As a result of investigative and procedural activities, carried out by Prosecutor’s Office of Georgia in cooperation with the Investigation Unit of Ministry of Finance of Georgia, on the fact of abuse of power and embezzelement of state funds, an offense punishable under article 182§2 (D) and 182§3 (B) and Article 332§1 of the Criminal Code of Georgia, the following officials have been detained:
1) Batumi Former Mayor G.E.
2) Adjara Autonomous Republic Deputy Minister of Education, Culture and Sports B.M.
3) Adjara Autonomous Republic Deputy Minister of Finance and Economy A.V.
4) Batumi Vice-mayor T.P.
5) Head of Municipal Property and Services Management Unit of Batumi City Hall E.L.
6) Deputy Head of the City Infrastructure and Improvement Unit of Batumi City Hall V.Kh.;
7) Head of the Procurement Unit of Batumi City Hall B.Kh.
An investigation has established that upon the decision of afore listed persons, who were members of the permanent tender commission and held various positions in City Hall, on October 09, 2015, Batumi City Hall announced the electronic tender on construction of so-called “cheap houses”. According to the tender conditions, the facility should have been constructed using lightweight stainless-steel constructions.
Before the announcement of the tender, the members of the Tender Commission and top management of Batumi City Hall were informed that there was just one company, which had the experience of building facilities using lightweight stainless-steel constructions. This company was offered by top management of Batumi City Hall to implement the project using these constructions. Batumi City Hall announced a tender based on the design and building cost estimations, which was provided for free, without conducting market research on those prices given in the documentation. Only one contender, a branch of foreign enterprise Convert Georgia participated in the tender.
During the electronic tender, the branch of foreign company Convert Georgia submitted fake documents to the unified electronic system of state procurement.
The members of the Permanent Tender Commission of Batumi City Hall did not even discuss the submitted documents, while the same documents, submitted by Convert Georgia for the same e-tender announced by Batumi City Hall on May 1, 2015, led to the company’s disqualification.
Batumi Municipality City Hall permanent tender commission members, vice-mayor of Batumi B.M. of that time, Head of the City Infrastructure and Improvement Division of Batumi City Hall T.P, Deputy Head of the City Infrastructure and Improvement Division of Batumi City Hall V.Kh., Head of Financial-Economic Division of Batumi City Hall E.L, and Head of the Procurement Division of Batumi City Hall B.Kh., despite the fact that submitted documents were not in line with the tender conditions, did not disqualify the branch of foreign company Convert Georgia and they announced it as a winner. Having won the tender Convert Georgia presented the UK, London registered Point Bank LDT bank guarantee. Aforementioned company was not a banking facility at all and was in fact an inactive company.
Based on the assignment of Batumi Mayor G.E., Deputy Head of Financial-Economic Division of Batumi City Hall A.V.was asked to examine and study reliability, ability to pay and rating of the UK registered Point Bank LDT. As a result of the examination, there was revealed that this company did not have a rating at all, that clearly indicated on its unreliability. At the same time, there was already sent a recommendation letter from the Georgian National Bank to Batumi City Hall that bank guarantees were to be required only from high level reliable international or Georgian commercial banks.
So instead of protecting state legal interest by Batumi Mayor and permanent tender commission members, to end the tender and not to sign an agreement with Convert Georgia, they signed state procurement 4,279,990 GEL worth agreement with the company. Having signed the agreement, Convert Georgia submitted advance bank guarantee issued by non-bank, inactive, fictitious company Point Bank LTD.
Though, Batumi Mayor, as well as the Head of the Finance Division E.L. and Deputy Head of the Finance Division A.V. knew on unreliability of Point Bank LTD and the fact that guarantee issuing company was not a banking institution at all, advance payment was still transferred to Convert Georgia in the amount of 1 626 396,20 GEL. The Company fulfilled 251 109,43 GEL worth works. The rest of the works that were to be accomplished have not been carried out yet.
Considering aforesaid, abuse of power and authority, illegal granting preference to Convert Georgia and groundless advance payment transfer by Batumi Mayor and different level officials, led to violation of the State legal interest and based on State Audit Office report, there has been embezzled 1 370 076,00 GEL by which the municipality suffered a great amount of material damage.
Considering the public interest related to the case, the Prosecutor's Office of Georgia will periodically update the public on the progress of the investigation.