Economy

“The example of Rustavi Nitrogen confirms that the Bank of Georgia’s dictatorship over the country continues” – AYFB

Andria Gvidiani, analyst from the Association of Young Financiers and Businessmen, has commented on the events unfolding around the Rustavi Nitrogen factory, saying that there are many unanswered questions in the situation, which necessitates involvement of both the society and the appropriate governmental structures.

“As of late, numerous questions are emerging regarding the information published by the media about the Rustavi Nitrogen case. The protest by sacked workers has significantly boosted the issue’s relevance and therefore, revealed gaps in the legislation in regard to protection of labor rights and minimal social responsibility of the companies. Besides, the Bank of Georgia’s excesses have really gotten out of hand. There exists a well-founded suspicion regarding the EU Investments company – the new owner of Rustavi Nitrogen – having a direct connection to that bank. Outwardly, from the official point of view, EU Investments may appear as an independent company, but a whole set of factors serves to reinforce the suspicion that it is de facto owned by BoG.

To be more precise, the aforementioned company was registered only a few days before the factory was put on auction, with an asset capital of merely 100 GEL. However, the Bank of Georgia “was happy to loan” 235 million GEL to such a company – money that was used to acquire the factory.

As far as we know, in 2014 a decree was issued, according to which the National Bank made it illegal for commercial banks to possess non-core assets. Unfortunately, the facts point at lack of respect for this regulation. In turn, this points to lack of means of enforcing it,” said Mr. Gvidiani.

The analyst addressed the government with a recommendation to make the regulations against non-core bank assets stricter.

“Possession of non-core assets by commercial banks and their movement out of the framework of providing traditional financial services significantly harms development of a healthy and competitive environment in the private sector. This needs to be opposed by decisive action. Numerous circumstances point at the fact that the Bank of Georgia’s dictatorship over the country continues and that said bank possesses almost the entirety of big business assets. Therefore, I feel compelled to address the financial, monetary and legal branches of government with a recommendation to conduct systemic reform and come up with effective means of preventing the banks from possessing non-core assets,”- commented Mr. Gvidiani.