1. State Audit Office of Georgia
Compliance Audit of Tbilisi City Municipality Property Management and Disposal in
Intermediate information based on the evidences obtained during the audit as of May 17, 2017
State Audit Office of Georgia
2017

2. Pieces of land owned by “BSR - CDG Development” Ltd in 2012
Land I
 2246 m2
Land II
2302 m2
Land III
14749 m2
In 2012 Tbilisi City Hall constructed a new road. Approximately 97 meter long section of this road passed through the land owned by Ltd. In particular, it occupied approximately 74% of the land II.

3. Correspondence between “BSR - CDG Development” Ltd and Tbilisi City Hall about the compensation of loss
From 2012 company requested compensation from the Tbilisi City Hall - no correspondence has been presented
On 4th of December, 2014 “BSR - CDG Development” Ltd sent a letter to the Mayor of Tbilisi, requesting compensation from Tbilisi City Hall for the loss either by paying money or assigning alternative piece of land – there were no response
On 12th of June, 2015 Tbilisi City Assembly assigned 3 pieces of Land (C.C ; C.C ; C.C ) to the State
2012
2014
2015
2016
All 3 pieces of land were assigned back to Tbilisi City Municipality on 3rd of February, 2016.
On 29th of February, 2016, “BSR - CDG Development” Ltd requested 3 pieces of land as a compensation for loss on its Land covering the area of 2,302 m2 (C.C ; C.C ; C.C ) - according to the response this issue will be reviewed by the authorized bodies.
On 25th of March, 2016, “BSR - CDG Development” Ltd again addressed to the Tbilisi City Hall and requested other 2 pieces of land as a compensation: land I – (C.C ) and land II – 5515 კვ.მ (C.C ) – request was fulfilled

4. Relation between the loss incurred by “BSR - CDG Development” Ltd and the compensation granted
Land I
Land II
Land III
“BSR - CDG Development” Ltd possibly incurred the loss by the road construction in 2012, while Tbilisi City Hall assessed the loss and compensated it in 2016.
If we consider that in the period of causing the loss by the road construction, “BSR - CDG Development” Ltd sold two pieces of land under its ownership, situated adjacent to the land with the area of m2, for the price of 223 GEL for one square meter, the Ltd would have a loss equal to approximately GEL by losing m2 of land.
The process of negotiation and compensation was managed by Tbilisi City Hall in the way that the company received the compensation for the loss 4 years later and the amount of the compensation was much higher. Namely, Tbilisi City Hall transmitted GEL worth of lands to the company.

5. Relation between the loss incurred by “BSR - CDG Development” Ltd and the compensation granted
Land I
Land II
Land III
Land I and Land III sold by Ltd in 2013
In total m2 of land was sold, by the price USD ( GEL);
1 m GEL;
“BSR - CDG Development” Ltd possibly incurred the loss by the road construction in 2012, while Tbilisi City Hall assessed the loss and compensated it in 2016.
If we consider that in the period of causing the loss by the road construction, “BSR - CDG Development” Ltd sold two pieces of land under its ownership, situated adjacent to the land with the area of m2, for the price of 223 GEL for one square meter, the Ltd would have a loss equal to approximately GEL by losing m2 of land.
The process of negotiation and compensation was managed by Tbilisi City Hall in the way that the company received the compensation for the loss 4 years later and the amount of the compensation was much higher. Namely, Tbilisi City Hall transmitted GEL worth of lands to the company.

6. Relation between the loss incurred by “BSR - CDG Development” Ltd and the compensation granted
Land II
Land III
Land I and Land III sold by Ltd in 2013
In total m2 of land was sold, by the price USD ( GEL);
1 m GEL;
Compensation granted by Tbilisi City Hall in 2016 for the Land II
Loss is compensated for the area of m2, amounting to GEL;
1 m GEL;
ნაკვეთი I
“BSR - CDG Development” Ltd possibly incurred the loss by the road construction in 2012, while Tbilisi City Hall assessed the loss and compensated it in 2016.
If we consider that in the period of causing the loss by the road construction, “BSR - CDG Development” Ltd sold two pieces of land under its ownership, situated adjacent to the land with the area of m2, for the price of 223 GEL for one square meter, the Ltd would have a loss equal to approximately GEL by losing m2 of land.
The process of negotiation and compensation was managed by Tbilisi City Hall in the way that the company received the compensation for the loss 4 years later and the amount of the compensation was much higher. Namely, Tbilisi City Hall transmitted GEL worth of lands to the company.

7. BSR - CDG Development Ltd
Relation between the loss incurred by “BSR - CDG Development” Ltd and the compensation granted
Otar Partskhaladze
Lev Nanikashvili
Manuakh Nanikashvili
15%
BSR - CDG Development Ltd
Royal Development Ltd
40%
45%
100%
On 29th of February, 2016 “BSR - CDG Development” Ltd sold 100% of its share to “Royal Development” Ltd for USD (approximately GEL )
“BSR - CDG Development” Ltd was the owner of a property – m2 of land in Mziuri adjacent territory and demanded compensation for the loss caused by the construction of the New Road.
There does not exist a documentary evidence which would indicate that for February 29, 2016 “BSR - CDG Development” Ltd was informed that Tbilisi City Hall would consider the question of loss compensation by transmitting the lands. Appropriate evidence could not be presented by Tbilisi City Hall.

8. Relation between the loss incurred by “BSR - CDG Development” Ltd and the compensation granted
There does not exist a documentary evidence which would indicate that for February 29, 2016 “BSR - CDG Development” Ltd was informed that Tbilisi City Hall would consider the question of loss compensation by transmitting the lands. Appropriate evidence could not be presented by Tbilisi City Hall.
Royal Development Ltd
Otar Partskhaladze
100%
On the 29th of June, % share of “BSR - CDG Development” Ltd was sold to Otar Partskhaladze by “Royal Development” Ltd for USD.
By this time, as a result of the compensation, the company was already the owner of two pieces of land in Delisi Street adjacent territory. According to LEPL “Levan Samkharauli National Forensics Bureau” conclusion, market price of these lands was equal to GEL. Accordingly, if we rely on this information, for February 29, 2016, owners of “BSR - CDG Development” Ltd agreed to sell the company under their ownership, including the m2 of land in Mziuri adjacent territory, for USD (approximately GEL).
Therefore, the objective of the audit is why could not Tbilisi City Hall have appropriate communication with the company about the compensation and why it became necessary to compensate the loss by much higher amount, in particular by GEL worth of lands.

9. Auction conditions of the lands neighboring to the ones transmitted to “BSR - CDG Development” Ltd

10. The property transmitted to “BSR - CDG Development” Ltd by Tbilisi City Hall and neighboring land plot purchased by the company via auction
გაცვლით მიღებული
აუქციონით მოთხოვნილი
One of the necessary conditions defined by the auction was that the land plot must be united with the neighboring land. Considering the fact that neighboring land plots were owned by “BSR - CDG Development” Ltd, the company won the auction in noncompetitive environment with the price amounted to thousands GEL (initial price – bid).

11. Main Audit Findings Replacement of the land
During “BSR - CDG Development” Ltd was requesting compensation without any result;
In 2016, when the holder of the company was changed, compensation issues were finalized in 45 days by Tbilisi City Municipality;
The value of the property compensated by the municipality 5 times exceeds the price of the property in the period of loss and also the amount paid by the new holder for the land plot;
New holder purchased a company for GEL while the company owned assets worth of GEL.

12. Main Audit Findings Auction
According to the necessary condition of the auction, defined by Tbilisi City Hall, the piece of land must be united with the neighboring land plot;
The owner of the neighboring land plot was 1 company (100% shareholder O. Partskhaladze);
The value of the piece of land on the auction is estimated at 1.7 times less than the value of the neighboring land plot.

13. Thanks for Attention