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