Deeper Look

Paper on Ivanishvili’s Former Confidant Court Case Showcases State Capture by Oligarch

The white paper titled “Bidzina’s Law: The state Capture of Georgia- A White Paper on Bidzina Ivanishvili’s attack on rule of law and the case of Giorgi Bachiashvili” by international lawyer Robert Amsterdam, of Amsterdam& Partners LLP details the case of Giorgi Bachiashvili, a venture capitalist and former employee of Bidzina Ivanishvili as an example of the erosion of judicial independence and state capture of the judiciary.

Bachiashvili faces criminal charges related to a cryptocurrency investment from more than seven years ago – charges that Amsterdam insists are “completely false and unfounded.” The paper says that the charges are “based on no other evidence than Ivanishvili’s own ungrounded allegations and his decision to commandeer the judicial system to obtain what he wants.”

What is the Paper About?

The paper says that the case is not only illustrative but that it “is a historically unique one” citing that this is the first time, that Bidzina Ivanishvili who “has instrumentalized” the Georgian judiciary “to satisfy his personal whims, while also staying in the “shadows” and “maintaining some disability”  has “emerged from the dark” and is the direct complainant behind “these false criminal charges.”

The paper delves into the origins of Ivanishvili’s wealth and the trajectory of his political ascent, as well as how he gradually achieved the “state capture of Georgia”. The report focuses on the “blatant abuses of law “and Ivanishvili targeting the political opponents, and details the role of many of his cronies in this endeavor.

It also takes a critical stance toward the international community’s response to these developments and identifies steps that Georgia must take “to save its democracy and free the judiciary from oligarchic control.”

The paper showcases how Ivanishvili’s behavior has become more “erratic” and “unhinged” as time passed, and how the state, has been attacking the civil society groups and NGOs, as well as disparaging the youth as “radicals.”

Foreign Agents’ Law

The report traces the fascinating career of Giorgi Bachiashvili, a “brilliant” financial analyst, from his education to becoming Bidzina Ivanishvili’s confidant and financial manager, managing billions of the oligarch’s money.

According to the report, after hired by Ivanishvili, Bachiashvili “recognized that there was a deficit in equity capital in Georgia Ivanishvili with the idea of creating an organization that would that would attract more foreign investment” – what came to be the Georgian Co-Investment Fund (GCF); a Cayman Islands/Luxembourg-based private equity private equity fund financed entirely by Ivanishvili with Bachiashvili as its CEO.

It then looks at Bachiashvili’s gradual fall from grace with the oligarch, who is suspicious of all things Western (fears that were further exacerbated by the war in Ukraine) – the process that led to the charges against the former. A separate chapter is devoted to the Foreign Agents Law, as a manifestation of distrust of Western influence, similar to its Russian prototype, and as a tool to eliminate democratic institutions, civil society, and the opposition.

The paper notes that Bachiashvili publicly (in a social media post) condemned the reintroduction of the Foreign Agents law and Ivanishvili’s “continued attempts to suppress fundamental freedoms and push Georgia away from European Union accession. This makes people like Bachiashvili, in Ivanishvili’s mind, members of the ‘party of war’ and therefore political opponents who must be eliminated,” the paper notes, stressing that this has led to a sham political prosecution of the man based on fabricated offenses.

Credit Suisse Alleged Fraud

Large part of the paper is devoted to describing the pressure campaign and the oligarch’s growing “paranoia,” which got a boost after Bachiashvili discovered the unprecedented Credit Suisse fraud in 2015, at the center of which was Credit Suisse employee Patrice Lescaudron, who was appointed by the bank to manage Ivanishvili’s vast trust portfolio.

According to the report, after the fraud was discovered, Bachiashvili worked closely with Ivanishvili’s lawyers in five jurisdictions over the next eight years, including Switzerland, Singapore, and Bermuda, providing all the key documentary evidence and critical testimony at two key trials. Meanwhile, Bachiashvili’s relationship with Ivanishvili began to show signs of strain.

Escalating Conspiracy Theories

In May 2022, Zaza Shatirishvili, a “philosopher” widely acknowledged to be Ivanishvili’s close confidant and unofficial mouthpiece, and a frequent quest of the pro-government TV channels, began spreading an unfounded conspiracy theory that the United States was determined to drag Georgia into the Russia-Ukraine war and that the Credit Suisse fraud was somehow an elaborate “blackmail” campaign designed to attack Ivanishvili and pressure him to open a second front for military conflict with Moscow.

On several occasions in his personal interactions with Ivanishvili, the report says, Bachiashvili tried to dissuade him of such persecutory delusions, pointing out that the fraud had a history that predated Ivanishvili’s entry into politics and that the case was slowly moving toward victory. However, these attempts at persuasion appear to have led Ivanishvili to extend his suspicions of a Western conspiracy against him to include Bachiashvili himself.

Capture of the Judiciary

The report details the capture of the Georgian judiciary, with a focus in detail on the figure of the former Prosecutor General, Otar Partskhaladze. It cites, in particular the report  by Transparency International-Georgia’s highlighting Partskhaladze’s continued impunity as a prime example of state capture. Partskhaladze is believed to be part of Ivanishvili’s inner circle and has close ties to the Ivanishvili family.

TI-Georgia has traced Partskhaladze’s rapid enrichment after leaving office, including shadowy deals involving Georgian state enterprises, Ivanishvili’s Georgian business projects, and Russian oligarchic economic interests. Partskhaladze’s continued informal influence over the Georgian Prosecutor’s Office speaks volumes about the regime’s commitment to maintaining control over the judiciary, according to the assessments by watchdogs and pundits.

The Georgian Dream Party unilaterally amended the election procedures for the position of Prosecutor General, the report notes, changing the required qualified parliamentary majority to a simple majority.  

In September 2002, the United States government sanctioned Partskhaladze for assisting the Kremlin in exerting “malign influence” on Georgia. The State Department also said that Russia’s Federal Security Service (FSB) helped Partskhaladze obtain his Russian citizenship and then “used him to influence Georgian society and politics for the benefit of Russia.”

Criminal Charges Against Bachiashvili

The report details the business relationship between the two parties. One of the key episodes of this relationship is the loan that Bachiashvili took out from Ivanishvili’s Cartu Bank, which, according to the report, he repaid in full in 2017, hearing no complaints, no disputes, and no problems with the transaction until six years later, when “he was summoned to the prosecutor’s office for questioning in 2023 and discovered that Ivanishvili had decided to target him with these false allegations.”

It was in July, 2023 that the Prosecutor’s Office of Georgia filed criminal charges against Bachiashvili alleging “misappropriation” and “legalization of illegal income” related to the 2015 cryptocurrency mining investment. The charges, which came after weeks of questioning and open cooperation by Bachiashvili, were later revealed to have originated from a complaint filed by Bidzina Ivanishvili.

Pointing out the specific contradictions and the “abuse law the law” and describing the details of the case, the paper argues that the basis for the case is “entirely fictional, and the charges politically motivated” stressing that “ in no other normal, rule of law system” would criminal charges arise “from such an absence of evidence without the extraordinary political influence of their source, in this case, Bidzina Ivanishvili.” The narrative describing the capture of the judiciary by the so-called “judicial clan” (several members of which are sanctioned by the U.S.) under Ivanishvili serves as a backdrop to the story of Bachiashvili’s trial.

The Case

Robert Amsterdam quotes Levan Makharashvili, Bachiashvili’s Georgian defense counsel as saying: “Never in my years working for the prosecution service or in private practice I have ever seen criminal charges brought on the basis of so little evidence. It is highly unusual and represents a major red flag.”

The paper also notes that “the Prosecutors have issued charges against Bachiashvili under Article 182 (Appropriation or embezzlement) and Article 194 (Legalization of illegal income) under the Criminal Code of Georgia, which “establishes grounds for criminal liability, determines which acts are criminal and prescribes relevant punishment or other types of penal sanctions.”

Firstly, the report says, upon review of Ivanishvili’s witness testimony, any prosecutor operating faithfully under Georgian Criminal Code would be obligated to dismiss the matter from investigation immediately and refer the claimant to seek remedy under one of Georgia’s existing civil law statutes to file a complaint. Stressing that the case is a civil matter, and has nothing to do with criminal law, the paper says that “if Ivanishvili’s allegations had merit, the case would be a contract claim that should in fact be brought by Cartu Bank.” At the core of the dispute, Amsterdam argues, there is a powerful oligarch who, eight years after his bank issued a loan, declares – without evidence – that there exists a contract for an investment, and that against all of the documents in case, the Bank loan was purportedly a personal investment of Ivanishvili.

Secondly, the report stresses that the prosecutors “are obligated to drop the case based on the clear exculpatory evidence contained within the prosecution’s charge documents.” The copy of the loan agreement between Cartu Bank and Bachiashvili contradict the allegations of the complaint, “as the document explicitly details the terms of the transaction, interest rate, and repayment terms – which prove that there was no investment by Ivanishvili.”

Robert Amsterdam contends that “If Ivanishvili enjoys this level of control over prosecutors, it would mean he could retroactively become a self-declared “investor” in any and every loan originated by Cartu Bank in its history.”

Lastly, the report notes, that the charges relating to the legalization of illicit income are fabricated and incomprehensible and lack any form of compelling evidence.It emphasizes that “money laundering requires that the alleged funds be the proceeds of crime. No predicate offense has been alleged and therefore the charges should be dismissed.

The paper argues that the case thus demonstrates “unprecedented abuses of rule of law, profound levels of corruption, and the state capture of critical government institutions by a man who has shown a willingness to exercise revenge and harm the country’s national interests in the process.”

The paper notes the worsened political climate in Georgia and recalls Ivanishvili’s speech of April 29th, 2024, where he announced persecution of his opponents, saying that his re-elected government would be able to deliver a “strict political and legal condemnation to the collective UNM [meaning CSOs and political opponents]; it will get the due punishment it deserves.” He promised: “They will pay for all the crimes against the Georgian people.”

Recommendations

The author of the report argue that the outcome of the Bachiashvili case is important in terms of Western interests and Georgia’s geopolitical vector, and as a precedent for the future.

They call for the appointment of a Special Rapporteur to serve as an independent observer of key hearings in these proceedings, with the ability to investigate and verify Georgia’s compliance with its legal obligations under international law.

In addition, the report calls on all of Georgia’s Euro-Atlantic allies to demand that the Georgian Dream government demonstrate successful implementation of numerous long-promised and never-delivered reforms.

Among them:

• Implement new sanctions and strengthen existing sanctions against members of Georgia’s judiciary who engage in human rights violations and blatantly politically motivated cases.

• Implement measures to insulate judges from political influence and external pressures, ensuring their impartiality and autonomy in adjudicating cases.

• Establish robust mechanisms for monitoring and evaluating prosecutorial conduct to prevent abuse of power and partisan agendas.

• Enforce strict adherence to procedural safeguards, including the right to a fair trial, access to legal representation, and timely notification of charges, to protect individuals from arbitrary detention and judicial harassment.

• Institute transparent procedures for investigating allegations of judicial misconduct or political interference, holding accountable those responsible for undermining the integrity of the justice system.

• Encourage active participation of civil society organizations and human rights defenders in monitoring and advocating for reforms aimed at restoring the independence and integrity of Georgia’s justice system

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