Authorities Continue to Arrest Former State Contractors on Fraud Charges
Georgian authorities have arrested several people in recent days in serious fraud cases involving state budget funds, as the ruling Georgian Dream government continues its “uncompromising” fight against corruption.
The Ministry of Finance announced on September 30 the arrest of two individuals accused of fraudulently appropriating millions in state funds and laundering them. Investigators said the pair, acting through LLC Lagi Capital, won eleven tenders worth more than GEL 94 million (about USD 34 million) to reconstruct 30 kindergartens and build four schools, but did not complete any of the projects.
The Ministry added that the two, with accomplices, fraudulently registered in the “white list” supplier registry to obtain advance payments, seizing over GEL 9.3 million (USD 3.4 million) from the Municipal Development Fund with only a 50% bank guarantee. To cover the illicit origin, the Ministry added, they sent GEL 1.2 million to another company and distributed it to affiliates. Two face from nine to twelve years in prison. Lagi Capital had reportedly been owned by former football player Aleksandre Amisulashvili, son-in-law of GD MP Irakli Zarkua.
On September 29, the State Security Service of Georgia (SSSG) detained Guria Energy director Mamuka Zhghenti and a supervisory company employee on charges of large-scale fraud, assisting fraud, and forging official documents. Another supervisory company employee was also charged. They face six to nine years in prison.
The SSSG spokesperson said that between September 2022 and January 2023, during rehabilitation works on a 3.5-kilometer road in the Gardabani municipality, Zhghenti, with the help of the supervisor, used forged documents to fraudulently obtain more than GEL 400,000 (about USD 148,000) from the Ministry of Regional Development and Infrastructure, causing significant state losses. An expert examination found the rehabilitated road unusable.
The arrests come as the ruling Georgian Dream party tightens anti-corruption laws and declares an all-out war on corruption.
“The battle against corruption continues in all directions,” GD Prime Minister Irakli Kobakhidze told journalists on September 29 after the SSSG arrests. Asked whether the latest probes involving the Ministry of Regional Development and Infrastructure could reach its former head Irakli Karseladze, Kobakhidze said authorities are reviewing cases where “shortcomings” have been found.
“Our goal is to ensure that every project is carried out with minimal costs and maximum quality. Wherever there are questions, investigations will continue. This is in our interest, in the public’s interest. We will be uncompromising wherever we see flaws in the implementation of projects.”
Critics argue the crackdown reflects political infighting rather than a genuine anti-corruption effort. David Mzhavanadze, an opposition Ahali party member and corruption researcher, wrote on Facebook that Zhghenti’s detention was “not a fight against corruption” but “an internal clan-like, mafia-style dispute, when Ivanishvili and his cronies cannot divide the money and resources stolen from the people.”
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