Roman Gotsiridze: “Parliament did not confirm two members of the National Bank’s board nominated by the President (in 2019).”

Verdict: FactCheck concludes that Roman Gotsiridze’s statement is TRUE.

Resume: In May 2019, Salome Zurabishvili nominated Giorgi Khishtovani and Giorgi Mirotadze as members of the National Bank’s board. In October 2020, Giorgi Mirotadze withdrew his candidacy whilst in June 2020, Parliament held a vote on Giorgi Khishtovani’s candidacy and he was not confirmed.

Analysis

At the session of the Budget and Finance Committee, the Chairperson of the Euro-optimists Parliamentary Group, Roman Gotsiridze, stated during the discussion over amendments to the Law on the National Bank: “The President is criticised because she did not nominate a candidate and the National Bank’s work is hindered because of that. Are you aware what happened when the President nominated two very good candidates from commercial structures, a person with bank work experience and a person from the academic field? The candidates nominated by the President were not considered in the Parliament for a year-and-a-half. Afterwards, they were considered but not appointed.”

Another disagreement between Salome Zurabishvili and the ruling party about the National Bank arose when the president vetoed the Parliament-supported amendments to the law on 23 February 2023. On 13 June 2023, the Parliament overrode the president’s vote.

Before the amendments, the board of the National Bank consisted of nine members; of these, one is the president, three are vice presidents and the remaining five members hold non-executive positions. According to the original version of the amendments, the position of the first vice president was additionally created after which the number of executive members would increase to five, which disturbed the balance and caused the International Monetary Fund to make a negative assessment. After some corrections, the position of the first vice president was retained. The total number of vice presidents remained unchanged. According to the latest version, the National Bank will have a president and three vice presidents, one of whom will be the first vice president. In the event of the absence of the president for any reason (expiration of the term of office, vacation...), the first vice president will perform his functions instead of one of the vice presidents.

The number of executive members is still going to increase temporarily if other members of the board nominate the first vice president from non-executive members and if the board elects him. After the expiration of the term of one of the vice presidents, a new one will not be elected and the number of executive members will again be four – two vice presidents, the first vice president and the president.

The confrontation between President Zurabishvili and the ruling party over the National Bank did not start in February. In May 2019, the president nominated Giorgi Mirotadze and Giorgi Khishtovani to the Parliament for confirmation as members of the board of the National Bank.

In 2009-2011, Associate Professor of Ilia State University, Giorgi Khishtovani, held the position of Deputy Dean of the Faculty of Economics and Business at Tbilisi State University. In 2011-2014, he was a Research Associate of the Faculty of Economics and Business at the University of Bremen. In 2015-2016, he was the Research Director for the Institute for Development of Freedom of Information (IDFI). In 2015-2017, he worked as the Head of the Scientific Department of the Shota Rustaveli National Science Foundation of Georgia and was also an Associate Professor at the Caucasus International University.

Giorgi Khishtovani studied economics and law in Bremen, Trier, Lüneburg and Tbilisi. He holds an MSc in Economics and Social Sciences from the University of Trier (Germany), an LL.M. from the University of Trier (Germany) and a BA in Economics and Law from the Technical University of Georgia. Mr Khishtovani also holds a PhD in Economics from the University of Bremen (Germany).

After 13 months from the nomination in June 2020, the majority faulted Giorgi Khishtovani's competence, experience or degree of independence and rejected his candidacy.

Giorgi Mirotadze did not wait for the voting and withdrew his candidacy in October 2019 by his own statement. According to his biography submitted to the Parliament, Mr Mirotadze held the position of Financial Director for Finca Bank and Strategic Development Director for Bank Respublika at different times. He gave lectures at the Black Sea University. He received his higher education in Georgia and the United States in the fields of physics, international business and finance.

The Law on the National Bank clarifies (Article 7) who can be a member of the board: "Members of the Board of the National Bank are citizens of Georgia or foreign countries, professionals in economics, finance or other relevant fields, and distinguished by their integrity." Salome Zurabishvili did not question the competence either of the candidates when she refused to nominate the incumbent Minister of Finance, Lasha Khutsishvili. The president had questions about the degree of his independence.

As of June 2023, seven out of the nine positions on the Board of the National Bank are occupied. Of these seven, three members are former ministers or deputy ministers, including Natia Turnava, Minister of Economy in 2019-2022; Nikoloz Gagua, Deputy Minister of Finance in 2018-2021, and Ekaterine Mikabadze, Deputy Minister of Economy in 2019-2021.

In addition to the organic Law on the National Bank, the independence of the National Bank is also explicitly protected by the Constitution of Georgia (Article 68). According to the opinion of the opposition and partially of the president, the presence of former ministers and deputy ministers on the board cannot ensure this independence.

Prior to overriding the veto, the Georgian Dream issued a statement accusing President Zurabishvili of sabotage and explaining the decision to override the veto by the creation of the possibility to elect the president of the National Bank which is in fact an incorrect explanation. If Salome Zurabishvili did not present the candidates to the Parliament, or if she presented them but the Parliament did not approve them, then the number of board members would be reduced to five - the term of the office of Vice President Archil Mestvirishvili, who is temporarily acting as the president, will expire in December. In December, Robert Singletary will also be dismissed (the Law on the National Bank gives the right to board membership of foreign nationals). Five members are the necessary minimum for the National Bank’s board to be recognised as legitimate (Article 7). Therefore, the board members can elect the president even now and will be able to do so in December.

The IMF made another comment after the news broke that the Parliament was going to override the veto, calling the decision "shocking."

Roman Gotsiridze emphasised the political context when making his statement. Although one of the two candidates nominated by President Zurabishvili technically withdrew his candidacy on his own free will, the other candidate was rejected by the Parliament through voting five months after the nomination. At the same time, both candidates had the mandatory experience and the competence which is why FactCheck concludes that Roman Gotsiridze's statement is TRUE.