Tag Archives: Georgia

Three former executives at Georgia’s Poti Port given prison sentences for corruption

TBILISI, MAY 23 2017 (The Conway Bulletin) — Three former executives of the Ras Al Khaimah Investment Authority (RAKIA), which used to own Poti Port in Georgia, were given prison sentences in Ras Al Khaimah, part of the UAE, for corruption.

Former RAKIA CEO Khater Massaad and Gela Mikadze and George Janashia, who also used to work for RAKIA in Georgia, were found guilty in absentia of fraud by a judge over a scam they concocted in 2010/11. They persuaded Poti Port, then 100% owned by RAKIA, to enter a joint-venture with the previously unknown Raystar Trade LLP.

The judge said that Mikadze and Janashia were the owners of Raystar and that as soon as a payment was made to it by Poti Port the company was closed down, effectively allowing the three men to steal $17.2m.

Media said that Massaad is currently in Jeddah, where he has been arrested, and is waiting extradition. Mikadze is reportedly in Switzerland and Janashia is allegedly in Georgia. It is not clear if they have also been arrested.

In 2011, RAKIA sold its stake in Poti Port. Poti Port, on the Black Sea, is considered an important strategic site by the government.

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(News report from Issue No. 330, published on May 28 2017)

Bank of Georgia issues first ever lari denominated debt

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TBILISI, MAY 23 2017 (The Conway Bulletin) — London-listed Bank of Georgia issued 500m lari of debt ($200m), the first corporate bond denominated in Georgia’s national currency.

Georgian PM Giorgi Kvirikashvili said that the issue was a major victory for Georgia and showed that investors had confidence in the national economy and the national currency.

“International investors trust our country and our national currency. It is a momentous event, and I would like to congratulate everyone,” he said.

The Bank of Georgia debt is due to mature in 2020 and has a coupon of 11%.

Fitch the ratings agency gave the Bank of Georgia debt issue a BB- rating and said that this “reflects the bank’s adequate asset quality, reasonable capitalisation, sound profitability metrics and stable funding profile.”

Bank of Georgia has been listed on the London stock exchange since 2012. Its stock is now trading at 3,744p, an all-time high, against a price of around 3,000p in January.

For investors in the West, the Bank of Georgia debt issue not only gives them exposure to the Georgian financial sector but also to the lari. It has performed well this year, currently trading at 2.41/$1 compared to 2.76/$1 at the start of the year.

Much of this strengthening has been linked to a general uplift for Emerging Market stock and currencies as oil prices have stabilised, but some of it is specific to Georgia. Western analysts rate Georgia’s economy as the most diversified in the region and best equipped to cope with shocks.

Bank of Georgia and local rival TBC are the only banks in Central Asia and the South Caucasus to be listed on the LSE.

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(News report from Issue No. 330, published on May 28 2017)

Court in Georgia sentences seven for bomb plot

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MAY 23 2017 (The Conway Bulletin) — A court in Tbilisi sentenced seven men to prison for trying to blow up a gas pipeline running from Russia to Armenia last August. Neither the police nor the court gave a potential motivation for the bomb plot but they did say that there was no connection to IS, the radical Islamic group.

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(News report from Issue No. 330, published on May 28 2017)

Georgia detains manager of Gulen-linked school in Tbilisi

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TBILISI, MAY 25 2017 (The Conway Bulletin) — On Turkey’s request, police in Georgia detained Mustafa Emre Cabuk, manager of a Gulen- linked school, for allegedly having connections with terrorist networks.

Mr Cabuk’s detention came the day after a visit to Tbilisi by Turkish PM Binali Yildirim, triggering accusations that the Georgian government was more interested in boosting relations with its neighbour than human rights.

Turkey has been pressuring its neighbours to close Gulen-linked schools and universities and to extradite their key staff since a failed coup attempt last summer, which it blamed on the exiled cleric Fetullah Gulen.

In court, media reported that Mr Cabuk sobbed.

“These tears come because they badly touch my self-esteem. I’ve not had even a small knife in my life,” media quoted him as saying.

“Unfortunately, there is no justice in Turkey and therefore I ask not to extradite me.”

Mr Cabuk was the manager of the private Demirel College in Tbilisi. As reported in the Bulletin in February, the Georgian government closed down a Gulen-linked school in Batumi on Georgia’s Black Sea coast.

Like the rest of the Central Asia and South Caucasus region, Gulenists set up a network of schools and universities immediately after the fall of the Soviet Union in 1991. Then, the newly independent countries turned to Turkey for support. Russia was too weak and China had yet to develop a strategy towards its near-abroad.

And the Gulenist educational institutions have become some of the best in Central Asia. Kazakhstan and Kyrgyzstan have resisted Turkish moves to shut down these institutions but Azerbaijan and Georgia have acquiesced. Turkey is Azerbaijan’s most loyal ally and Georgia is increasingly currying favour with its neighbour through trade and military deals.

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(News report from Issue No. 330, published on May 28 2017)

Stock market: Georgia’s TBC, Kaz Minerals

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MAY 28 2017 (The Conway Bulletin) — Profit at Georgia’s London-listed TBC Bank rose by two-thirds to nearly 100m lari ($40m) highlighting the increasingly upbeat assessment of the Georgian banking sector.

The bumper results also pushed up TBC’s share price to an all-time high of 1,695p. This is nearly an 18% increase from the start of the year and is an increase of roughly 65% from when TBC listed in August.

The main driver of this improvement has been an overall strengthening of Georgia’s economy. The region has been hit hard by a downturn in economic conditions, linked to a collapse in oil prices and also a recession in Russia.

TBC’s main rival, the London- listed Bank of Georgia, has also been hitting similar all-time highs. As well as boosting its stock price, Bank of Georgia also gain a PR boost when it issued 500m lari debt, the first corporate issue in lari.

Elsewhere, KAZ Minerals has been performing well. It’s been yoyo-ing around and has regained much of the ground lost in March. KAZ Minerals is a major copper producer and its share price follows copper prices to a large extent.

It is now trading at 506p, up from 430p at the beginning of the month but down from highs of 589p hit in mid-February.

KAZ Minerals used to by known as Kazakmys, which was linked by transparency campaigners to Kazakh Pres. Nursultan Nazarbayev.Stock market: Georgia’s TBC, Kaz minerals

Georgia and China sign free trade deal

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TBILISI, MAY 19 2017 (The Conway Bulletin) — A new free trade deal with China will allow Georgia to position itself at the centre of global commerce, Georgian PM Giorgi Kvirikashvili said .

He was commenting on a deal signed by officials with their Chinese counterparts a few days earlier, the first Free Trade Agreement (FTA) with China by any former Soviet State.

Both the Georgian and the Chinese parliaments still have to ratify the agreement which is expected to enter into force by the end of the year.

“Georgia is gradually reclaiming its geostrategic function, which the country has enjoyed historically,” Mr Kvirikashvili was quoted as saying.

China has become an increasingly important trading partner for Georgia. According to Geostat, between 2009 and 2016 the value of exports to China tripled.

Nikoloz Khundzakishvili, head of the Georgian branch of the International Chamber of Commerce, told the Bulletin that the free trade deal with China will also be important for the wider region.

“This is a huge market with more than 1b customers. This will be a tremendous opportunity for Georgian products,” he said.

“Georgia will be like a link between China and our neighbourhood.”

Agricultural products, wine and mineral water are the main items exported from Georgia to China. The agreement will scrap custom duties for about 94% of Georgian products exported to China.

And it works both ways. Maya Grigolia, senior researcher, at the ISET Policy Institute in Tbilisi, said Georgia was also hoping for an increase in Chinese investment once the free trade deal comes into law, as China’s companies look to take advantage of Georgia’s liberal trade laws and deals with the European Union.

“Because of its unique geographical location, Georgia has been a hub for transport and international trade since ancient times,” she said.

China has already become a major investor in Georgia’s telecoms, tourism, financial and construction sectors.

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(News report from Issue No. 330, published on May 28 2017)

Georgia and China sign free trade deal

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MAY 13 2017 (The Conway Bulletin) — Georgia and China formally signed a free-trade agreement that Georgian PM Giorgi Kvirikashvili described as a vital step towards boosting relations. Under the agreement, almost all goods will be exempt from import duties. The deal was agreed at the end of last year and should be operational by the end of this year.

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(News report from Issue No. 329, published on May 20 2017)

EU comments on South Ossetia angers Georgia

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TBILISI, MAY 17 2017 (The Conway Bulletin) — Georgia’s foreign ministry called in the EU’s special representative in Tbilisi, Herbert Salber, to explain why media had reported him congratulating the leader of the rebel region of South Ossetia on winning an election last month .

Georgia was incensed by the comments which they said went against the EU’s stated position of not recognising the Georgian breakaway republics of South Ossetia and Abkhazia. They were recognised by Russia as independent in 2008 after a Georgia-Russia war, a move followed by only by a handful of countries trying to curry favour with the Kremlin.

“What we have heard today from the EU Special Representative and the Geneva [Georgia-Russia talks] co-chairman, is to put it mildly unacceptable and incomprehensible,” media quoted Georgia deputy foreign minister Davit Dondua as saying.

Mr Sabler reportedly made the comments during a visit to Tskhinvali, the capital of South Ossetia. After meeting with the Georgian foreign ministry, the EU released a statement saying it did not recognise South Ossetia or Abkhazia.

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(News report from Issue No. 329, published on May 20 2017)

Trial of Archpriest begins in Georgia

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MAY 8 2017 (The Conway Bulletin) — The trial began of Archpriest Giorgi Mamaladze who is accused of trying to kill the Patriarch’s Secretary, Shorena Tetruashvili. In a case that has captivated Georgia, Archpriest Mamaladze was arrested trying to board a flight to Germany carrying cyanide earlier this year where Patriarch Ilia II was receiving medical treatment. It had been thought that the Archpriest had wanted to kill Ilia II but this has now been rejected. Instead, prosecutors believe that he had a vendetta against Ilia’s secretary.

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(News report from Issue No. 328, published on May 12 2017)

Georgia Healthcare boosts profit

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TBILISI, MAY 8 2017 (The Conway Bulletin) — Georgia Healthcare Group reported a surge in revenue linked to its new pharmaceuticals business, underlining its position as one of the Central Asia/South Caucasus region’s best-performing stocks.

Shortly after announcing that revenue in the first quarter of the year had more than doubled to 186.6m lari ($76.5m) from 72.6m lari in 2016, Georgia Healthcare Group shares listed on the London Stock Exchange hit 370p. This was just shy of an all-time high of 379p reached earlier this year.

In a statement Georgian Healthcare, whose core business is running hospitals and health services, said that the addition of a pharmaceutical business had boosted its revenue.

“Our key focus during the first quarter of 2017 has been to ensure the successful integration of the newly-acquired Pharmadepot business,” it said in a statement.

Georgia Healthcare said it had a 29% share of the pharmaceuticals sector. It is Georgia’s largest healthcare provider, operating over 2,500 hospital beds, 23% of the market.

Georgia’s healthcare system has been revolutionized by the Georgian Dream government who introduced a variant of the Universal Healthcare model in 2013.

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(News report from Issue No. 328, published on May 12 2017)