Transparency International report on party financing in Georgia

| News, Georgia

On 28 May, Transparency International Georgia released a report on the issue of Georgia’s political finance in 2020. The focus was on those 9 political entities that received at least 1% support in the 2020 parliamentary elections. 

The report emphasised that the ruling Georgian Dream - Democratic Georgia party had almost half of all parties' total revenues and expenditures (each amounting to about GEL 60 million), which shows an extremely unequal distribution of finances between the parties. Nevertheless, compared to other years, financial inequality has been relatively reduced, which was mainly caused by the fact that several financially strong new political parties appeared in 2020.

Only 19% of the total revenues received by the parties came from public funding. For comparison, in 2019, public funding was up to 60% of the revenues received by the parties. This is explained by the fact that in 2019, unlike 2020, no general elections were held. The share of private donations received is traditionally high in an election year. 97% of the total donations received by the parties were made by individuals and 3% by legal entities. Georgian political parties mainly depend on large donors and the share of small contribution is usually insignificant.

In 2020, as in other years, the alleged cases of political corruption and the lack of adequate response to them were relevant. As it turned out, the companies connected with the donors of the ruling party had won public tenders worth about GEL 158 million in 2020 and, in return, during the same period, these donors had donated GEL 1.6 million for the benefit of the Georgian Dream - Democratic Georgia. In addition to tenders, the companies of the individuals donating to the ruling party are also recipients of simplified public procurement contracts. Companies which are directly or indirectly connected to persons who have contributed approximately GEL 2.8 million to the ruling party in 2020, received around GEL 11.7 million from simplified public procurement contracts during the same year. 

Over the years, several major groups had been formed among the ruling party's donors who have been contributing large sums of money to the Georgian Dream – Democratic Georgia in almost every election. All such groups have a common characteristic - a large part of its members donate money to the ruling party on the same day or 1-2 days apart, which raises doubts about whether such collective action is organised by someone in advance and whether the donations are made through third persons. The Georgian legislation prohibits third-party donations. In 2020, among such large groups there were people associated with Bidzina Ivanishvili, the founder of the Georgian Dream - Democratic Georgia party, the former chairman of the same party and former Prime Minister. 

The largest expenses of political parties fell under the following categories: 1) advertising; 2) salaries; 3) rental costs of the real and movable estate; 4) office expenses; 5) costs of organising congresses or other events; and 6) notary, consulting, and translation costs. As 2020 was an election year, advertising expenses accounted for a substantial share (59%) of total expenditures of political parties.

During the election period, the State Audit Office (SAO) initiated administrative proceedings in 13 cases. The proceedings were completed in 10 cases, on which this agency drew up administrative violation protocols and the court made decisions. Such cases did not include many alleged cases of political corruption related to the donations declared by parties, therefore, the State Audit Office deemed by TI Georgia as ineffective in investigating.

TI Georgia issued the following recommendations to improve the issue of party funding in the country: 1) the SAO should be equipped with investigative powers and, among other things, should oversee the financing of political parties; 2)  the Parliament should refuse to adopt the draft registered on 16 December 2020, which unreasonably restricts the access of political parties to state funding and other benefits; 3) the SAO should respond more effectively and promptly to relevant violations; 4) the SAO should systematically update and place more information in the register of violations; 5) the SAO should establish another mechanism by which political parties/election entities will be able to disclose detailed information about their loans; 6) the SAO should pay more attention to strengthening the capacity of political parties to complete financial statements and develop more detailed and comprehensive instructions to establish consistent practices.

 

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