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What is Gigi Ugulava’s connection to the Agriculture Ministry scandal?

Published: July 1, 2013 | 8:51 am
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Which exclusive materials and encrypted telephone recordings have been obtained by Versia?

Maia Misheladze, Economic Journalist, Versia Newspaper

On 1 May 2013, the Deputy Chief Prosecutor Lasha Natsvlishvili launched a criminal investigation into alleged abuses of position by certain members of the Ministry of Agriculture. The Anti-Corruption Agency at the Ministry of Internal Affairs, then headed by the Deputy Interior Minister Gela Khvedelidze, was entrusted with investigating the case. What happened at the Agriculture Ministry? Why have high-ranking individuals been arrested, and precisely what is the prosecution demanding from them? What standards were set by the tendering committee for the execution of the Agricultural Development Program? Versia exclusively presents confidential materials relating to the investigation, to which it has gained access, and will attempt to answer questions based on various sources, and with the help of lawyers.

Terms of the Tender

11 December 2011 saw the creation of a task group within the Ministry of Agriculture, tasked with compiling nomenclature and specifications of agricultural equipment. The creation of such a group had been ordered by the Minister of Agriculture Davit Kirvalidze four days earlier. Members of this task group were: the head of the Department of Agricultural Technology, Omar Tedoradze; the chief expert at the Department of Agricultural Technology, Khvicha Bochoshvili; a representative from the legal department, Giorgi Gagua; the Director General of Mechanizatori Ltd. Vazha Nakhutsrishvili; Deputy Directors General of Mechanizatori Ltd. Mamuka Ivanidze and Besik Tetvadze; the head of the Agrarian Services Department at Mechanizatori Ltd. Ivane Bokuchava; the head of the Department for Mechanisation and Technical Support at Mechanizatori Ltd. Giorgi Mardaleishvili; the Director of the Institute for Agricultural Mechanisation and Electrification at the Agrarian University, Zaza Makharoblidze; and the Doctor of Science and Technology at the Agrarian University, Otar Karchava.

The task group was to determine the specifications of those tractors which they were meant to purchase as part of the Agricultural Development Program through a tendering process, in order to aid small farmers. Versia has gained access to the minutes of this meeting, during which preference was afforded to 115 HP tractors. For example, Mr. Tetvadze states that machines with 115 HP or more are most practical for farming on land plots of between 0.5 and 1 hectare in size, both in terms of fuel efficiency, and their accessibility. Mr. Makharoblidze adds that soil conditions have to be taken into account when choosing plowing equipment, and that 115 HP tractors are suitable for operations of any kind.

As for the tendering committee, it was composed of Mr. Nakhutsrishvili, Mr. Ivanidze, as well as the Director of the Agricultural Development Fund, Giorgi Chkheidze; the Deputy Minister of Agriculture and Food, Davit Gelashvili; and the deputy head of the State Chancellery, Irakli Karseladze. Following the specifications set by the task group, the committee determined the type and strength of the tractors that were to be purchased as part of the Agricultural Development Program. Aside from the tractors, various other types of agricultural equipment were discussed by the committee. Mr. Karseladze was the Prime Minister’s only direct representative within the tendering committee, and clearly he would be the person most capable of providing information about any violations committed in relation to the Agricultural Development Program. However, the head of the Prime Minister’s Press Department Nona Kandiashvili has stated in response to Versia’s enquiry that neither Mr. Karseladze, nor any other member of the tendering committee would be available for comment prior to the conclusion of the investigation.

The Official Charges

For the most part, the charges are brought against the Czech company Zetor’s representative in Transcaucasia, Givi Kaikhosroshvili, who is charged with falsifying evidence. Other high-ranking members of the Agriculture Ministry have also been arrested in relation to Zetor’s activities. Versia has obtained the official protocol of charges, which reads as follows:

“In April 2013, Givi Kaikhosroshvili discovered that while conducting their research, experts had used the Zetor Proxima 120 model’s Z-1405 motor’s specifications as displayed on the company’s official website, which stated that the motor’s power was 110 HP. This contradicted the numbers determined by the expert committee, which had been used as evidence by the investigators. Aiming to falsify the evidence, on 20 April 2013, Mr. Kaikhosroshvili, together with Mechanizatori Ltd’s director Vazha Nakhutsrishvili, conducted a mobile phone conversation with a person of authority at the Zetor company, a certain Vladislav (see the encrypted contents of this conversation below – author), whom he instructed to change the information displayed on the company website, so that the power of the motor would be listed as 117 HP. These instructions have been followed, and the information was altered.

At a time and under the circumstances unknown to the investigation, Mr. Kaikhosroshvili – the manager of Zetor’s official representative company Techagroservice Ltd. – found out that a judicial technical expertise had been arranged by the Central Investigation Department of the Interior Ministry’s Anti-Corruption Agency, to be conducted at the Levan Samkharauli Bureau of Judicial Expertise with the aim of comparing the technical characteristics of the Zetor Proxima 120, and the New Holland TD5 110 tractor models. A member of the Georgian Academy of Agricultural Sciences and a Doctor of Technical Sciences, Elguja Shapakidze, had been invited to conduct the expertise by the investigators. Mr. Kaikhosroshvili and Mr. Shapakidze had known each other for a number of years. The expertise concluded that the New Holland tractor model was superior to that of Zetor. Attempting to have the findings of the expertise altered, Mr. Kaikhosrashvili proceeded to approach the expert Elguja Shapakidze on several occasions, asking him not to state in his report that the New Holland tractor was superior. With this, Mr. Kaikhosrashvili committed a criminal act according to Article 372 of the Criminal Code.”

The ‘Goryachkin Method’

Experts on agriculture are familiar with the ‘Goryachkin method,’ named after the Soviet agrarian scientist Vasily Goryachkin, which is used to verify a tractor’s technical capabilities. According to the ‘Goryachkin formula,’ the heavier the tractor, the more capable it is of carrying heavy loads, while also skidding less, and being able to plough considerably larger plots of land. The experts also make it clear that the process of applying the Goryachkin formula would be thrown into chaos if wrong technical parameters of a tractor were to be used. The experts Mr. Shapakidze and Mr. Bedia had been supplied with wrong technical data for the Zetor and New Holland tractor models for their expertise. Applying these wrong parameters to the formula, they concluded that the New Holland model was superior to Zetor’s, and that therefore the 9000 Euros more that had been spent on purchasing the Czech tractors, were to be considered as inappropriate use of funds.

Experienced specialists on agriculture have told Versia that the government had announced a tendering process on 115 HP strong tractors. The maximum power of the Turkish-assembled New Holland models reaches 110 HP, while the Czech Zetor assembles tractors with up to 115, 117 and 120 HP motors. Moreover, Zetor is a brand very well known both across eastern and western Europe. A well-placed source has informed Versia that the investigation first became interested in the Agricultural Development Program following a letter of complaint sent to the tendering committee and the Ministry of Agriculture by the Turkish company New Holland’s representatives in Georgia, the GT Group.

According to the source, the official protocol of charges later brought against the detainees is virtually identical in its wording to the GT Group’s letter of complaint. Moreover, the source claims that the GT Group is being lobbied by high-ranking members of the United National Movement, most notably the Mayor of Tbilisi Gigi Ugulava, and that the yellow buses were imported into Georgia precisely by this company several years ago. The source insists that in Techagroservice and Zetor, the GT Group saw the unwelcome emergence of rivals on the market, and that the current scandal was initiated solely with the aim of having these rivals removed.

The GT Group’s Director Refutes the Accusations

Versia has contacted Levan Gogsadze, the Director General of the GT Group, one of the participants in the tendering process. He has refuted all the aforementioned accusations placed by our source:

- Mr Gogsadze, did you initiate this scandal for the purpose of removing the rival Techagroservice Ltd. from the market?

- This is an absolute lie. We have not initiated any scandals at all. In fact, importing tractors is by far not our only business. We also bring in various types of automobiles, building materials and agricultural equipment. When the tendering process was announced at the end of last year, naturally, we were one of those invited to participate, due to our status as a major supplier of agricultural technology. Later on, the terms of the tender were made secret by the Ministry of Agriculture. We found this objectionable, informed the representatives of our rival companies of our displeasure, and proceeded to draft a joint letter of complaint, which was signed by all of them, as well as us. The accusations against us are nothing but a dirty PR campaign conducted by someone. First of all, New Holland is not a Turkish company at all, but a massive transnational company, and the leader of the world market in terms of its size and sales figures.

- Our source claims that your company is being lobbied by high-ranking members of the United National Movement, and Gigi Ugulava in particular. Is this the case?

- This is laughable. I do not know and have never met Mr. Ugulava. We had objections regarding the tendering process, so people have sought to bring up allegations of wrongdoing against us, and have found a popular theme in form of the alleged involvement of political lobbies.

- Did the GT Group import the yellow buses into Georgia?

- This was done by our subsidiary company GT Motors, which is an automotive dealer in Georgia, representing the Ford Motor Company, Suzuki, and Land Rover. The Mayor’s Office of Tbilisi conducted a tendering process, which was won by several companies. This was not a state purchase, but a tender, where a number of private companies prevailed. I confirm that the yellow buses were purchased by the winning bidders from GT Motors.

Witness Statements

Officially, the investigators have relied upon the statements of one single witness – the expert Elguja Shapakidze – on the basis of which a number of high-ranking members of the Agriculture Ministry, members of the task group and the tendering committee were arrested and had criminal charges brought against them. According to Mr. Shapakidze, his work place was visited by the representative of Techagroservice Ltd. Givi Kaikhosroshvili, whom he had known since around 2003.

“Givi Kaikhosroshvili told me that Techagroservice Ltd. were Zetor’s official representatives in Georgia, and represented his business. Since he represented Zetor and was lobbying on this company’s behalf, he wished to see the findings of the expertise delivered in such a form that would not disadvantage Zetor, thus hurting his own business interests. Mr. Kaikhosroshvili also said that he was aware of the results of mine and the expert Mr. Bedia’s findings, which deemed the New Holland tractors to be superior to Zetor’s. He asked whether it was possible to alter the verdict in Zetor’s favour. I refused, and proceeded to announce the verdict in its current form.” Thus reads Elguja Shapakidze’s witness statement.

According to Mr. Kaikhosroshvili’s defence attorney Kakha Khvistani, this statement mainly formed the basis for charges being brought against his client under Article 372, which relates to intimidation of experts for the purposes of falsifying their findings, and carries a prison sentence of up to 3 years with it.

“There are no other witness statements backing up the charges against my client in this case. Givi Kaikhosroshvili is Zetor’s official representative in Transcaucasia, and lobbies on behalf of this company. Naturally, he had an active interest in the findings of the expertise, and as Zetor’s official representative, he was entitled to provide anyone, including the experts, with full and objective information regarding the tractors manufactured by this company. Moreover, the expert Mr. Shapakidze states that he determined the New Holland tractor to be superior to Zetor’s. This is a grave mistake, since the tractors


have to be tested in field conditions in order to reach such a verdict, and this was not done,” states Kakha Khvistani.

Encrypted Telephone Conversations

Versia has gained access to an encrypted telephone conversation, which forms part of the basis for the case against the accused. In it, Mr. Kaikhosroshvili, and later Vazha Nakhutsrishvili, are being heard speaking to Zetor’s representative, a certain Vladislav, essentially for the purposes of clarifying some information:

“Vladislav, our rivals are trying to prove somehow that Zetor Proxima has 110 HP. I checked the website, and there it says that the motor has the power strength of 81 Kw/h, which is 110 HP. So, they’re looking at the Z-1405 model, which is listed as having 81 Kw/h or 110 HP, and based on this, they’re saying that our tractors have 110 HP instead of 117. How can we refute this?”

In response, Vladislav tells Mr. Kaikhosroshvili and Mr. Nakhutsrishvili that there are several Zetor Proxima models, which include Proxima Power 100, 110 and 120. Here is Vladislav’s full reply:

“This is easy to clarify. They are looking at the standard parameters for the motor. If you go to the tractors section, you will see that there are Proxima Power 100, 110 and 120 models. Naturally, we have these tractors certified all across Europe, and we have three different options of installing the motor. In order to comply with the terms of the tender, for you we have installed Proxima Power 120, which is the most powerful Power model, and nominally has 117 HP.”

Mr. Kaikhosroshvili and Mr. Nakhutsrishvili proceed to ask Vladislav to put all of this to them in writing, and they say that if necessary, the Georgian side can put in an official request to Zetor in this regard.

Versia has also obtained encrypted recordings of telephone conversations involving other high-ranking members of the Ministry of Agriculture. Due to reasons of confidentiality, Versia does not wish to reveal the contents of these conversations in full. However, due to the events that unfolded at the Ministry of Agriculture, which caused the resignation of the Minister Davit Kirvalidze, and due to the high level of interest within the society towards this case, we can bring you a short summary of the conversations.

High-ranking members of the Ministry of Agriculture are being heard discussing among themselves the statement made by the Prime Minister on the Rustavi-2 channel, on the program Position hosted by Nino Shubladze. According to the conversation, when the Prime Minister stated live on air that certain questions had arisen with regards to one of the ministries, he would have probably meant the Minister of Probations and Legal Assistance, Sozar Subari, basing this on the fact that “Sozar drinks, things have gotten out of his control, and are coming down on him.” As for the attention being drawn towards the Ministry of Agriculture and the Agricultural Development Fund, the telephone conversations state that this is apparently a scandal initiated by ‘the thin one’ for the purposes of deflecting attention away from himself: “I have phoned Dato [Kirvalidze], and he must immediately get himself to the Prime Minister, and clarify everything.”

Who is ‘the thin one,’ and precisely what is being talked about here? This is explained with the help of another phone call, made a day earlier, on 27 April, at 10:47 p.m. which also involves a conversation among high-ranking officials. One of the men is instructing the other to immediately rewind the Kavkasia television channel, and watch it from the 8:35 p.m. mark: “You will see, everything is clarified there…so, apparently Ivanishvili is unhappy with one of the ministers, and there might even be talks about resignation. The [parliamentary] minority are saying there might be several people involved in this, and then members of the [parliamentary] majority were being asked who they think it is. They’re all saying that this isn’t known to them, only to Bidzina. But then Khukhashvili appeared, and said that it’s possible that…well, he gave a hint that this involves Agriculture. Then they showed images of tractors, and the presenter said that he reckons the talk is about the Agriculture Minister.” Versia is also aware that the recordings of a further conversation, involving the experts Mr. Shapakidze and Mr. Bedia, form part of the criminal case. During this conversation, the investigators’ chief witness Mr. Shapakidze does not rule out the possibility that he was wrong in his assessment of the Zetor tractors.

Did the Investigators Mislead the Experts?

With regards to the encrypted telephone conversations, Versia has once again asked the attorney Kakha Khvistani to comment. According to him, the experts already know for certain that the investigators had supplied them with wrong data about the tractors:

“Such actions would have made it certain from the off, that the New Holland tractors would eventually be declared superior. Of course, at the time, the experts did not know that they were being supplied with wrong data by the investigators. However, once the Samkharauli Bureau of Expertise became involved, they began to realise that according to the new materials, the results of their findings were being turned upside down, and did not match the technical data given to them by the investigators. Givi Kaikhosroshvili is being charged with bringing to the experts’ attention the data which throws the whole investigation into disarray, even though as Zetor’s representative in Transcaucasia, it was his duty to prove that the Zetor tractors fulfilled all the necessary standards. If Mr. Kaikhosroshvili knew that the investigators had supplied the experts with false data, was it not his duty to inform the experts about this? Let’s follow the logic: Mr. Kaikhosroshvili is being charged with falsifying evidence, but who has actually falsified the evidence – those who supplied the experts with wrong data, or Mr. Kaikhosroshvili, who was defending his own company’s interests?

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