Review of the Government’s Meeting. August 8, 2001

On August 8th, members of the executive branch of the Government accused each other in corruption. Justice Minister Mikheil Saakashvili stated before the Government members that Vano Chkhartishvili, Minister of Economy, Industry and Trade and Vakhtang Kutateladze, Minister of State Security are corrupted and they have illegally acquired property.

Such emotional clashes have been caused by a report of Justice Minister Mikheil Saakashvili on the new bill on “Return to the State of Illegal and Unproven Property”, elaborated at the ministry of Justice. Prior to starting of a meeting, President Shevardnadze asked Government members to discuss this bill calmly. However, the document appeared too irritating for some of them. The law is against of numerous governmental authorities, and therefore opposition to the Ministry of Justice was rather natural event.

According to this bill, all unproven or illegal property should be confiscated and returned to the state. This bill concerns only high-level government authorities, or those who have been working on principal positions in the governmental institutions. The bill also uses term “close person”, which means a physical or legal subject, with whom a governmental employee or his/her family member has joint material interest. As an explanation memo to the bill says, “This term extends an area of bills competence to wider group of persons. This is very important, because quite often “friendly connections” are being used for laundering illegal incomes”.

He bill defines the subjects, who may appeal to the court on returning an illegal property to the state. First version of the bill allows every citizen to appeal to the court, when another version gives this right to the state. A governmental authority, which would be found possessing illegal property, would be dismissed form his/her position immediately and the property would be confiscated.

Minister of Economy, Industry and Trade Ivane Chkhartishvili reacted very sharply on Saakashvili’s report on the bill. He evaluated the bill as an act of populism and attempt to increase the rating. He emphasized the provisions of the bill, regarding improper process of privatization of the state property, when the assets worth of millions of dollars have been sold for almost no price. Chkhartishvili stated, that reexamination of privatization processes is much similar to nationalization and this might distract investments into the country.

Justice Minister replied, that as provisions of the bill indicate, these processes would concern only governmental employees but not businessmen. Therefore, the bill has no similarity with nationalization.

Reaction of Minister of internal Affairs Kakha Targamadze was sharp as well. He criticized a legal side of the bill. He said, that some of the provisions of the bill contradict with the Constitution of Georgia. Targamadze said, that the bill has a principle of retro force, which is not permitted under Georgian legislation. This statement concerns the provision of the bill regarding a liability of former governmental employees. Furthermore, Minister of Internal affairs said that Crime Code of Georgia already contains such provisions, and therefore there is no need of having another special law on illegal property.

However, it must be said, that if these provisions of the Crime Code functioned normally, then Justice Minister would not need to elaborate a special bill on such issues. Saakashvili states that law enforcing structures make no reaction on facts of corruption among the governmental employees. Saakashvili demonstrated photos of the villas of high-level governmental authorities to prove necessity of adoption of the bill and uselessness of the same provision in the Crime Code. Images of huge ‘palaces’ belonging to Vano Chkhartishvili, Vakhtang Kutateladze, Soso Alavidze were among the pictures that Saakashvili demonstrated. It is impossible to build such houses with the wages that these governmental employees receive. Therefore these persons are suspected in corruption. Mikheil Saakashvili is going to name other persons at the next Meeting of the government on August 15.

President Shevardnadze thanked Saakashvili for submitting the bill, however he mentioned that the document needs certain adjustments. He also mentioned, that the title of the bill associates with Soviet period style for some extent. President did not make any further comments on the issue.

Introduction of the bill at August 8th Government’s Meeting has clearly shown to citizens the opposition between “reformers” and “conservators” wing of the Government. Saakashvili (who belong to the “reformers”) was supported by Tax Incomes Minister Mikheil Machavariani and Finance Minister Zurab Nogaideli. Other ministers and most influential governors Temur Shashiashvili (of Imereti) and Levan Mamaladze (of Kvemo Kartli) have strictly opposed the bill.

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Yet another scandal would happen during the Meeting if President had not postponed Ivane Chkhartishvili’s report on year 2002 budget parameters and reserves.

Minister of Economy, Industry and Trade Ivane Chkhartishvili demands increase of incomes to the budget worth of 100 million Laris, however ministers of Finances and Tax Incomes are strongly against (yet another example of confrontation between the two wings).

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Ministry of Justice presented bill on “Licensing and Granting the Right for Entrepreneurship” to the Meeting as well.

The same law of 1999 is in force at present, however the Ministry considers necessity of its renewal and refining. The present law considers rather complicated mechanisms of licensing. Under the new bill procedures of licensing and granting of the rights would be simplified as much as possible.