State Audit Finds Possible Local Gov’t Corruption in Kutaisi

The State Audit Office of Georgia has found numerous irregularities in the activities of Kutaisi City Hall in 2019-2020, including problems with budgeting, supposed misuse of public funds, and inadequate provision of public transport services, among others.

The 46-page-long document, published earlier in April, looked into the implementation of the Kutaisi Municipal Budget, which covers the City Assembly (Sakrebulo), City Hall, and the local government agencies.

Speaking with reporters during a regional tour in Kutaisi, Imereti Region, Prime Minister Irakli Garibashvili on April 30 promised a serious response to all of the possible offenses listed in the audit report.

“I have not seen [the report] yet but I will ask about it,“ PM Garibashvili said, going on to stress that none of such allegations and problems “will be left without a response.”

The Kutaisi City Hall has not made any explanations over the audit’s findings.

It told the Kutaisi Post, a local online media outlet, on April 12 that the  City Hall had its “own responses” to the findings but would only make a statement after consultations with the State Audit Office concluded.

Audit Findings

Auditors found that the Kutaisi Municipality did not spend the 7.1% and 31.9% of the Kutaisi City Hall’s allocated budget for investments in nonfinancial assets in 2019 and 2020, respectively. As a result, it failed to start or complete work on roads, pavements, apartment building facades and yards, kindergartens, and water infrastructure systems.

Besides, the audit report said that Kutaisi City Hall has trouble managing infrastructure projects. Due to a faulty quality control system, the implementation of projects worth GEL 1.98 million (USD 652.3 thousand) failed to meet the required standards, according to the document.

The report noted that when purchasing new public transport vehicles in 2019 for GEL 22.7 million (USD 6.5 million) with a loan from the state Municipal Development Fund, the Kutaisi City Hall, failed to ensure the quality of the buses, which regularly experienced problems, making people unable to depend on the transport.

The personal use of gasoline allocated for official uses, dozens of unnecessary restaurant visits, and the keeping of 125 more cars than necessary for municipal staff, were also among the irregularities listed in the report.

The auditors further revealed that the Kutaisi Municipality allocated nearly GEL 360 thousand (USD 118.6 thousand) of social assistance funds to municipal employees, including higher-ups at the City Hall and the City Council (Sakrebulo), who already had solid income.

Procurement Deals

Auditors found that after Kutaisi City Hall procured social housing at a high market cost yet partly uninhabitable and poorly built, it launched legal proceedings against the constructer.

As part of the proceedings, between 2019-2020, the City Hall was asking the company to return about GEL 1.6 million (USD 527.2 thousand) since it failed to fulfill the terms of the procurement contract, the report said

But, the document added, without explanation, that the two parties reconciled their disagreement in 2021 and the company completed the construction works with the municipality paying the company GEL 120 thousand (USD 40 thousand) instead.

Auditors also found that during the reporting period the City hall procured GEL 128.8 thousand (USD 42 thousand) worth of goods from a company linked with the Deputy Mayor of Kutaisi, who also took part in the procurement process.

Recommendations

Overall, auditors stressed the need for an overhaul of the system with emphasis placed on the need for better planning and oversight.

The State Audit Office highlighted the need for the Kutaisi City Hall to plan the municipal budget realistically, with the necessary oversight systems in place, and then follow it to completion within the proposed timeline.

The auditors also recommended the local authorities take necessary measures against possible conflicts of interest during public procurement deals.

The auditors found there to be the existence of conflicts of interests that was not disclosed during transactions and auctions which were sold at minimal cost to sellers against normal practice.

The report highlights as a particular concern the Municipality continued to repeat some of the mistakes which had been found in an audit of the 2015-2016 and brought to their attention in 2019.

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