TI Georgia’s Report on Political Finance in 2021

On July 8 Transparency International (TI) Georgia, a local civil society organization, released a report on the revenues and expenditures of 17 political parties, which were financed by the state according to the election law, or recorded a minimum of GEL 100,000 (USD 34,000) in revenue.

According to the document, the ruling Georgian Dream party’s was accounting for more than two thirds of both total revenues and total expenditures which, according to TI, “indicates an extremely uneven distribution of funds.”

Party Revenues

A total of GEL 43 million (USD 14.6 million) in revenues was reported by 17 political parties, of which 63%, GEL 27.3 million (USD 9.2 million) were in donations, 32%, GEL 13.9 million (USD 4.7 million) in state funding, and 5%, GEL 1.8 million (USD 612,244) was other types of income, including loans.

For many parties, funding from the state budget, as foreseen by the law, was a significant source of revenue. The ruling party hovered up the largest share (37%) of the state funding too, with GEL 5.1 million (USD 1.7 million), UNM received GEL 2.2 million (USD 748,299).

In this sense, an impact of the amendments to the legislation, passed on February1, 2022 had an impact: two parties – the Labour Party and Lelo for Georgia have lost the right to benefit from the state funding, since either the MPs either had their mandate revoked, or failed to show up at more than half of the plenary sessions. This amendment was criticized by civil society and OSCE/ODIHR, and international watchdog, since it affected the parties that boycotted the parliament sessions for political reasons.

The revenues and its composition for other opposition parties’ is reflected in the chart above, hover over the appropriate party name to see the data.

Donations continue to represent the major component of the party finance. The report shows that 13 political parties received monetary and in-kind donations amounting to the total of GEL 27.4 million. 72% of these donations – GEL 19.8 million were given to the Georgian Dream. UNM is second with GEL 2.9 million.

The report points out that a stable group of companies has crystallized that regularly donates to the ruling party. Often, reads the report, such donations are on the same dayor withing several days. Notably, in 2021 some of these companies and legal entities won state tenders totaling approximately GEL 320 million (USD 108.8 million) and received simplified state procurement contracts worth GEL 19 million (USD 6.4 million).

“These companies and donors directly or indirectly connected donated about GEL 4.5 million (USD 1.5 million) in the same period for the benefit of Georgia Dream,” the study reads.

Parties’ Expenditure

Per the report, the 17 political parties spent GEL 41.9 million in 2021, of which 62% – 25.8 million (USD 8.7 million) was spent by the ruling Georgian Dream. UNM spent GEL 5.1 million (USD 1.7 million), Lelo for Georgia – GEL 3.3 million (USD 1.1 million). Data for other parties is presented in the chart below.

The parties spent the most significant amount, 49% – GEL 19 million (USD 6.4 million), on advertising. Second comes office rentals with 21% of the expenditure went to cover such costs. Third item is salaries – 12%. The distribution of these articles among parties is uneven.

The ruling party spent the highest amount – GEL 13.3 million (USD 4.5 million) – on advertising, which is 70% of the total advertising expenditure. Lelo, which came second, spent GEL 1.9 million (USD 646,258). The report notes, that the ruling party spent solely 2% of its total expenditures on salaries.

Recommendations

The report notes that the State Audit Service has proven particularly inefficient when tackling potential political corruption, and calls for the creation of an independent anti-corruption agency. In the meantime, it is recommended for the State Audit Agencies to inquire into unrealistically low spending on salaries for some parties and to issue guidance and ask for clarification the budget item “other monetary revenues” which currently remains opaque. TI also recommends the parties to perfect their fundraising methods to increase the share of small, activist donations and end dependency on few large donors, which contains the risks of corruption.

Also Read:

• Watchdog on 2020 Parliamentary Election Campaign Finances
• TI Georgia’s Report on Political Finance in 2019

This post is also available in: ქართული (Georgian) Русский (Russian)