GEORGIA/ANTI-MONEY LAUNDERING PROSECUTION

UNCLAS SECTION 01 OF 02 TBILISI 003205

SIPDIS

STATE FOR INL, EUR/ACE, EUR/CACEN
DOJ FOR OPDAT (LEHMANN/NEWCOMBE),AFMLS, OCRS (STONE)
FBI FOR PHILLIP GADD

E.O. 12958: N/A
TAGS: SNAR PGOV OTRA KCRM KJUS GG
SUBJECT: GEORGIA/ANTI-MONEY LAUNDERING PROSECUTION
UNIT TAKES BILLION-DOLLAR CASE TO TRIAL AND PASSES
POLYGRAPH TEST


1. Summary. The DOJ supported anti money-laundering
(M/L) unit of the Georgian Prosecutor's Office scored
a first ever in Georgian jurisprudence by having a
witness testify at trial pursuant to a plea bargain
agreement. The case charges that the president of a
local bank (and vice premier of Georgia in 1992)
directed the laundering of a billion dollars through
his bank. Further, in an affirmation of the eliteness
of this unit and the confidence placed onto its
members, 14 out of the 15 members passed a second
(follow-up) polygraph test administered two weeks ago
by a team of visiting FBI agents. End Summary.

Background
--------------


2. The Georgian Prosecutor's Office created a vetted
unit last year to tackle high-level money laundering
cases. At that time, all unit members had to pass a
polygraph administered by the FBI to gain entry into
the unit. With USD 30,000 in INL funds, Post DOJ
Resident Legal Advisor renovated and equipped a stand-
alone office owned by the Prosecutor's Office in the
old section of Tbilisi and conducted a series of
intensive trainings in the investigation and
prosecution of these types of cases.

Gamma Bank Trial
--------------


3. This expenditure of money, training, and effort has
paid off. To date the unit has initiated several
significant investigations, each involving the
laundering of millions of dollars received from banks
in Russia. One of these, dubbed the "Gamma Bank" case,
is currently in trial. Amiran Kadagishivili, the
president of Gamma Bank, is in pre-trial detention and
charged with receiving up to a billion dollars from a
bank in Moscow over the past few years, and in turn
wiring the received amounts to different banks in the
US and elsewhere. Also, Gamma Bank was an authorized
government collection agent for utility bills, notary
fees, etc. The bank collected a million dollars,
which instead of being turned over the government, was
wired to an account in Montenegro. From there the
money was transferred back into Georgia to shell
accounts controlled by relatives of Kadagishivili.


4. Although trial commenced in June, hearings have been
held only sporadically, with a total of five held to
date. At a recent hearing, a bank cashier who flipped
pursuant to a plea bargain and pled guilty to
conspiracy to money laundering, testified that
Kadagishivili had ordered her to create false loan
accounts through which to pass funds. She was cross-
examined by the defense counsel on the validity of her
plea. Refusing to backtrack on her position, she stood
firm (despite tears) in her assertion of her own guilt
and that of the defendant's.


5. This hearing was quite significant as it showcased
for the first time in Georgia the implementation of
the trial techniques advocated by Post RLA and
recently implemented into Georgian law; namely, use of
a witness testifying pursuant to a plea bargain. The
plea bargain provision was recently put into Georgian
law upon recommendation by the RLA. The prosecutor
handling this witness learned the technique at both a
study tour sponsored by DOJ and a trial advocacy
course taught by the RLA and visiting DOJ experts.

Polygraph
--------------


6. Two weeks ago all eleven members of the unit were
administered polygraph tests by a team of visiting FBI
agents. Also, four M/L investigators from the
Ministry of Internal Affairs were polygraphed. Only
one person (a prosecutor three months new to the M/L
unit) registered deceptive on the question as to
whether he/she had accepted bribes in connection with
their work. By order of the Prosecutor General, this
prosecutor was immediately dismissed from the unit.


7. Post hereby makes special mention of and offers
its thanks to the four FBI Special Agents - Phillip
Gadd, Unit Chief; Joseph Edwards from New Orleans, LA;
Jeffrey Newton from Columbia, SC; and Michael Shafer
from Lexington, KY - for their dedication, hard work,
and professionalism.


8. Comment. That only one out of fifteen failed the
polygraph is quite a significant testament to the
dedication and professionalism of this unit.
Considering the high money environment and the culture
of temptation, this unit is a model for the rest of
Georgian law enforcement to emulate.

TEFFT
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