GOVERNMENT ISSUES STATEMENT SUPPORTING CHARGES

UNCLAS SECTION 01 OF 02 TBILISI 002608

SIPDIS

SIPDIS

DEPT FOR EUR DAS BRYZA AND EUR/CARC

E.O. 12958: N/A
TAGS: PREL PGOV PHUM GG
SUBJECT: GOVERNMENT ISSUES STATEMENT SUPPORTING CHARGES
AGAINST OKRUASHVILI

REF: A. TBILISI 2437


B. TBILISI 2483

C. TBILISI 2542


1. (U) Summary: On October 16 the Government of Georgia
released an "information note" setting out the legal basis
for charges against former Defense Minister Irakli
Okruashvili and his subsequent bail. The note explains the
investigation and evidence for allegations of abuse of power
and official negligence, extortion of a bribe and money
laundering. The note describes Okruashvili's interrogation
and October 7 guilty plea on two charges, official
negligence and extortion of a bribe. The note details
Okruashvili's medical examination which found him in good
health. It asserts the prosecutors' and judicial system's
commitment to transparency and respect for due process in
this case. End Summary.

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Charges and Evidence Against Okruashvili
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2. (U) The October 16 information note released by the
Government of Georgia sets out the legal basis for charges
against former Defense Minister Irakli Okruashvili.
Okruashvili was arrested on September 27 following a lengthy
investigation by the Office of the Prosecutor General in
cooperation with the Ministries of Finance and Defense, as
well as the Chamber of Control. On September 28, the Tbilisi
City Court ordered Okruashvili to be held for two months in
pretrial detention to prevent the risk of flight, the
destruction of evidence, and attempts to influence witnesses.
Later, Okruashvili was released on bail and has been living
in Tbilisi. He has made no further statements since his
release. A brief summary of the government's charges and
evidence follows.

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Abuse of Power and Official Negligence
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3. (U) As stated in the information note, these charges are
connected to a series of alleged abuses of the Ministry of
Defense procurement process with the goal to enrich
Okruashvili and his associates. They primarily relate to the
illegal procurement of aviation fuel for the MOD; overcharges
in the procurement of ammunition; and embezzlement related to
contracts to build and refurbish the Gori and Senaki military
bases. Mr. Okruashvili pleaded guilty to the charge of
official negligence only.


4. (U) Evidence for these charges is based on a three month
inspection between September-December 2006 at the MOD that
allegedly uncovered misuse of public funds. On the aviation
fuel purchase, the MOD bought 4000 tons of aviation fuel at
USD 725.7 per ton from Transport and Development, LTD., a
company controlled by Kibar Khalvashi, a close friend of
Okruashvili. This purchase was done despite an existing
contract between the MOD and Aviasatsvavservisi, which
provided aviation fuel at USD 673 per ton. The Prosecutor
General also found that in December 2005, the Head of the MOD
Procurement Department, Iason Chikhladze, a longtime
associate of Okruashvili, purchased ammunition that was
virtually useless at a price ten times higher than the
quality warranted. On the charge of embezzlement related to
construction of the military bases, Okruashvili requested the
Ministry of Economic Development negotiate directly with the
newly established International Building Company (IBC),a
company with no prior construction experience but that was
owned by close friends of Okruashvili. Prosecutors claim
Okruashvili did this to gain advantage over competitors and
to safeguard the interests of his friends at IBC. IBC won
the GEL 132 million contract. Over GEL 300,000 was allegedly
embezzled from expenses for the refurbishment of the Senaki
base.

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Extortion of a Bribe
--------------


5. (U) This charge relates to the extortion of 2.5 percent of
the shares of Geocell, the second largest mobile phone
company in Georgia, from a former Member of Parliament, Jemal
Svanidze. Okruashvili pleaded guilty to these charges.


6. (U) Okruashvili and President Saakashvili's Parliamentary
Secretary, Dmititri Kitoshvili, allegedly threatened Svanidze

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with government-created problems for his business, and
arrest, if he did not sell the shares to Kitoshvili for a
price far below their market value. Okruashvili confessed to

TBILISI 00002608 002 OF 002


this extortion attempt and Svanidze and Kitoshvili also
testified to it.

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Money Laundering
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7. (U) This charge was brought because of the April 2007
purchase for USD 1.8 million of a building located in Tbilisi
by Okruashvili, four public officials who are his close
associates, and five friends or relatives. The price paid
for the building, according to the purchase and sale
contract, was only USD 250,000. Mr. Okruashvili has pleaded
not guilty to this charge.


8. (U) Evidence of money laundering during the purchase of
the building by Okruashvili and ten associates for only USD
250,000 was given by Teimuraz Gogitidze, an employee of
Okruashvili in 2002 at the Ministry of Justice, who
negotiated the purchase of the property from the owner, Koba
Amirejibi. Both testified the actual selling price of the
building was USD 1.8 million, and that the contract falsely
listed the sale at USD 250,000. Records at the Bank of
Georgia indicate the mortgage and interest of USD 697,000 was
later paid in cash by Mr. Gogitidze, who testified he
received USD 1.75 million in cash directly from Okruashvili
to pay for the purchase. Okruashvili's personal worth was
allegedly not enough to cover even the fictitious USD 250,000
price of the building.

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Entering the Guilty Plea
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9. (U) On October 7 Okruashvili pleaded guilty to charges of
extortion of a bribe and official negligence (committed
during his capacity as Minister of Defense that caused
material damage to the State),as recorded by the Office of
the Prosecutor General during his interrogation. He
confirmed his guilty plea in an open court hearing on October

8. Both statements were made in the presence of his lawyer.


10. (U) The information note details the extent to which
prosecutors went to confirm Okruashvili's confessions were
not made under duress or other illegal form of pressure or
influence. These include videotaping the confessions from
three angles and medical examinations of Okruashvili by both
the Medical Division of the Ministry of Justice's
Penitentiary Department and six independent medical doctors.
Okruashvili was found to be in good health with no signs of
bodily injury and no presence of narcotic or psychotropic
drugs in his system. He signed the medical examination
records.


11. (U) The note outlines the October 8 setting of bail for
Okruashvili at 10 million Lari (6 million US) and Mr.
Okruashvili's payment on October 9, partially in funds and
partially in real estate. The note concludes with a
commitment of prosecutors and the judicial system to meet the
highest legal standards and says the case of Okruashvili will
continue with the utmost fairness, transparency and respect
for due process consistent with Georgian legislation.

Comment


12. (SBU) The government's note recapitulates information
that has largely been reported in the press and adds little,
if any new information. It is unlikely to mollify or
persuade any of Okruashvili supporters, who are convinced
that Okruashvili's statements were made under duress. Both
Okruashvili and his supporters have been remarkably quiet
since his dramatic televised confession. How many such
supporters there actually are, and whether they will emerge
in the future, is difficult to gauge.
TEFFT