07TBILISI624, Georgia Bi-Weekly Update March 23

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Reference ID Created Released Classification Origin
07TBILISI624 2007-03-23 13:07 2011-08-30 01:44 UNCLASSIFIED Embassy Tbilisi

VZCZCXRO3807
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSI #0624/01 0821307
ZNR UUUUU ZZH
R 231307Z MAR 07
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 5802
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 TBILISI 000624 
 
SIPDIS 
 
SIPDIS 
 
E.O 12958: N/A 
TAGS: PREL PGOV KPAO GG
SUBJECT: Georgia Bi-Weekly Update March 23 
 
 
1. This cable contains current items of political, economic, and 
social interest concerning Georgia during the weeks of March 11-23. 
 
Investigation of MOD Finances under Okruashvili 
--------------------------------------------- -- 
2. Georgian newspapers are reporting that the Audit Chamber has 
formally forwarded to the Prosecutor General financial records from 
the Defense Ministry during former Minister Irakli Okruashvili's 
tenure.  The Audit Chamber's inspection has reportedly uncovered 
that Okruashvili embezzled GEL 75 million (around USD 44 million). 
According to commentators, if this information is confirmed, the 
Prosecutor General's Office will be obliged to start criminal 
proceedings.  Current Defense Minister Kezerashvili has ordered the 
Ministry's own General Inspection Department to conduct a separate 
investigation.  A month before this story appeared, Okruashvili was 
included on a published list of the richest Georgians with an 
estimated wealth of USD 250 million, most of it presumably from a 
lucrative law practice earlier in his career. 
 
Former Television Director Returns 
---------------------------------- 
3. The Georgian media has paid great attention to the return of 
Erosi Kitsmarishvili, former owner and director of Rustavi-2 
television, who has reportedly agreed to serve as a consultant to 
the Georgian Public Broadcasting Service (GPBS).  In Georgian 
political circles Kitsmarishvili is seen as a kingmaker, famous for 
Rustavi-2's role in the Rose Revolution reporting on the corruption 
of Shevardnadze's regime and keeping the revolutionary movement on 
the nation's television screens.  Afterwards Kitsmarishvili 
reportedly fell out with the new government, and he sold his station 
and moved to New York.  Many commentators suggest the government 
wants Kitsmarishvili to "upgrade" the GPBS so that it can compete 
with rival private stations, including Badri Patarkatsishvili's 
Imedi TV as well as Kitsmarishvili's old station, Rustavi-2, which 
has become strongly pro-government and is believed to have lost much 
of its audience. 
 
Controversy Surrounds Return of Gamsakhurdia's Body 
--------------------------------------------- ------ 
4. Georgian media have been filled with speculation on the final 
resting place of former Georgian President Zviad Gamsakhurdia after 
Prime Minister Noghaideli issued an order March 5 to bring his body 
back from Russia.  The body, reportedly recovered in a park in the 
Chechen capital of Grozny, is currently undergoing testing in 
Rostov-on-Don, Russia, to confirm its identity.  Members of 
Gamsukhurdia's family have been involved in a highly public spat 
over where in Georgia he should be buried, with his widow and 
younger son wanting the body to be buried in Tbilisi's newly built 
Trinity Cathedral, while Konstantin Gamsakhurdia, an elder son from 
Gamsakhurdia's first marriage, wants the body to be buried in the 
Mtatsminda Pantheon.  When some observers raised the possibility of 
President Saakashvili resolving the controversy, Saakashvili 
demurred, instead suggesting that a commission should make the 
decision. 
 
Tax Cheats in the Left Pocket 
----------------------------- 
5. A law enforcement operation targeting corruption landed 21 tax 
inspectors and 11 businesspeople in detention on suspicion of 
accepting and receiving bribes.  Code-named "Left Pocket," the 
combined operation by the Prosecutor General's Office, the Financial 
Police, and the Interior Ministry's Constitutional Security 
Department used hidden cameras in tax inspection offices to film 
bribes paid by entrepreneurs to conceal their incomes.  Several of 
the enterprises involved had well-established reputations for 
profitability and success. 
 
Shah Deniz Gas Delivery Resumed 
------------------------------- 
6. On March 15, delivery of natural gas to Georgia from the Shah 
Deniz field in Azerbaijan resumed.  Deliveries had been suspended in 
January, reportedly because of technical problems, thus leaving 
Georgia fully dependent on Russian gas, the price of which jumped up 
from USD 110 to USD 235 per thousand cubic meters starting from 
January 1.  The suspension of Shah Deniz gas had cast some doubts on 
Georgia's ability to diversify its energy import sources, but the 
announcement that starting from March 15 Georgia would get 1 million 
cubic meters per day from Shah Deniz, in addition to the more than 1 
million cm per day coming from other Azeri sources, helped alleviate 
these concerns.  The volume of the Azerbaijani gas supply will 
increase after the full commissioning of wells in the field. 
 
New Player Enters Mobile Phone Market 
------------------------------------- 
7. Vimpelcom, the second-largest operator of cellular communication 
in Russia, has entered Georgia's mobile phone market under the name 
"Beeline" through a local subsidiary, Mobitel, Ltd.   Initially, 
Beeline will cover Tbilisi and Rustavi, with plans to expand 
nationwide by the end of the year.  Beeline launched operations in 
Georgia with an initial rate
 of 2 tetri (about 0.85 cents) per 
minute, much lower than the 28.8 tetri (about 17 cents) offered by 
the two other players in the market: the American-owned Magti and 
Turkish-Finnish-Georgian joint venture Geocell. 
 
TBILISI 00000624  002 OF 002 
 
 
 
TEFFT

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