WHY PATARKATSISHVILI SCARES THE GOG

C O N F I D E N T I A L TBILISI 003002

SIPDIS

SIPDIS

STATE FOR EUR/CARC AND EUR/FO

E.O. 12958: DECL: 11/29/2017
TAGS: PGOV KCRM KBIO GG
SUBJECT: WHY PATARKATSISHVILI SCARES THE GOG

REF: TBILISI 2978

Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d)


1. (C) Summary. The Georgian government accuses oligarch and
presidential candidate Badri Patarkatsishvili of moving from
ordinary politics to fomenting revolution over the course of

2007. It has taken steps against him personally and against
his business interests in an attempt to blunt his influence
and power, although it insists he will be allowed to campaign
freely before the January 5 presidential election.
Patarkatsishvili is wanted in Russia for a variety of white
collar crimes and is suspected of much more dangerous and
unsavory activities. His most important tool to achieve his
political ends is the independent television station Imedi.
Imedi's true relationship with the American company News Corp
is unclear, and the government wants an assurance News Corp
is really in charge before it will trust the station to go
back on the air. The evidence against Patarkatsishvili
personally, on claims of conspiracy to overthrow the
government, is so far largely circumstantial, but some
independent experts are uneasy about him. Patarkatsishvili's
popularity with Georgian voters will be tested by the
election in January. Even if he loses, he will likely
continue to be a formidable opponent to Saakashvili. End
Summary.


2. (C) The Georgian government, headed by former President
Saakashvili, took a number of drastic and seemingly
counter-productive steps to protect itself since the
appearance of a major political challenge, first from former
Minister of Defense Irakli Okruashvili and then from oligarch
Badri Patarkatsishvili. The arrest of Okruashvili, the
forceful response to demonstrators on November 7, the closing
of Patarkatsishvili's Imedi television station, and the
harassment of some Patarkatsishvili businesses (reftel) has
cost the GOG dearly in its standing with its friends in the
international community. The government is sincerely
convinced that Patarkatsishvili constitutes a threat to its
existence, and has been willing to sacrifice years of
progress and accumulated international goodwill to avert that
threat. To the government of Georgia, the struggle is one of
life and death. Why is Patarkatsishvili viewed in such
apocalyptic terms?

WHO IS BADRI PATARKATSISHVILI?
--------------


3. (C) Patarkatsishvili was born October 31, 1955 in Tbilisi
to a Jewish family. In the early 1990's, he moved to Moscow
and became associated with Boris Berezovsky, who helped him
to become very wealthy, attaining an estimated net worth of
USD 12 billion, according to the Georgian Times newspaper.
Estimates of his wealth vary widely. Patarkatsishvili was a
deputy director of Berezovsky's LogoVaz group, which
distributed and sold Russian cars. He was a director of
Russia's ORT TV and TV6 when they were controlled by
Berezovsky. He was a director of the oil company Sibneft,
which Berezovsky bought for an estimated USD 100 million but
was later found to be worth billions. Also associated with
Roman Abramovich, he helped manage a $3 billion investment in
the aluminum industry. In 2001, he and Berezovsky were
charged by the Russian government with stealing hundreds of
millions of rubles from Aeroflot, and Patarkatsishvili was
accused of embezzling millions from LogoVaz. Faced with
prosecution in Russia, he returned to Georgia in 2001. In
Georgia, he set up the independent media company, Imedi, and
bought the country's national circus, soccer clubs, other
sports franchises and a great deal of property. He was the
president of the Georgian Federation of Businessmen, and
served on Georgia's Olympic committee. He is known for grand
philanthropic gestures, such as a million dollar loan to the
City of Tbilisi to pay for gas for its citizens in 2003, and
financing the Georgian Olympic team's participation in the
games in Athens.


4. (C) Patarkatsishvili is suspected of having an even darker
side than that reflected by his alleged white-collar crimes
in Russia. He is alleged to have been Berezovsky's enforcer,
and even to have committed murder in his service. He is
associated with some extremely unsavory figures, including
Andrei Lugovoi, suspected of poisoning Russian dissident
Alexander Litvinenko. Lugovoi was head of ORT's security in
Russia and Patarkatshishvili has described him as a "close
friend." Despite his differences with the Government of
Russia, Patarkatsishvili is believed to be closely allied
with Russian intelligence services, probably through Lugovoi.


INTO THE OPPOSITION
--------------


5. (C) Patarkatsishvili enjoyed a warm relationship with
former Georgian President Shevardnadze. Immediately after
the Rose Revolution in 2003, he remained on good terms with
President Saakashvili. However, beginning in 2006,
Patarkatshishvili began to take issue with the new
government's policies toward business. He may have been
motivated by the new government's aggressive tax enforcement,
which greatly increased the government's revenue but upset
many businessmen in Georgia, not only Patarkatsishvili. MP
Giga Bokeria has been quoted as saying the reason for the
oligarch's discontent was his inability to gain privileges
and suppress his rivals so that he could become the "Don
Corleone of Georgian business." In an interview,
Patarkatsishvili marked the turning point as the death of his
friend and former Prime Minister Zurab Zhvania in 2005.


6. (C) By 2006, Patarkatsishvili had begun to finance the
opposition parties more or less openly. Although many of
them urged him to run for an office, such as Mayor of Tbilisi
in the 2006 local elections, he did not put himself forward
personally until November 2007, when he announced his
intention to run for President. By that time, he was
describing Saakashvili as "fascist" and "a despot". Before
that however, Patarkatsishvili was backing Irakli
Okruashvili, who famously accused Saakashvili of plotting
Patarkatsishvili's murder, and then retracted the accusation.
The government says Patarkatsishvili paid the demonstrators
who battled police on November 7 and directed their efforts
via intermediaries on the scene in Tbilisi.
Patarkatsishvili's last public appearance in Georgia was at
the opposition demonstrations on November 2, after which he
departed for Israel and the UK. From Eilat, he repeated the
vow to "free Georgia from this dictatorial junta," echoing
his call for Saakashvili's ouster that led to the closure of
Imedi television on November 7. Since that time he has
allegedly been funding the travel of opposition figures to
Europe, where they have been meeting government officials and
pressing their case against Saakashvili as a faux democrat.
Government pressure on Standard Bank and other
Patarkatsishvili enterprises may make it more difficult for
him to fund the parties within Georgia.


7. (U) Patarkatsishvili's political program, as announced on
October 17, would seek a balance in Georgia's policy toward
Russia and the United States. He says NATO and EU membership
is fully in line with Georgia's interests, but "should not
occur at the expense of others' interests." He envisages
Georgia as a federal state, without a president, or possibly
with a constitutional monarch. The central government would
be responsible only for defense and economy and all other
functions would be distributed to the regions. To ensure
both Georgia's independence and its economic prosperity, he
would encourage maximum self-realization and security for the
rights of entrepreneurs.

IMEDI, THE THORN
--------------


8. (C) Although Patarkatsishvili has many business interests
in Georgia, the one that makes him the number one thorn in
the government's side is Imedi television. Founded in 2002,
Imedi has grown to be the most popular television station in
Georgia. Although one would expect it to be a lucrative
venture, the government has claimed it is reporting losses in
the range of USD 20 million a year. As Patarkatsishvili
became more critical of the government, so did his television
station. Imedi broke the news that Ministry of Internal
Affairs officials were involved in the beating death of
Sandro Girgvliani in February 2006, a news story that shocked
the nation and seriously undermined the government's
reputation for respect for rule of law. It is widely
believed in Georgia that Patarkatsishvili had made a deal
with the GOG earlier in 2007 to sell Imedi to an owner more
amenable to the government in return for taking control of
Georgian Railways. That deal fell apart, however, reportedly
angering Saakashvili. By November 7, the government was
convinced that Imedi was not only reporting, but encouraging
revolution and disorder in the streets. Imedi's news anchor,
Giorgi Targamadze (a former chief of staff to ousted Adjaran
strongman Aslan Abashidze),was a bitter government foe and
was not shy about letting it show in his newscasts.
President Saakashvili branded the station a "factory of
lies."


9. (C) The government does not seem willing to allow Imedi to
reopen until it is satisfied that Patarkatsishvili cannot
influence its editorial content and an ombudsman is in place
to call a foul if it exceeds the bounds of journalistic
ethics. The government' suspicions of Imedi are heightened
by questions about the station's relationship with the
American communications company News Corp. In April 2007,
News Corp, Imedi and Patarkatsishvili trumpeted the sale of
an undisclosed portion of Imedi to News Corp. However, the
government says that News Corp's purchase has never been
registered and that on the official books Patarkatsishvili's
companies remain the station's full owners. The government
wants to be assured Patarkatsishvili is out of the station
and News Corp fully in before it allows Imedi to reopen.
News Corp has provided the Prime Minister with a document
wherein it admits it "does not fully own" Imedi; rather, it
has an agreement to purchase a minority interest. It is
unwilling to do more than promise full transparency of its
stake, whatever it is, in Imedi. The government is also
seeking to impose some duties of disclosure about management
and Imedi's finances. News Corp seems ready to accept these,
so long as they are applicable to all media in owners in
Georgia. Similarly, it appears ready to accept oversight of
journalistic ethics on an industry-wide basis. It rejects
allowing the government to name "tainted" journalists whom
Imedi must not employ.

IS HE REALLY A THREAT?
--------------


10. (C) Patarkatsishvili is, if nothing else, a shrewd and
powerful opponent of the Saakashvili regime. He has more
than enough money to fund the opposition, as he has promised
to do. Although he has been named a suspect in a case of
conspiracy to overthrow the government of Georgia, he has
apparently been careful not to commit any treasonous acts
that can be easily traced to him personally. The government
can investigate for 30 days before it must drop the
investigation. Officials insist he is free to return to
Georgia to campaign while their investigation is ongoing. At
the same time, the government believes that
Patarkatsishvili's turning of control of Imedi over to News
Corp was a sham, and that he was directing its employees to
foment revolution, and will continue to do so if allowed.
The most serious allegations, such as stockpiling of weapons
and organizing a militia by the station's security director,
touch on employees' actions, and the recorded statements by
Patarkatsishvili himself are ambiguous. Nevertheless, not
only the government, but also a level-headed observer such as
Alex Rondeli, head of the Georgia Foundation for Strategic
and International Studies, believe Patarkatsishvili is
dangerous. Rondeli recently told the Ambassador that in his
opinion, it was necessary for the GOG to arrange for Irakli
Okruashvili to be taken into custody in Germany to prevent
his being assassinated on Patarkatsishvili's orders, which
would create a further scandal for the beleaguered
Saakashvili.


11. (C) Patarkatsishvili remains a huge wild card in the
January 5 election. It is unclear how many people would vote
for him, but polls taken before this fall's political crisis
showed him personally among the most popular figures in the
country. The government genuinely fears that he could employ
his fortune and his network of associates to launch
provocations or violent demonstrations. These concerns may
be overblown, and Georgia does not have the feel of a country
on the verge of a revolution. Nevertheless, this drama is
likely to take more unexpected turns both before and after
January 5. It is not clear at this point who will win the
election, or how Patarkatsishvili and the rest of the
opposition would respond to a Saakashvili victory.
TEFFT