GEORGIA: WHAT IS GOING ON WITH NINO BURJANADZE?

S E C R E T SECTION 01 OF 02 TBILISI 001674 SIPDIS E.O. 12958: DECL: 09/02/2019 TAGS: PGOV PHUM PREL GG SUBJECT: GEORGIA: WHAT IS GOING ON WITH NINO BURJANADZE? REF: A. TBILISI 0852 ¶B. TBILISI 1568 ¶C. TBILISI 1634 Classified By: AMBASSADOR JOHN F. TEFFT. REASONS: 1.4 (B) AND (D). ¶1. (C) Summary/Comment: Despite her almost complete lack of political support, Burjanadze, likely because of her past international role as Georgia's acting President (twice) and well-known Speaker as well as the on-going activities of her husband, still commands the GoG's attention. A growing amount of evidence indicates that Burjanadze's husband, former Head of the Border Police, Badri Bitsadze is receiving large amounts of financing from ethnic Georgians based in Russia, some of whom may be part of a crime syndicate. Burjanadze's autumn plans are unclear but political engagement with the GoG is certainly not on her radar screen. Bitsadze's intentions are more murky and of significant concern to the GoG, which believes Bitsadze played a role supporting the failed Mukhrovani coup (ref A). Complicating matters is the GoG's apparent vindictive tax prosecution of Burjanadze for a property she received in 2008 for the price of GEL 1 (USD 60 cents) (ref B). Burjanadze garners little sympathy and no public support for her tax predicament, but she appears to have a legitimate gripe regarding the legality of the tax prosecution. End Summary/Comment. Where Is Nino - What Is She Doing? ¶2. (C) Irakli Alasania (Our Georgia - Free Democrats) told the Ambassador that Burjanadze was working with Eka Beselia (United Georgia) and Salome Zourabichvili (Georgia's Way) to try to organize a new wave of autumn protests to force President Saakashvili's resignation. Alasania said that Burjanadze was trying to convince Giorgi Gachechiladze "Utsnobi", brother of former presidential candidate Levan Gachechiladze to join the protests. Alasania said his Alliance (New Rights and Republicans) would not participate, and added that he was relatively sure Levan Gachechiladze also would not participate. According to Alasania, Burjanadze knows she has little popular appeal so she has been trying to co-opt Utsnobi to provide the street level credibility to autumn protests. (Embassy Comment: Courting the radical Utsnobi, who lead the May 6 storming of a police station, is not a positive sign that Burjanadze intends to lead peaceful, issue-based protests. End Comment.) Alasania also said Burjanadze was trying to make the recent arrest of Beselia's son and brother into a political issue. Alasania described both of them as petty hooligans and said he (and most others in opposition) would not support this. ¶3. (S) Burjanadze has spent a large portion of the summer quietly traveling abroad. (Embassy Note: A Poloff contact spotted her in Ukraine recently. End Note.) Minister of Internal Affairs Vano Merabishvili told the Ambassador that he had solid evidence that Bitsadze received USD 500,000 from Tariel Oniani (ref C) who had ties to the Mukhrovani coup attempt. Merabishvili said that Bitsadze had recently met Oniani in Belarus. According to Merabishvili, Bitsadze has received significant funds funneled through Armenia from ethnic Georgian Thieves-In-Law based in Moscow. Merabishvili also noted that both Burjanadze and Bitsadze were traveling frequently to Europe to meet with various Thieves-In-Law. Nino Might Have a Point on Taxes ¶4. (C) Burjanadze met Poloff to explain her version o the legal dispute regarding her dacha (ref B). Contrary to press reports, Burjanadze said the Ministry of Finance was not Qreports, Burjanadze said the Ministry of Finance was not attempting to collect property tax, but rather tax the property as unearned income. Burjanadze explained her case calmly and rationally telling Poloff that she did not dispute that she needed to pay taxes on the receipt of the property. She handed Poloff the 2008 official appraisal of the property which put the value of the property at GEL 2,769,325 (USD 1.64 million). Burjanadze said she was still prepared to pay income tax on the basis of the 2008 appraisal. She noted that it strained credibility that the value of her land increased six fold in the middle of an economic downturn, as tax authorities allege. Burjanadze said that she was tipped off that the GoG was preparing to sanction her for a false declaration of value if she paid her taxes on the basis of the 2008 official appraisal, rather than a new valuation which was only recently provided to Burjanadze. Burjanadze described a lose-lose scenario in which she would be blamed for not paying taxes or found guilty of misrepresentation and tax evasion in a "kangaroo court" style proceeding. She said that paying a political price for not paying taxes was the preferably choice; therefore, she requested an extension to sort the matter out in the courts. (Embassy Comment: According to lawyers at DLA Piper who are tax specialists but TBILISI 00001674 002 OF 002 unrelated to the case, seeking an extension and paying a small fine (less than USD 20) plus interest is normal practice in tax cases. The lawyers at DLA Piper were unanimously of the opinion that Burjanadze was correct in claiming she only owed a lesser amount in income tax and the government's overall legal case against her was highly dubious. End Comment.) ¶5. (C) Burjanadze explained that her lawyers have not been not allowed to cross examine the government witness who valued the property at over USD 12 million. Burjanadze also said she was denied the opportunity to introduce evidence that shows that the USD 12 million valuation was severely inflated. Burjanadze further provided Poloff with a copy of the newly amended tax code provision (on July, 17, 2009) which allows for the sale of property at auction after an initial court ruling. This provision previously allowed the government to take properties with tax liens to auction only after all appeals were exhausted. Burjanadze noted the curious timing of the amendment and offered her conclusion that the provision would be quickly repealed after her dacha was auctioned. For her part, Burjanadze seemed to understand that, as a political matter, she had very little public sympathy for her predicament having accepted the property for GEL 1 - about 60 cents. Nevertheless, Burjanadze told Poloff she would continue to fight because she believed the law was on her side. Burjanadze told Poloff she had little hope of winning but would appeal to the European Court of Human Rights in Strasbourg. Burjanadze added that the GoG would come after her for something else even if she decided to quit and pay the amount in question so litigating the case was her only option. The Dacha and More - A Former Insider Adds Context ¶6. (C) Former Burjanadze confidant and advisor, Thea Gogvadze-Apfel (strictly protect) told Polchief that she and others had confronted Burjanadze when they heard she was going to accept the dacha over a year ago. According to Gogvadze-Apfel, Burjanadze initially denied that she had any intentions of accepting the property. Gogvadze-Apfel found out later that Burjanadze signed the necessary papers the same day she had denied that she was going to accept the property. Gogvadze-Apfel described the incident as a painful betrayal. Nevertheless, Gogvadze-Apfel, who left the Burjanadze camp in early 2009, still defends her former boss. According to her, all of Burjanadze's questionable political decisions are a result of taking advice from her father Anzor Burjanadze (former director of the state bread enterprise and Shevardnadze confidante) and her husband. She opined that Burjanadze, left to her own devices, was an honest, sensible person. ¶7. (C) Gogvadze-Apfel said that she believed Bitsadze and Anzor Burjanadze had convinced Burjanadze to accept the dacha and were behind her increasing political desperation and radicalism. She said that contrary to the accepted wisdom, Anzor Burjanadze, who made a fortune as the "bread czar" and later as a Shevardnadze ally, was broke. Burjanadze's parents are currently living in the disputed dacha which likely helps explain Burjanadze's position on the issue, not wanting to have to move her parents from the residence. Gogvadze-Apfel said she did not know what Burjanadze's future political plans were but suspected Burjanadze was only listening to her father and husband for advice which essentially assured her political decisions would be to Qessentially assured her political decisions would be to defend their interests, not the promotion of democratic values. TEFFT