Biggest Construction Scandal in Georgia – The Center Point Case

TBILISI – The Tbilisi City Court has sent the founders of the Center Point Group construction company, former Vice-Speaker of Parliament Rusudan Kervalishvili and her sister Maia Rcheulishvili, to prison for four years for embezzlement and misspending client money.

The case has been in progress for more than four years. The sisters are accused in misspending $5,548,341 and GEL 20,692,408.

The Prosecutor’s Office of Georgia (POG) reports that Rcheulishvili and Kervalishvili obtained clients’ money in a fraudulent manner through embezzlement schemes. They were accordingly sentenced to six years in prison, which was reduced by 1/3 after application of the Amnesty Act of Georgia adopted on December 28, 2012. They are now expected to spend four years in prison.

“As a result of the fraud, around 6,200 families were affected,” the POG said.

The affected developers are not happy with the court’s decision, which many of them consider “minimal.” They are demanding their money back. The POG suggested the defense strike a plea bargain for a conditional sentence, if the losses of all victims are compensated. Mariam Tsustkiridze, Rcheulishvili and Kervalishvili's lawyer, says that they are ready to start negotiations with the POG over the plea bargain. “The Center Point property is enough to compensate the losses of all the affected developers,” she said. However, the lawyer underlined that no monetary compensation will be paid to the victims. “Compensation means completion of constructions of the apartments purchased by the victims. Paying money to the affected people is not on the agenda,” she said.

At present, the Tbilisi City Court is also conducting hearings on two other cases of criminal prosecution of Maia Rcheulishvili as separate counts, regarding embezzlement of large funds owned by developers and appropriation by deceit. Her son Guram Rcheulishvili is also detained regarding the case.

The Center Point Case is the biggest construction scandal in Georgia. In 2012, the non-governmental organization Transparency International (TI)-Georgia prepared a report on the case, saying that, in total, the Center Point Group had mishandled $310 million paid by around 6,200 customers for the construction of their houses.

Center Point Group was established in 1999, and aimed to raise capital from citizens and implement construction projects. It was a conglomeration of 70 companies, 55 Limited Liability Companies (LLC) and 15 individual partnerships, owned by the three well-known people in Georgia: Vakhtang Rcheulishvili, Maia Rchuelishvili, and Rusudan Kervalishvili. The company went bankrupt following the 2008 war. Dexus, a company managing Center Point Group’s assets since September 2010, pledged to finish suspended constructions within three years. The company was established on 23 August 2010, just two weeks before undertaking the management of Center Point Group’s construction projects. However, Dexus has worsened the initial conditions for the affected customers by asking them to pay burdensome taxes and additional costs for their houses. According to NGO TI-Georgia, Dexus became involved in an allegedly illicit deal through which the founders of the Center Point Group claimed the customer's valuable property.

By Thea Morrison

Photo: Maia Rchuelishvili and Rusudan Kervalishvili

Source: fmabkhazia.com