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Fraud Goes Through (Mansion) Roof, Georgians Say

Caucasus: Homes selling for upward of $3 million attract poorly paid government officials as owners, adding to complaints of corruption.


TBILISI, Georgia — There is a suburb going up here filled with fantastic towers of brick and steel, the kitschy dream homes of current and former officials who could not afford to buy on their government salaries alone.

The price tags: between $3 million and $4 million.

That officials on meager state salaries--the head of government, President Eduard A. Shevardnadze, makes only $190 a month--are buying these homes is evidence, say Georgian analysts and journalists, of colossal corruption.

Georgia has absorbed about $900 million in U.S. aid during the last five years, and the mansions raise disturbing questions about the value of pouring dollars into a corrupt system.

"The result of that aid in almost any sphere, except food aid, is very hard to detect. One reason is incompetence of post-Soviet structures, but corruption played an enormous role," said Anatol Lieven, a senior associate at the Carnegie Endowment for International Peace in Washington, who is writing a book on Georgia.

In the post-Soviet era, Georgia was anointed by the West as a likely candidate for future North Atlantic Treaty Organization membership, a stable pipeline route for Western companies' oil and a reliable ally to counterbalance Russian power in the region.

Disappointing Progress

But its progress toward democratic institutions and a market economy has been disappointing. The divide between rich bureaucrats and the mass of disgruntled, impoverished Georgians is wider than ever.

The biggest symbol of Georgia's failure to establish a stable democracy was the April 2000 presidential election, which was sharply criticized at the time by monitors from the Organization for Security and Cooperation in Europe as fraught with balloting violations. The vote, which kept Shevardnadze in office, rocked Western faith in the country's ability to reform.

In the grand new Tbilisi suburb, the houses jostle the eye, competing for height as though a mob of frustrated Soviet architects had run amok. But don't wander too close or ask too many questions about the owners, a foreman at the construction site of one home warned journalists last year.

"A brick might fall on your head. We wouldn't want that," he growled. "Now get out of here. I'm fed up with you."

The story of the house that Tbilisi police chief Iosif Alavidze built shows the lines of patronage in Georgian society, and the point at which these fray and snap.

In a controversy over the mansion's construction last spring, Alavidze drew support from his boss, Interior Minister Kakha Targamadze, a Shevardnadze loyalist. Insisting that there was no evidence of corruption, Targamadze argued that the mansion was not registered in the name of Alavidze but the chief's relatives.

But Targamadze would not last long in his post. Nor would Alavidze, nor some of his neighbors in the exclusive new suburb, such as Security Minister Vakhtang Kutateladze and his deputy, Simon Nozadze.

Alavidze resigned last summer, after photos of his and Kutateladze's mansions were brandished in a government meeting by Justice Minister Mikheil Saakashvili, an ambitious young populist who made his name campaigning against corruption.

Saakashvili was the next to go, resigning in anger a month later and accusing Shevardnadze of failing to tackle corruption.

The clamor for action reached a head last fall. Angry street protests called for the resignation of government leaders after agents from the Ministry of Security, the successor to the Soviet-era KGB, attempted to raid independent television station Rustavi 2, which specializes in airing exposes on state corruption.

Entire Cabinet Sacked

Shevardnadze, weakened and unpopular, was forced to accept the resignations of Kutateladze, who had ordered the raid, and Targamadze. The president then sacked the entire Cabinet, though many of the ministers were reappointed. Nozadze later stepped down.

The shake-up cheered Georgia's anti-corruption campaigners and brought significant change to the upper echelons of the Ministry of Security, with a new and more open generation sweeping in.

But despite these positive signs, many analysts see the steps as too little too late.

Alexander Rondeli, director of the Georgian Foundation for Strategic and International Studies, a think tank here, said the public wants an end to corruption in the Interior and Security ministries and has been disappointed by Shevardnadze's lack of action.

"If you promise to do something a second time and fail, people's trust is completely exhausted," he said. "Shevardnadze started some changes but could not or did not want to continue them."

Rondeli said that the reforms at the Ministry of Security were encouraging but that the changes at the Interior Ministry were limited to the minister's resignation.

"People have more contact with the Interior Ministry in life," he said. "It's the police, the law. People want to feel some tangible change."

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