Pandora Papers: Ivanishvili’s Offshore Companies among the Leaked Files
By Natalia Kochiashvili
Friday, October 8
The Pandora Papers is a recent leak of almost 12 million documents that reveal hidden wealth, tax avoidance, and, in some cases, money laundering by some of the world's richest and most powerful.
More than 600 journalists in 117 countries have been trawling through the files from 14 sources for months, finding stories that are now being published.
The data was obtained by the International Consortium of Investigative Journalists (ICIJ) in Washington DC, which has been working with more than 140 media organizations on its biggest ever global investigation.
The Pandora Papers leak, one of the most voluminous leaked materials of recent years published on October 3, includes 6.4 million documents, almost 3 million images, more than a million emails, and almost half a million spreadsheets. The files expose how some of the most powerful people in the world - including more than 330 politicians from 90 countries - use secret offshore companies to hide their wealth.
“The materials show how presidents, prime ministers, government officials or their families hide their assets with the help of firms setting up companies in offshore zones,” reads the website of the ICIJ. It’s the offshore zone where money is kept to avoid paying taxes in the country where the money was made.
According to BBC News, stories revealed so far include the owners of more than 1,500 UK properties bought using offshore firms, including individuals accused of corruption; the Qatari ruling family who avoided GBP18.5m tax on a London supermansion; the King of Jordan's GBP70m spending spree on properties in the UK and US through secretly-owned companies; Azerbaijan's leading family's hidden involvement in property deals in the UK worth more than GBP400m; the Czech prime minister's failure to declare an offshore investment company used to purchase two French villas for GBP12m; how the family of Kenyan president Uhuru Kenyatta's secretly owned a network of offshore companies for decades.
The leaked materials of Pandora papers hit the companies based in the offshore zones of the former Prime Minister of Georgia and the founder of the Georgian Dream, Bidzina Ivanishvili as well.
According to the materials, Ivanishvili founded 12 companies in the British Virgin Islands in 1998-2016. According to the ICIJ, information about the assets and operations of its companies is scarce. The purpose of founding Silverpot Holdings Ltd was to control “publicly listed companies through a brokerage account.”
Another facility, Brighton Corporate Ltd, was established to fund ‘certain projects with borrowed equity’ of the Georgian Co-Investment Fund.
For its part, the Georgian Co-Investment Fund invests in large projects such as hydropower plants, hotels, greenhouses, etc. in the country, including Paragraph Resort and Spa in seaside Shekvetili village of Guria region, Axis Towers, and Galleria Tbilisi in the capital.
Pandora Papers also includes leaked materials from 14 firms that help clients start companies in offshore zones. One of them is the company Alcogal. The group says all the companies, at some point, listed Panama-based offshore service provider Alcogal as an agent, which received an official letter from the Virgin Islands financial regulator in October 2011 asking about Finseck, a company founded by Ivanishvili. Alcogal even replied that the company was related to the trust management of the property and that it was founded by Ivanishvili in 1999 for the welfare of his children. The leaked documents do not show what caused the regulator's interest or how the issue was resolved.
Reports about Ivanishvili’s purported offshore dealings have emerged before. According to a June 2021 report by the local watchdog, TI Georgia, Ivanishvili's Brightsone Finance Ltd., founded in 2015, is a controlling shareholder of Georgia-based Eurasian Invest LLC, which owns significant stakes in the Poti Free Industrial Zone, a tax haven near Georgia's key port of Poti, through several other companies. TI Georgia claimed in a previous study from April 2021 that the profitability of the Poti Free Industrial Zone was closely connected to cargo turnover in the Poti port.
The Pandora Leaks confirm Ivanishvili ‘lobbied’ against the Anaklia project because of his ‘personal economic interest’ in developing Poti port instead, according to the Anaklia Development Consortium, which was supposed to carry out the Anaklia Deep Sea Port Project before the government terminated its contract with the firm in 2020 due to unfulfilled obligations.
Anaklia Development Consortium, says Pandora Leaks confirm that Ivanishvili ‘lobbied’ against the project that ADC was supposed to execute, before the government terminated the contract in 2020 over unfulfilled obligations, because of his ‘personal economic interest’ in developing the Poti Port instead.
Bidzina Ivanishvili Co-Investment Fund responded to allegations related to Poti FIZ and Anaklia Development Consortium statement.
According to the ex-premier asset management fund, they are helping the ruling consortium of the Poti Free Industrial Zone to attract investors, however, the fund does not receive financial benefits from these activities.
“In response to recent media reports, Brightstone Finance Limited is a Panama-based subsidiary of Frankston International, which in turn is managed by the Georgian Co-Investment Fund. We also explain that none of the above companies and foundations owns the property and/or assets in the Poti Free Industrial Zone and/or any related company, either directly or indirectly.”
The fund says that they entered 2017 as shareholders in the Poti FIZ Management Company at the request of the FIZ Management Company themselves, and their goal was to find potential investors for the development of the industrial zone and to offer financial cooperation to potential investors if necessary.
“According to the latest data, Poti Free Industrial Zone has attracted a total of 106 companies in 2018-2021, with a total investment of more than 18 million GEL. According to the consortium, the sole purpose of the fund is to create comfort for potential investors and, if necessary, financial participation, which does not provide for any income from the Poti Free Zone or the ruling consortium. Consequently, during these years, the Fund has not received any financial benefits from the above activities, nor is it planned for the future.”
Fund says appealing that the activity was done secretly to protect someone else's interests is a lie. More than 80% of the world's investment funds are based in offshore zones, and this is a practice accepted in the West. In addition, the relationship between FRANKSTON INTERNATIONAL and Bidzina Ivanishvili was always transparent to the public and during these years no one addressed Brightstone Finance Limited or Eurasian Invest Ltd. about its shareholders.
As for the response to the accusations of the Anaklia Consortium, the fund clarified that according to their information, no free industrial zone in Georgia has anything to do with any port. In this particular case, the only thing we can connect Poti Free Industrial Zone and Poti Port is their location.
“Exactly as well as in the neighborhood of these two facilities, there are many other terminals and railway stations, by the same logic we can conclude that the co-investment fund has an interest in the latter, which is illogical.”
