Georgian Billionaire Premier Warns U.S. Ally Saakashvili of Jail

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Bidzina Ivanishvili, billionaire and Georgia's prime minister, poses for a photograph at his summer house in Ureki, Georgia, on Thursday, Aug. 22, 2013. Close

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Bidzina Ivanishvili, billionaire and Georgia's prime minister, poses for a photograph at his summer house in Ureki, Georgia, on Thursday, Aug. 22, 2013.

Georgia’s billionaire prime minister said outgoing President Mikheil Saakashvili may face prosecution for corruption, brushing off warnings from the U.S. not to use the courts to exact political retribution.

“All are equal under the law,” Bidzina Ivanishvili said in an interview at his estate on the Black Sea. “Georgia was smothered by the corruption of the elite and Saakashvili at a minimum had to know about it or even participate in it.” Saakashvili called the claim “ridiculous.”

Ivanishvili, who financed a coalition drive to defeat Saakashvili’s pro-Western party and gain control of the government last October, said he’ll step down and quit politics by the end of the year. The 57-year-old billionaire, who made most of his fortune in Russia, is worth $6.4 billion, according to the Bloomberg Billionaire Index, equal to about 40 percent of Georgia’s economy.

The American-educated Saakashvili, 45, allied Georgia with the U.S. after leading the Rose Revolution that overthrew former Soviet Foreign Minister Eduard Shevardnadze’s government in 2003. Saakashvili’s second and final term ends in October and dozens of officials from his party have been detained on corruption charges, including a former premier.

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Georgia's outgoing president Mikheil Saakashvili rejected the corruption allegations as politically motivated. Close

Georgia's outgoing president Mikheil Saakashvili rejected the corruption allegations... Read More

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Georgia's outgoing president Mikheil Saakashvili rejected the corruption allegations as politically motivated.

“Investigators must prove it and the courts must decide, but there are issues with him,” Ivanishvili said of Saakashvili.

‘One Aim’

Saakashvili rejected the corruption allegations as politically motivated.

“Any hint even at corruption by my government or me are ridiculous, especially from people who brought back the old corrupt elites that we basically eliminated from power,” Saakashvili said in an interview yesterday. “We had one of the least corrupt governments in Europe. Any kind of menaces from this prime minister are aimed at only one thing -- to eliminate political opposition in the country.”

In June, the U.S. House of Representatives condemned the “political” arrests and prosecution of Saakashvili-era officials, warning they would affect political, economic and security cooperation with the U.S.

“The Americans and the Europeans had the wool pulled over their eyes,” Ivanishvili said. “They’re in shock that what they thought was the most democratic country in the region was practically a dictatorship.”

The U.S. and European Union, which supported the Rose Revolution and Ukraine’s Orange Revolution a year later, have now lost steadfast allies in both countries, bolstering Russia’s influence in its former Soviet empire.

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Mikheil Saakashvili, Georgia's president, pauses during an interview in Batumi, Georgia, on Thursday, Aug. 22, 2013. Close

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Mikheil Saakashvili, Georgia's president, pauses during an interview in Batumi, Georgia, on Thursday, Aug. 22, 2013.

NATO, EU

Saakashvili angered Russian President Vladimir Putin by seeking to join the U.S.-led North Atlantic Treaty Organization and the two countries fought a five-day war in 2008. Georgia is a key route for Caspian energy supplies to world markets bypassing Russia.

Ivanishvili campaigned on a promise to improve living standards, partly by securing an end to trade sanctions Russia imposed to punish Saakashvili’s policies. The Georgian prime minister said yesterday he remains committed to the previous government’s goal of joining NATO and the EU, saying both may happen within four years.

“I am sure we can reach an understanding with Russia and live as neighbors,” Ivanishvili said. “We musn’t insult them.”

Russia has already lifted its ban on wine and mineral water and may lift its ban on citrus fruits by the end of the year, the billionaire said.

Balancing Act

Georgia, a country of 4.5 million people, has received $3 billion in aid from the U.S. over the past 20 years, including $1 billion in military assistance. President Barack Obama’s administration last month announced a new $140 million aid package aimed at improving education in the former Soviet republic, which borders Turkey, Armenia, Azerbaijan and Russia.

“Ivanishvili is faced with a challenge in keeping Georgia’s Western allies on his side,” Lilit Gevorgyan, senior analyst for Russia and the Commonwealth of Independent States at IHS Global Insight, said by e-mail. “This is a particularly difficult task when dealing with more conservative political quarters in the West, where Ivanishvili is perceived as a billionaire with close links with Russia.”

About 20,000 complaints have been filed by Georgian citizens against former government officials, Ivanishvili said in an editorial in the Wall Street Journal this month. Vano Merabishvili, a former prime minister, has been charged with abuse of office and embezzlement, which he denies.

U.S. Watch

Still, both the EU and the U.S. have criticized the judicial pursuit of Saakashvili’s political allies by Ivanishvili’s government.

“We believe strongly in the primacy of the rule of law and this cannot become cover for political retribution,” Victoria Nuland, a former U.S. State Department spokeswoman, said in July at a confirmation hearing to become assistant secretary of state. “The world is watching,” Nuland said. “Georgia’s got to stay on a democratic path.”

Saakashvili won international plaudits for cutting red tape and corruption and for helping the size of the economy triple since 2003. He, too, has been criticized for judicial abuses and for cracking down on political opponents.

Mass protests against Saakashvili’s government erupted a few weeks before last year’s election over leaked footage showing prison guards beating and raping male inmates with broom handles and truncheons.

Saakashvili, angling to hold on to power after his term ends, pushed through legislative changes that will make the prime minister more powerful than the president after the current head of state leaves office.

Ivanishvili’s Fortune

Ivanishvili made his fortune in banking and metals in Russia during the 1990s before giving up his Russian citizenship and selling his assets there to focus on Georgian politics. Born in the Georgian village of Chorvila in 1956, he is the youngest of five children. He worked as a cleaner in a factory in Tbilisi to support himself while studying economics and engineering at college.

The billionaire said his wealth has fallen over the past year to about $5.4 billion, though by his own count, he’s given away about $3 billion in Georgia, including on initiatives to overhaul the police and military and rebuild theaters, museums and churches.

Beach, Lemurs

There’s no sign of a declining fortune at his 38-hectare Black Sea estate, which includes a private beach, two swimming pools, two guest houses and a menagerie of lemurs, zebras, peacocks, parrots and flamingos. His main residence, outside Tbilisi, is a $50 million complex designed by Japanese architect Shin Takamatsu.

Ivanishvili said he’ll stay active in Georgia after he retires from politics, including through investment projects. He’s currently trying to raise $6 billion, including $1 billion of his own money, for a private equity fund that will invest in tourism, agriculture, industry and energy projects alongside the government.

The prime minister said he’ll also continue “keeping tabs on the government,” though he dismissed speculation that he intends to become a gray cardinal who controls events behind the scenes.

“Why should I be an informal leader when I can be the formal leader,” the billionaire said.

To contact the reporters on this story: Helena Bedwell in Ureki, Georgia at hbedwell@bloomberg.net; Henry Meyer in Ureki, Georgia at hmeyer4@bloomberg.net; Hellmuth Tromm in Ureki, Georgia at htromm@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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