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Home / Banking / Gvidiani’s Initiative for Bank of Georgia – Rustavi Azot Crisis Resolution Mechanisms
Gvidiani's Initiative for Bank of Georgia - Rustavi Azot Crisis Resolution Mechanisms

Gvidiani’s Initiative for Bank of Georgia – Rustavi Azot Crisis Resolution Mechanisms

Wave of protests burst out after massive dismissal of workers from Rustavi Azot worsens social-economic situation in Rustavi and the whole Kvemo Kartli Region, as well as the condition of fired 350 workers.

The mentioned decision has actualized several other important issues. Position of Bank of Georgia, the major commercial bank in the country, towards the current situation in the chemical complex has raised much public interest. It is also evident that the developments at Rustavi Azot provoked by Bank of Georgia activities may seriously damage reputation of Georgia in international business circles.

Around Rustavi Azot issues, Andria Gvidiani, analyst for Association of Young Financiers and Businessmen (AYFB), held a briefing at the Reporter press-club and introduced crisis resolution plan for Bank of Georgia.

The initiative for Bank of Georgia proposed by Gvidiani regarding Rustavi Azot crisis resolution issues is as follows:

1) Unconditional restoration of fired works at job places: – For the purpose of settlement of protests and consequently, stabilization of processes, first of all, it is necessary to restore each dismissed worker at the job place so as to not sacrifice employees rights to the interests of the company, creditors or other commercial organizations. At the same time, minimum living conditions should be ensured for the workers.

2) Results of the mock auction should be annulled – As reported, Rustavi Azot auction was held by many violations. Namely, Bank of Georgia group announced EU Investments as the auction winner. The company had been founded 2 weeks before and its stock capital was only 100 GEL. The bank issued 235 million GEL credit to the mentioned company for purchase of Azot. This decision doubles questions that the mock auction was held. Moreover, after announcement of Rustavi Azot auction, Bank of Georgia sent notification to European Bank for Reconstruction and Development (EBRD) only 2 days earlier, and only in Georgian language. Consequently, this step infringed the  right of other creditors for preferential purchase. Consequently, it is necessary to abolish results of the auction conducted by similar violations. It was also clarified that the auction was held by the company founded by dummy business operator and this factor makes the auction transparency more questionable and proves considerations about preliminary collusions.

3) Date of New auction should be scheduled – Naturally, it is important that all interested parties be invited to the new auction. First of all, information must be forwarded to European Bank for Reconstruction and Development – and all other creditors. At the same time, the new auction must be organized by an experienced company with focus on arranging similar large-scale auctions.

Moreover, valuable and international standard auction will enable Georgia to maintain he status of a stable country.

4) Government of Georgia should resume negotiations with EBRD on allocating 155 million USD credit to Rustavi Azot – We know that in July 2016 Rustavi Azot and EBRD signed a loan agreement of 155 million USD. However, after 3 weeks EBRD refused to issue the mentioned credit. Consequently, it is important to continue negotiations with EBRD on resumption of 155 million USD loan. European Bank for Reconstruction and Development does not approve 155 million USD loans on daily basis. Therefore, missing of this  opportunity may be appraised as a crime.

At the same time, we apply to Government of Georgia to restore workers under permanent contract terms and in full compliance with the law. Ministry of Labor and Social Protection should be actively involved in the process.

The whole Government and, particularly, Ministry of Economy, should provide active negotiations with EBRD for resumption of the loan agreement.