Individual Corruption

Just a few years ago, corruption in connection with the health care services in Georgia was not uncommon. For example, Transparency International Global Corruption Report 2006 reports that ‘out-of-pocket’ payments constituted approximately 70-80% of total health spending in Georgia, half of which was estimated to be speed money and bribes. However, a recent household survey conducted by Transparency International Global Corruption Barometer 2010 shows that, only a very small percentage of responding households reported having paid a bribe to obtain medical services and registry and permit services in 2009.

On the other hand, corruption in education is rampant. According to Global Integrity 2009, students who do not meet the basic admission requirements, offer bribes to corrupt officials, in order to get accepted into a university. According to the same source, many university students cited that it is ‘very easy’ or ‘sufficiently easy’ to pay bribes to obtain high scores at university.

Business Corruption

Licensing requirements and procedures have been streamlined and have drastically improved since 2004. Business executives interviewed in the World Economic Forum Global Competitiveness Report 2010-2011 identify Georgia as one of the least burdensome economies in the world in relation to government regulation (permits, regulations, reporting). The reduction in the level of corruption in connection with obtaining licences and permits is due mainly to government initiatives that drastically simplify the procedures and number of licences needed to operate a company in Georgia.

However, companies should be aware that obtaining licences or permits can still entail demands for bribes. For example, according to Global Integrity 2008, Zaza Koplatadze, the deputy head of the medical regulation board at the Ministry of Health, Labour and Social Affairs and Malkaz Kokichashvili, the founder of a private ophthalmology and neurology centre were imprisoned as a result of receiving and offering bribes of USD 1,500 respectively. An additional illegal monthly transfer of USD 2,900 was also made from Kokichashvili to Koplatadze in order to obtain quick and permanent import licences for the private medical centre. In 2008, both men were facing sentences between 7 to 11 years in prison.

According to Global Integrity 2009, business licensing and regulation continues to be 'very weak' in Georgia. It is reported that there is a lack of transparency in business licensing areas, such as health and safety, and that inspections by government officials are not carried out in a uniform or even-handed manner.

Political Corruption

Despite enormous progress, Georgia still witnesses cases of corruption at high levels. According to two news articles published by Civil Georgia in 2006 and 2007, officials in the State Pension Fund were charged with embezzling GEL 570,000 worth of funds in 2006. A number of politicians were also exposed when the media revealed that they applied for funding from the Georgian Unified State Fund for Social Insurance to cover their private and very expensive medical bills.

In May 2010, the head of the Division on Regulation of Gambling Business was found guilty of taking bribes. He was given a five year prison term with additional four years of conditional sentence and a fine of USD 17,750, as reported by the US Department of State 2009.

Frequency

The World Bank & IFC: Doing Business 2011:
- In order to obtain a construction permit, a company must go through 10 procedures and spend 98 days at a cost of approximately 23.2% of income per capita.

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give government administrative requirements (permits, regulations, reporting) in Georgia a score of 4.6 on a 7-point scale (1 'extremely burdensome' and 7 'not burdensome at all').

Transparency International: Global Corruption Barometer 2010:
- 0.8% of households who had contact with registry and permit services in 2009 report to have paid a bribe.

- 1.3% of households who had contact with the utilities services in 2009 report to having paid a bribe.

- 2.9% of households who had contact with medical services in 2009 report to have paid a bribe.

The World Bank & IFC: Enterprise Surveys 2008:
- Nearly 11% of companies surveyed identify business licensing and permits as a major business constraint.

- Slightly more than 4% of companies report that they expect to make informal payments to public officials to 'get things done'.

- 3.5% of companies expect to give gifts in order to obtain an operating licence.

- 3.9% of companies expect to give gifts to get a construction permit.

- Less than 0.5% of companies surveyed expect to give gifts to obtain an electrical or telephone connection; however, slightly more than 9% expect to do so in order to obtain a water connection.

EBRD & World Bank: BEEPS Georgia 2008:
- 8% of the companies surveyed identify business licensing and permits as a 'major problem' to doing business in Georgia, while 3% identify it as a 'very severe problem'.