23 May 2023 –
A recent report authored by the Institute for Development of Freedom of Information finds that provisions for the prevention of corruption and asset recovery (Chapter II and V of the UNCAC) have been largely adopted in national legislation in Georgia, with a few exceptions, but that anti-corruption efforts have been stalling in recent years and effective implementation is still lacking in some areas. Georgia’s tremendous success in eradicating corruption is unquestionable and widely praised internationally; however, over the last two years there has been a clear lack of progress, particularly in the policy-shaping direction. The report is intended as a contribution to the UNCAC implementation review process in its second cycle, produced with technical and financial support from the UNCAC Coalition.
There are anti-corruption bodies and policies in place in Georgia, but their efficiency is questionable. High-level corruption remains a serious challenge to the country. While the regulation has improved, gaps remain in public institutions regarding conflicts of interest. Whistleblower channels are in place within public entities but there is a minimal awareness of these by civil servants.
In terms of implementation for Chapter V of the UNCAC, Georgia’s Financial Intelligence Unit displays operational independence, yet lacks adequate human resources. Cases of corruption related to money-laundering are under-investigated in the country. While legal frameworks exist for asset recovery procedures and the rights of other states are recognized in Georgian courts, there is broad lack of information available on cases of international cooperation for asset recovery.
The official UNCAC review process in Georgia was scheduled to begin in 2018, but has experienced significant delays. The governmental experts list is the only document available on Georgia’s UNODC Country Profile Page, while the self-assessment checklist was obtained by IDFI through our access to information campaign. A country visit by peer reviewing countries North Macedonia and Malaysia was planned for late 2022/early 2023, but no date has been communicated yet. It is unclear whether civil society will be involved in the review.
For all the detailed findings, read the full civil society parallel report in English. A translated Georgian version of the report is forthcoming.
Main findings
The following are some of the main findings according to topic:
Anti-Corruption Bodies and Policies
An Interagency Coordination Council to Combat Corruption was created in 2008 and anti-corruption policy documents were systematically adopted between 2008 and 2018. Participation of civil society was ensured in the Council and in the process of elaboration of policy documents, but the real impact of non-governmental organizations in the process was low. Anti-corruption action plans and strategies were published on the official web page of the Ministry of Justice (in Georgian).
After 2020, the preventive anti-corruption body and its functions were transferred to the Administration of the Government of Georgia (AOG). However, the AOG has not drafted any policy documents in the past two years. The Anti-Corruption Council (ACC) has not met since 2019 and its Secretariat only exists formally, without real actions having been taken.
The new Law of Georgia on the Fight Against Corruption will enter into force from September 1, 2023. Importantly, this new law will introduce an independent Anti-Corruption Bureau that will have the mandates of anti-corruption policy development, monitoring and publishing public officials’ asset declarations and monitoring the financial activity of political parties, electoral entities and persons with a declared electoral goal. Additionally, the Bureau will operate the whistleblowing online portal and will report to the Parliament of Georgia once a year and to the Anti-Corruption Council of Georgia periodically.
Public sector employment
The Law of Georgia on Remuneration in Public Institutions was adopted in 2017, marking an important step forward in defining the scope of the civil service and establishing a merit-based evaluation system for civil servants. A professional career development system for civil servants was established, and a ranking of the accredited professional development programs was developed as an additional monitoring mechanism. However, the process of transformation from the new law to the improved civil service is not consistently addressed to a satisfactory level.
The Law on the Civil Service of Georgia does not apply to all legal entities under Georgian law, leaving certain members of the civil service unregulated. Prevention of political influence and corruption with regard to managerial positions in the civil service has been a concern raised by the OECD’s Anti-Corruption Network. Georgia has made significant progress in this regard, but a lot still has to be done. The recommendations include the establishment of permanent positions for senior civil servants.
Political Financing
Political financing in Georgia is strictly and thoroughly regulated in organic law, which is hierarchically higher than general laws. The Law on Political Financing precisely sets rules and grounds for donations: any anonymous, suspicious or international donation is forbidden. This applies to state-controlled entities, which are prohibited from making financial or in-kind contributions to political parties, political candidates and election campaigns.
The transparency and legality of political funds are monitored by the State Audit Office of Georgia, which is particularly ineffective in responding to cases of alleged political corruption. The Agency’s management has been clarifying for several years that the function of monitoring political finances is incompatible with its core activities and carries a reputational risk, as well as that under the current mandate, the institution does not have the leverage and resources to investigate possible cases of political corruption.
Codes of conduct, Conflicts of Interests and Declaration of Assets
Codes of conduct, conflicts of interests and assets declarations are implemented in the national law: there are codes of conduct for public officials, merit-based eligibility conditions are regulated, and continuous training programs are provided among other provisions. At the same time, keeping the civil service free from political influence remains a challenge. The existing common Code of Ethics fails to provide an individual approach for all institutions, and most public institutions in Georgia do not have codes of ethics tailored to the specifics of the institutions.
In late December 2022, the asset declaration publication and monitoring system was transferred as it is from the Civil Service Bureau to a newly established legal entity of public law – the Anti Corruption Bureau. The system is focused entirely on verifying the accuracy and completeness of the data provided in the declarations, but does not directly reveal or prevent conflict of interest and corruption-related offenses.
Whistleblower protection
Georgia was one of the first countries in the region to regulate whistleblower protection at the legislative level, with a complaints and whistleblower system in place, which strengthens anti-corruption mechanisms in the country. Nevertheless, this system suffers from loopholes, making it difficult to comply with international standards. The Civil Service Bureau (CSB) still runs an online reporting channel for whistleblowing (until September 1, 2023) but civil servants’ awareness of the electronic portal is low and the rate of use of the platform by civil servants is minimal.
After September 1, 2023, the Anti-corruption Bureau will be in charge of operating the same functions the CSB had with regard to whistleblower protection and its reporting channel. Georgian legislation on whistleblowing does not cover the private sector, meaning that both the private sector, as well as the activity of establishments that do not belong to the civil service but exercise delegated public authority (such as state-owned enterprises), are not regulated in the same way.
Public Procurement
Georgia continues to operate a transparent public procurement system that encompasses most of the public sector economy. Exemptions from competitive procurement are limited and clearly defined; however, single-source procurement remains common in practice. The e-procurement system covers all procurement processes and functions well. Procurement complaints are properly addressed, and the review body operates independently and impartially.
Despite these achievements, non-governmental stakeholders consider that the public procurement system has challenges in terms of fairness and transparency because of the high rate of non-competitive procurement and other aspects. There are few cases of prosecution of corruption offenses and enforcement of conflict-of-interest restrictions in the procurement process. Key procurement data and statistics are published online, but data in machine-readable (open data) format has not been updated since 2019.
Management of public finances
There is a clear, precise and transparent process for the adoption of the national budget in Georgia involving public participation, with a state budget expenditure system in place. Timely reporting on revenue and expenditures is ensured, and accounting and audit standards are applied. Risk management systems are actively employed under the current legislation.
However, the public finance management system remains weak in broader terms. There is an absence of a cost-effectiveness evaluation mechanism, and the State Audit Office has a weak role in the field of public financial management. Overall, there is a lack of coordination between policy planning and financial management structural units during the budget planning process, and the relevant state actors lag behind in terms of responding to societal challenges, such as health protection and unemployment. Furthermore, there is low awareness among the public about their participation mechanisms in the budget planning process.
Access to Information and Participation of Society
Access to public information regulations have been in force since 1999 in Georgia. The relevant law has been slightly updated over the years, but is not sufficiently in line with international standards. There is no standalone legislation regulating access to information, although the obligation to adopt one has been foreseen in several international instruments since 2013, such as in OGP Georgia Action Plans 2014-2015 and 2016-2017, as well as in the EU-Georgia Association Agreement 2014. The proactive publication of information is foreseen by the government decree, but this obligation is not entirely fulfilled by public entities.
The Institute for Development of Freedom of Information monitors access to information implementation throughout the country. According to the monitoring conducted by IDFI in 2022, the quality of access to public information in the country has decreased significantly compared to the previous year. The rate of responses to IDFI’s requests (58%) from public institutions in 2022 is the lowest observed since 2010. There was an established practice of a critical threshold of 80% on the rate of responses after 2013, which was successfully maintained until 2022. The report showing these findings also highlights that the rate of access to public information in most categories of public institutions declined in 2022, and the ministries and their subordinate bodies have actively left letters of freedom of information requests unanswered.
As for the participation of civil society in the decision-making process, it has not been obligatory under the legal framework in force until 2022. Despite the absence of legally binding obligations, several public institutions exercised good practices in terms of involving civil society organizations in the policy-making process in previous years.
Judiciary and Prosecution Services
National legislation provides for a wide range of preventive measures to ensure the integrity of the judiciary and prosecution authorities. Nevertheless, the appointment of supreme court judges is not in conformity with international standards and recommendations, as set out by the Organization for Security and Co-operation in Europe for Democratic Institutions and Human Rights (OSCE/ODIHR) or the Venice Commission. Non-governmental stakeholders often underline that judicial governance bodies are not genuinely independent and impartial.
There are deficiencies in the selection and promotion of other judges as well as in the selection of court presidents: the Parliament, and not a judicial body, elects the Supreme Court Chairperson. Grounds for disciplinary liability and dismissal of prosecutors in Georgia are formulated in a broad and ambiguous manner.
Private sector transparency
The level of implementation of the relevant provisions of the UNCAC regarding the private sector and its role in preventing corruption in domestic legislation is extremely low. The registration procedure for a company is simple and quick, while the obligations for ensuring transparency or regulations on access to information remain a challenge.
The private sector is not fully covered by anti-corruption policy documents: there is a lack of preventive measures in anti-corruption Action Plans. One of the main deficiencies in this field relates to the implementation of the beneficial ownership registry, which has not been established yet. According to the Law of Georgia on Accounting, Reporting and Auditing, companies are divided into four categories, out of which only three are held responsible for conducting accounting practices and audits, and for publishing those documents on a special portal run by the Service for Accounting, Reporting and Auditing Supervision.
Anti-money laundering
The National Bank of Georgia has supervisory functions over financial institutions and the performance level of the organization is assessed to be high. A comprehensive regulatory and supervisory regime for anti-money laundering has been established for banks, non-bank financial institutions as well as natural and legal persons. The framework covers the appropriate tools for the deterrence and detection of money-laundering. More specifically, it details the measures applied to the different types of customers and the protocol for beneficial owner identification, record-keeping and reporting of suspicious transactions.
Georgia’s Financial Intelligence Unit enjoys operational independence, yet lacks adequate human resources. Despite the sound legal framework in force, potential money laundering cases are not sufficiently detected, and the overall number of investigations is modest compared to predicate criminality.
Asset recovery
The Georgian legal framework for asset recovery is in conformity with the relevant articles of the UNCAC. However, in terms of the implementation of these regulations, there is a lack of sufficient information or open data which prevents the authors of this parallel report from making any objective assessments in this area.
The legal framework of Georgia on International Private Law regulates the recognition of decisions of foreign countries. Measures for the direct recovery of property and confiscation procedures are regulated by international agreements, the law of Georgia on International Private Law, the Criminal Law of Georgia, the Georgian Law on Enforcement Proceedings, and several bylaws. Other States Parties are entitled to claim ownership as third parties over assets acquired through the commission of an offence in confiscation procedures taking place in the courts of Georgia.
Key recommendations
In its report, the Institute for Development of Freedom of Information makes several recommendations to the Georgian authorities to ensure the full implementation of the UNCAC in Georgia, among them:
- Ensure the development of ambitious, evidence-based, effective policy documents for the fight against corruption.
- Establish corruption risk assessment practices in public entities.
- Introduce senior civil servant (executive secretary) positions, which would clearly delineate political and administrative functions.
- Adopt standalone legislation on access to public information in conformity with international standards.
- Establish an oversight body for access to information.
- Ensure the establishment of a Beneficial Ownership Register with public, timely and verified data in open data format.
- Improve the law governing conflicts of interests, with clear regulation on revolving door cases.
- Define the obligation of public institutions to develop codes of ethics and practical instruments for their implementation.
- Ensure the implementation of an integrity risk assessment system at public institutions.
- Ensure the revision of the Georgian legislation on whistleblowing to bring it in line with international standards.
- Ensure full operation of the Civil Service Law of Georgia on Legal Entities of Public Law.
- Introduce relevant integrity norms concerning subcontractors and ensure that conflict of interest regulations covered by these.
- Provide for durable limitations on using simplified procedures in public procurement.
- Conduct comprehensive national risk assessment of money-laundering and terrorism financing, focusing on all relevant aspects.