09 February 2010

The Imedi Ownership Scandal: Is State Control over National TV Becoming Clearer?

One of the most sustained criticisms of Georgian democracy is that the government has nontransparently wrested control and/or ownership over the two most professional television channels in Georgia, the private nationally broadcast Rustavi-2 and Imedi, which together enjoy over 60 percent of the market share of Georgian broadcast television and, according to a 2009 poll by the Caucasus Research Resource Centers, enjoy at least some trust among 59 percent of the population (while more than 50 percent of respondents trusted the two stations enough to opt for a response of at least 7 on a 10-point scale).

In recent months, however, Rustavi-2 and Imedi have come to look like identical franchises, utilizing the same journalistsincorrect news stories, and innuendo. It has also come to light that the government provides unspecified "state aid" to the broadcast media: the government says that Foreign Minister Grigol Vashadze's October 2009 reference to such aid in front of a London audience concerned only legal guarantees and tax breaks. Unrelatedly, the NGO Transparency International Georgia has observed that the 2008 revenues reported by all private, non-satellite television stations amounted to between double and triple their estimated advertising revenues, a gap it attributes to subsidies from "unknown sources" (which, presumably, could be owners, the state, or others who "order" media stories and coverage).

A perhaps not so coincidental set of circumstances last week has highlighted this issue of nontransparent ownership of Georgia's influential private broadcast stations, as well as the need to clarify the state's role in Imedi and Rustavi-2 in advance of the upcoming local election campaign (since most of the country gets its news from these national private stations).

The circumstances pertain to the ownership of Imedi, established by the late Badri Patarkatsishvili, a Georgian oligarch who openly turned against the government in 2007, using his finances and media holdings to promote mass demonstrations in favor of Saakashvili's resignation. Now, Joseph Kay, an (alleged) half-cousin that arrived in Georgia brandishing a power of attorney giving him the right to manage the deceased Patarkatsishvili's holdings, seems to have faced negative verdicts in three European courts against his claims to be a rightful executor of Patarkatsishvili's estate. More strikingly, a United Arab Emirates' investment company, to which Kay reportedly sold a 90% stake in Imedi in February last year and which is one of Georgia's biggest foreign investors, has unexpectedly denied ownership of Imedi, saying it doesn't know who its owner is.

Let me back up a few steps. In November 2007, Badri Patarkatsishvili swore to spend every "last [cent]... to liberate Georgia from this fascist regime," enraged as he was at the violent dispersal of protestors. Authorities subsequently shut down Imedi, froze Patarkatsishvili's assets, and accused him of seeking to overthrow the government (he later died of a heart attack, after an unsuccessful January 2008 bid for the presidency). Against the objections of Patarkatsishvili's widow, daughter, and sister, Joseph Kay (aka Kakalashvili) acquired control over Imedi, an acquisition that was upheld by the Tbilisi city court.

If the arrival on the scene of the locally unknown Joseph Kay wasn't enough to raise suspicions of murky dealings, less than a year later Kay said he sold 90 percent of his shares to RAK Georgia Holding, an affiliate of Rakeen Georgia, the local branch of the "property development arm" of RAKIA, the investment authority of Ras Al-Khaimah, one of the United Arab Emirates and a major investor in Georgia (which has a long-term management concession in Georgia's Poti port and reportedly leased a Tbilisi amusement park previously developed by Patarkatsishvili -- at least until his forty-nine year contract was cancelled after November 2007).

It was then announced that the new general director overseeing the finances of the Imedi media group would be Giorgi Arveladze, a longtime associate of Saakashvili, with past positions as secretary general of the United National Movement, the president's chief of staff, and minister of economic development.

So what has happened in recent days? First, the lawyers of Patarkatsishvili's family have issued a statement saying that courts in London, Gibraltar, and Lichtenstein have determined that Kay's claims to control various of Patarkatsishvili's properties are suspect. The statement says that the rulings include orders to freeze Kay's assets. (I have not seen independent accounts of the rulings, and Kay's lawyers have previously disputed the family's interpretation of court rulings.)

Second, in an interview with the English-language Abu Dhabi newspaper The National, RAKIA CEO and Rakeen executive chairman Khater Massaad denied that any firm related to either company owned Imedi -- the first disavowal of its kind since Joseph Kay and one Mark Monem, claiming to represent RAK Georgia Holding, held a press conference in February 2009 to report the sale, which the Georgian president's press office reportedly confirmed later that month.

How did Massaad explain the confusion? “There is somebody in Georgia who has created his own company with the name RAK Georgia Holding....This company exists indeed. But we have nothing to do with it. The problem is that I have not registered the name RAK as a brand.”

Indeed. So someone stole the RAK brand and, with the connivance of Joseph Kay, pretended that they purchased Imedi as a representative of Ras al Khaimah, one of Georgia's largest investors? And the emirate's investment companies didn't bother to correct this blatant misrepresentation? And the Georgian government went along with it? And then a ruling party stalwart took control of the media holding under the new ownership and allowed the misrepresentation to continue?

Actually, Transparency International Georgia unveiled a hint at the end of last year that this is, indeed, what happened -- even though neither they nor anyone else noticed at the time. In a report on television ownership, control, and regulation, TI Georgia indicated that the 90% owner of Imedi's parent company, according to Imedi's lawyer, was RAAK Georgia Holding, with two "As," a misspelling that, given the recent revelation, appears to have been an attempt to intentionally misrepresent the ownership of the company while avoiding any potential legal trouble.

But now that Joseph Kay may be running into legal trouble elsewhere, there is a chance that the new owners may not be as successful as they had hoped. At a minimum, the affair confirms suspicions about Joseph Kay which Georgia's courts must now find impossible to ignore with regard to his initial acquisition of Imedi.

For that matter, someone should ask Giorgi Arveladze, the Georgian National Communications Commission, the presidential press office, and any other official personnel or structures that have referred to Ras al Khaimah as the owner of Imedi what they have or haven't known about Ras al Khaimah's (non-)involvement in the purchase of Imedi; why Joseph Kay and "RAAK Georgia Holding" have never been taken to task for their misrepresentation; whether such misrepresentation has any legal consequences in Georgia; and, finally, who really owns Imedi.

Next up: Rustavi-2.

9 comments:

  1. Cory, this is an excellent piece. Your detailed references must be a lot of work, but they are very helpful!

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  2. Hmmm, I note that the civil.ge piece says that RAK "finances Imedi TV" - makes sense to me: prez says finance my friends buying this TV station and I will see you all right...

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  3. super intersting. is anyone at the American ambassy listening to this?

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  4. The astute if anonymous folks at the Georgian Media Centre have suggested an equally plausible/implausible version of what has happened: An affiliate of Rakeen Georgia did in fact buy Imedi but is now running scared thanks to the recent statements about the illegality of Joseph Kay's acquisitions.

    Maybe. But couldn't Rakeen just as easily say it was tricked into what they thought was a legal transaction? They'd probably have to give up Imedi, but who's going to find them to be legally at fault?

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  5. Sorry, forgot to link to the astute and anonymous folks at the Georgian Media Centre (http://georgiamediacentre.com/content/bizarre_tale_imedi_ownership_and_how_find_out_truth).

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  6. A Pandora's Box with toxic genies inside, Hoax Attack on Georgia

    Jeffrey Silverman

    Who to believe, reporting the news? The recent hoax attack by evil Russia brought to light a deeper problem, not only in the Georgia media, which is no long known for not having a free media, but also how information is reported internationally.

    It keeps getting worse. Imedi (and Georgia by default) has made it to #1 on Time Magazine's list of the "Top 10 Shocking Hoaxes".
    http://www.time.com/time/specials/packages/completelist/0,29569,1931133,00.html

    They are making it out as a bit of a joke in my opinion, which is not going to go over well with some people (they compare it to the Hitler Diaries). Imagine if a station had faked Soviet invasion during the cold war... it might be funny now, but it certainly wouldn't be at the time. Most people in the west don't realize what it is like to live with the constant threat of war any more. Meanwhile, corruption in Georgia is rampant - not just bribes, drugs and arms flow freely.
    TV Station - grovels - we didn't mean to do it. The rest of the world scratches their collective heads... but all this is relevant because of the underlying tension. Georgians are very jittery – as they do not know what will be the next staged event, to top this latest debacle, even a war to divert attention from the failed policies and good intentions, so is paved the proverbial road.
    Another war, or even worst! But there are also cracks in Misha's democratic façade, his US sponsored (funded) life support mechanism, and his staunch defenders are distancing themselves out of damage control and looking out for their own political futures. Perhaps to stay out of jail too!

    Georgia may have seemingly improved its placement on some of the ranking lists for level of democracy, such as transparency and corruption. But on others, it shows no improvement, and in some cases, a worsening since the so-called Rose Revolution in 2003.

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  7. Does a lack of transparency equal corruption in USAID funded projects in Georgia?

    Jeffrey K. Silverman

    Has anyone thought that the best way to cut off the support for Misha's democratic façade, his US sponsored (funded) life support regime, is to bring about transparency in how development money is actually being used. I think the dots are being connected but there may be some questions as to the real motivation. This begs the question as if a lack of transparency equal corruption in USAID funded projects in Georgia?

    Please consider something that is directly related to this premise.

    Sleeping in the same bed with AEI makes for strange bedfellows for a whistle blower against USAID abuses

    The underlying motivations are not crystal clear, why a lone scholar as Till Bruckner, University of Bristol and who worked in Georgia as a monitor of IDP assistance in the aftermath of the 2998 Russian-Georgia war, is now accruing a long list of enemies who label him a whistle blower, has a sharp axe to grind against USAID's lack of even a clear and present transparency. Till Bruckner, whose name cannot pull up much at all on a Google search of anything unrelated to his new polemic emerging circa April 2010, which sprang out of nowhere to bemoan the lack of transparency that may be hiding corruption in USAID and their nongovernmental organization affiliates, including their religious aid network?
    Why would he pick the American Enterprise Institute's magazine, THE AMERICAN, to lead the armada as a flagship into the murky waters of investigating the similarities between World Food Program and USAID shortcoming? Many people today fear that the USAID may have itself have mutated into a bloated behemoth of intelligence affiliates. Not only Till.
    http://www.american.com/archive/2010/april/how-corrupt-is-the-world-food-program/?searchterm=till
    The AEI is well known and notorious among its detractors for being the birthplace of hard core neo conservatism, which has been a frightful infestation of American democratic ideals and foreign policy for over 20 years now. You may be thinking by now that I am a blind supporter of USAID and the black clouds of legitimate and illegitimate NGOs swarming around USAID and the Republic of Georgia like sweat flies. On the contrary, I have been a long time investigative reporter dredging up such information for public disclosure for a few decades here in the Caucasus.

    I have to give Mr. Bruckner credit for coining one of the pithiest sentences I have read in a very long time, "Secrecy and charity make for strange bedfellows."

    http://aidwatchers.com/2010/05/secret-ngo-budgets-publish-what-you-spend/

    I absolutely agree, and whistle blowing against abuses of U.S. monies exemplified by USAID projects, makes strange bedfellows for AEI.

    Jeffrey Silverman, Freelance journalist and former Editor of Georgian Times, 18 years resident of Georgia, who has successfully investigated high level corruption in USAID funded projects in Georgia, Azerbaijan, and Afghanistan, in the last ten years

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  8. I have been searching for this type of blog post Is State Control over National TV Becoming Clearer? with the longest time,Thanks for excellent blog post,

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  9. free media is very positive thing in any community and it will control on the wrong working of the government and also point out the week areas and week point where government need to work but one thing is wrong some time it will create problem for you if they have personal aims

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