Georgia: NGO Urges More Openness for $6 Billion Investment Fund
A new US$6 billion private “co-investment” fund to stimulate investment in Georgia is not providing enough information about its oversight, its investors, or how it plans to spend its money, says Transparency International-Georgia (TI).
Former Prime Minister Bidzina Ivanishvili has said he will invest US$1 billion of his own money in the Georgian Co-Investment Fund. Other investors include the Dhabi Group and RAK Investment Authority, United Arab Emirates; the State Oil Fund of Azerbaijan; KazTransOil of Kazakhstan; Milestone International Group Holdings Ltd. of China; Alexander Mashkevich, a mining magnate from Kazakhstan; and the estate of the late Georgian businessman Badri Partarkatsishvili.
TI is concerned that the fund has provided few details about what exactly it will invest in or how projects will be monitored. The fund’s website lacks details concerning oversight processes and “they do not intend to publish their financial statements.” TI also notes that the fund was set up using a complicated offshore structure, including entities in the Cayman Islands and Luxembourg.
The NGO’s statement continues, “Given its huge potential financial firepower and importance to the Georgian government and economy, the (fund) must institute an independent, experienced oversight board, and be transparent about who its investors are and what they are seeking to invest in.”
TI reports that the fund will invest approximately US$1.6 billion per year in Georgian projects, and has received at least 80 proposals for funding so far. About 10 are under active consideration, fund officials told TI. By the end of 2014, the fund hopes to invest “at least” $US1 billion in projects including two large hydro-electric plants, manufacturing, agribusiness and hotels, TI says.
Ivanishvili has said that the fund will invest 80 percent of its assets in Georgian projects over the next five years, with the other 20 percent invested internationally. According to TI, that $US6 billion equals 38 percent of Georgia’s annual GDP.