 15th in the 2015 World Bank’s, Ease of Doing Business Index.

Georgia is a low-regulation, low-tax, free market country that has made sweeping economic reforms since the 2003 “Rose Revolution." Georgia’s progress from a near-failed state in 2003 to a relatively well-functioning market economy in 2012 is noteworthy. Through dramatic police and institutional reforms, the government has all but eradicated low level corruption with, according to one poll, less than one percent of the population reporting having to pay a bribe in the past year to get a government service or decision. The government eliminated 84 percent of licensing requirements in 2005, and Georgia ranks 16th in the World Bank’s Ease of Doing Business Index.

In 2000 Georgian legal expert Georgi Glonti wrote, “The drug business is very wide-spread in Georgia today. A variety of criminal groups and individual citizens take part in thiscrime. Ethnic groups from Abkhazia, South Ossetia, Chechnya, Azerbaijan, and people fromother CIS countries as well as Turkey are involved in the drug business. Considering Georgia’s location, many countries are using it as a corridor, especially the regions with weak government control."

The government has made considerable strides in controlling corruption, although challenges still remain. Shortly after President Saakashvili took office, his administration dismissed about 85% of the police force and replaced its ranks with better-paid and better-trained officers, immediately decreasing the largest source for daily corruption among the population. Several high-level officials have been prosecuted for corruption-related offenses. The government continues to make anti-corruption initiatives a priority, and Georgia’s global ranking in Transparency International’s Corruption Perceptions Index improved overall from 133rd in 2004 to 68th best in 2010. Limited confidence in the Georgian court system remains a major obstacle to both foreign and domestic investment. The government publicly recognizes the importance of addressing these concerns, which requires the combination of judicial independence and informed, honest, fair, and competent judicial decision making.

Under the leadership of President Saakashvili, Georgia has taken dramatic action to reduce corruption. Anti-corruption efforts have resulted in the arrests of former officials, the radical downsizing of state bureaucracies, and effective crackdowns on smuggling. Consequently, state revenue collections have increased several fold. The government completely disbanded the notoriously corrupt traffic police in mid-2004 and citizens’ service agencies have been reformed into one-stop-shops called Public Service Halls, now considered a showcase of Georgia’s successful reforms.

The prevalence of opaque business structures and the dominance of select markets by a few companies contributed to allegations of elite corruption and crony capitalism. The Economic Policy Research Center stated that elite corruption was marked by embezzlement of public money by public officials and abuse of official powers through government favoritism and internal deals. Transparency International’s Competition Policy in Georgia reported that some segments of the country’s market were highly concentrated and suggested the existence of cartel agreements or coordinated practices among economic agents. Some problematic markets identified included fuel, food, and pharmaceuticals. Transparency International’s Georgian Pharmaceutical Market report noted that the pharmaceutical market was best described as an “oligopoly and vertical monopoly of two companies that use their strong concentration of market power in the import/distribution, the retail, and the manufacturing sectors to dominate the market." Aversi Rational and PSP accounted for 90 percent of pharmaceutical manufacturing and were the largest import and distribution companies. Both companies also owned hospitals and insurance companies. PSP was owned by parliamentarian Kakhaber Okriashvili, who was a member of the Committee on Health Care and Social Issues and the Committee on Sectors of Economy and Economic Policy. The pharmaceutical companies Aversi Pharma, PSP Pharma, and GPC were among the largest contributors to the election campaigns of the UNM party, and were the beneficiaries of substantial public procurement contracts.

Following transfers of power in 2012 and 2013, then Prime Minister Bidzina Ivanishvili and his successor Prime Minister Irakli Garibashvili both pledged to strengthen Georgia’s anti-corruption stance. Alleging elite corruption under the previous government, the new government launched a number of investigations and prosecutions against former officials, although the parliamentary opposition has alleged these prosecutions are politically motivated. As of May 2014, many of these cases are ongoing.

Articles 332-342 of the Criminal Code criminalize bribery. Senior public officials must file financial disclosure forms and Georgian legislation provides for civil forfeiture of undocumented assets of public officials who are charged with corruption offenses. Bribery is a criminal act under Georgian law, and Parliament recently accepted a package of constitutional amendments that make abuse of public office a criminal offense with a maximum penalty of 15 years imprisonment and confiscation of property. Penalties for accepting a bribe start at six years in prison and can extend up to 15 years depending on the circumstances accompanying the offense. Penalties for giving a bribe can include a fine, a minimum prison sentence of two years, or both. In aggravated circumstances, when a bribe is given to commit an illegal act, the penalty can be from four to seven years. The definition of a public official includes foreign public officials and employees of international organizations and courts. White collar crimes such as bribery fall under the investigative jurisdiction of the Prosecutor's Office.

Georgia is not a signatory to the Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Georgia has, however, ratified the UN Convention against Corruption. Georgia cooperates with the Group of States Against Corruption (GRECO) and the OECD’s Anti-Corruption Network for Transition Economies (ACN). The OECD conducted an assessment of Georgia in October 2009, releasing a report in March 2010 that concluded Georgia had significantly reduced corruption levels over the past four years. However, the report suggests that reforms should continue in order to strengthen the Anti-Corruption Interagency Council and improve judicial integrity.

Since 2003, Georgia has significantly improved its ranking in Transparency International’s Corruption Perceptions Index (CPI) report. The 2011 CPI ranked Georgia 64th out of 183 countries, improving on its 2010 ranking of 68 out of 178 countries. Transparency International credited Georgia for successful introduction of a transparent e-procurement system that makes government tender data accessible online to citizens and promotes e-governance.

Transparency International concluded that perceived corruption in Georgia is lower than in several European Union member states, including Slovakia, Italy, Greece, Romania and Bulgaria, and much lower than in neighboring Armenia, Russia and Azerbaijan. In spite of this progress, TI’s recently published National Integrity System analysis shows that Georgia’s system of democratic checks and balances remains weak. The report found the judiciary, the media, and civil society to be too weak to serve as effective checks on the power of the executive branch, whose power remains largely secured by the ruling party’s constitutional majority in Parliament.

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