Pandora papers reveal Ivanishvili’s interest in sinking Anaklia deep sea port
![IVANISHVILI [Recovered] GRASS Eleni.jpg](https://grass.org.ge/uploads/image/2021-10-21/1006.jpg)
19 October, 2021
0
On October 4, 2021 the Pandora Papers revealed the hidden interests of Bidzina Ivanishvili, an informal ruler of Georgia and founder of the ruling Georgian Dream (GD) party, behind tanking the Anaklia deep sea project. Ivanishvili apparently owns shares in the company that through the subsidiaries manages Poti Free Industrial Zone (FIZ) - a direct competitor to the Anaklia deep sea project.
Anaklia deep sea port project was torpedoed by the Georgian Government almost two years ago. In 2020 GD Government discontinued the contract with the Anaklia Development Consortium (ADC), led by the TBC Holding founders - Georgian businessmen Mamuka Khazaradze and Badri Japaridze, who are now in the opposition Lelo for Georgia party. ADC also attracted major investors - Conti Group, SSA Marine, Van Oord, Wondernet Express LLP, TBC Holding, the Asia Development Bank, the European Bank for Reconstruction and Development, the Overseas Private Investment Corporation (OPIC) and the Asian Infrastructure Investment Bank.
Reasons for “killing” the port remained obscure, ranging from the fear to anger Russia, who has its own deep sea port ambitions on Black Sea, to Ivanishvili’s unwillingness to empower already rich and powerful Khazaradze and Japaridze, and the alleged business interests of Ivanishvili in the competitor Poti port. Now the latter is all but confirmed.
On October 4, 2021, The Washington Post, the BBC, and other international news agencies released classified financial information obtained by the International Consortium of Investigative Journalists (ICIJ). The records show major investments and accounts of current or former world leaders in offshore jurisdictions. Bidzina Ivanishvili’s shares are among them. According to the ICIJ, from 1998 to 2016 Ivanishvili founded 12 companies in the British Virgin Islands. Among them is the company founded in 2015 - Brighstone Finance Ltd, which is the owner of the company Eurasian Invest LLC, which in turn controls a Georgian company Euro-Asian Management LLC, which fully controls the company that manages Poti FIZ.
The agreement on the construction of Anaklia Port was signed by the Government of Georgia with the ADC, which won the international tender in 2016. The Anaklia Deepwater Port project was widely believed to be of great importance for the long-term security and economic interests of Georgia. The port project was to acquire a strategic geographical function for Georgia on the East-West trade map. Commercially, even the most pessimistic calculations predicted that by 2025 the Anaklia port could handle cargo with a capacity of 600,000 TEU (twenty foot equivalent unit) and receive 10,000 container vessels. These types of vessels currently can not enter Georgian ports of Batumi and Poti and if Anaklia materialized would have been the largest vessels to pass through the Bosphorus Strait. On February 14, 2019 the Economist wrote that the Anaklia port was a bridge connecting Georgia with Europe and an attractive strategic object for Europe, which could have facilitated Georgia’s accession to the European Union and NATO. Additional flavor was given to the Anaklia deep sea port because of its proximity to the Russian occupied Abkhazia region.
Georgia’s new Black Sea port could have created an alternative corridor for Europe to the east-west land trade currently taking place through Russia. Anaklia port was supposed to be a third major infrastructure project in Georgia after the East-west motorcade (currently still under construction) and Baku-Akhalkalaki-Karsi railway (currently very much behind the schedule, but almost finalized).
The importance of the port for the Euro-Atlantic partners was confirmed by the direct and open support of the EU and the United States for the port. Anaklia Port was recognized as a priority project in the Trans-European Transport Union Action Plan co-authored by the European Commission and the World Bank. Under the same plan, the EU was to finance the second phase of the port with 233 million euros. On June 11, 2019, US Secretary of State Michael Pompeo called on Georgia to finalize the Anaklia port, clearly throwing Washington’s weight behind the strategic project. Needless to say that American investors, including Conti group, were directly involved in the financing of the project.
However, the project was stopped. The torpedoing unfolded as follows: first, in 2018 Bidzina Ivanishvili became discontent with the former Prime Minister Kvirikashvili, who was ardent supporter of the Anaklia port; it was then followed by the questionable scrutiny of the ADC by the authorities on July 17, 2018. The prosecutor’s office launched an investigation against the founders of the ADC - Khazaradze and Japaridze on money laundering charges. The case was related to a transaction carried out 11 years ago. Prosecutor’s office then issued an unseconded public statement on the questioning of Khazaradze and Japaridze, while the Government engaged in a public campaign to discredit them and ADC.
In December 2018 it became known that financial institutions, which have pledged financial support to the construction of Anaklia Port, were seeking certain guarantees from the government to fund the project. Conditions of assurance were quite favorable - effectively the Government was to cover basic expenses, if the port did not bring revenues - an unlikely scenario. Reinsurance of commercial risks, in the case of other projects, such as Namakhvani and Nenskra hydro power plants, was in principle acceptable for the Government, however was unacceptable when it came to Anaklia.
By the end of 2019 it became clear that the Government refused to give assurances to the investors. Neither did it allow new investor groups to participate in the project. The Kazakh-Hong Kong Group (Meridian Capital Limited) was deemed undesirable because of the “investors' backgrounds” and American Investment Fund (Cerberus Capital Management, L.P.) was not provided with a simple letter of support. Finally, on January 9, 2020, the agreement with the Anaklia consortium was terminated by the Government and the port was officially killed.
In an official statement, effectively ending the Anaklia saga, the Georgian government cited the failure of the ADC to fulfill its contractual obligations as a reason for terminating the contract, though in public messaging the Government often spoke of the inability of ADC to raise investments and about the importance of Poti port, which, of course, discouraged foreign investors. Mamuka Khazaradze, a co-founder of ADC publicly slammed Ivanishvili and the Government, remembering their encounter, during which Ivanishvili clearly referred to the Russian interests in not allowing the port to materialize.
After the publication of the Pandora papers, the allegations of Ivanishvili having an interest in Poti port were dismissed by the Co-investment Fund, which clumsily asserted that companies registered offshore under the management of a Co-investment Fund, neither directly nor indirectly own property and/or assets in the Poti FIZ and/or any related company. This might be true. However, even the Co-investment Fund could not deny that the company, which manages the Poti FIZ is owned by the subsidiary of a subsidiary of a subsidiary of the company that Ivanishvili owns.
While we might never know what was the exact role of Moscow in torpedoing the Anaklia port, we can now for sure attest that political rivalry with Khazaradze and Japaridze (their court case is still ongoing) and Ivanishvili’s personal interests in alternative Poti port are now well established. In addition, ADC is suing the Government in international arbitration. All factors combined make the Anaklia port now a distant dream.
