Besik Donadze: “Restaurant expenses totalled GEL 16,400,000 from January to June 2024.”

Verdict: FactCheck concludes that Besik Donadze’s statement is MOSTLY TRUE.

The six-month performance report of the 2024 state budget confirms that the representative expenses totalled GEL 16.4 million during the aforementioned period. Whilst Besik Donadze accurately cited the data, he mischaracterised it as restaurant costs incurred by state institutions. In reality, representative expenses encompass other types of expenditures, including excursions, cultural performances, souvenirs, guest greeting, farewell and service costs in addition to reception and banquet expenses.

FactCheck reached out to the author of the statement to ensure accuracy, subsequently prompting Donadze to publish a new post referring to the figure as representative expenses. Considering the misleading nature of the initial statement, which created the exaggerated impression that representative costs solely comprised restaurant costs, FactCheck concludes that Besik Donadze’s statement is MOSTLY TRUE.

Analysis

Besik Donadze, member of the Coalition for Change, posted a statement on his Facebook page regarding the restaurant costs incurred by state budgetary institutions, claiming: “Restaurant expenses totalled GEL 16,400,000 from January to June 2024.”

Expenses incurred by state agencies for restaurant meals, receptions, official dinners and related costs are classified as representative expenses.

According to Article 8, Paragraph 33 of the Tax Code of Georgia, representative expenses include:

• Expenses (for juices, mineral waters, soft drinks, tea, coffee, breakfast, lunch, dinner, banquet) related to events (presentations, receptions).
• Expenses for excursions and cultural and entertainment events.
• Souvenir costs.
• Guest service costs, including: consular service (visa processing and extension) costs, costs of meeting and departure at an airport (VIP Hall service), hotel service (reservation, accommodation) costs, costs related to receptions and parties (juices, mineral waters, soft drinks, tea, coffee, breakfast, lunch, dinner and banquets).

FactCheck investigated the representative costs incurred by state institutions by reviewing the six-month performance report of the 2024 state budget as this was the period highlighted by the author of the statement.

Representative expenses are categorised under the Goods and Services article in the state budget expenditures.

The revised plan for the Goods and Services category during the reporting period was determined at GEL 1,167,297,000, whilst actual cash execution totalled GEL 1,083,651,400, representing 92.8% of the projected amount, according to the 2024 State Budget Implementation Report for the six months of the year.

The structure of the rest of the expenses incurred from the goods and services category, according to the articles of economic classification, is as follows:

• Remuneration of contract employees – GEL 261,321,600.
• Business trips – GEL 33,845,000.
• Office expenses – GEL 161,068,400.
• Representative expenses – GEL 16,422,000.
• Food expenses – GEL 75,918,600.
• Medical expenses – GEL 26,860,300.
• Expenses related to soft inventory, uniforms and personal hygiene – GEL 43,300,000.
• Expenses for operation and maintenance of transport, equipment and weapons – GEL 76,562,000.
• Military equipment and ammunition procurement expenses – GEL 17,388,000.
• Other goods and services – GEL 370,965,300.

Representative expenses for the first six months of 2024 indeed totalled GEL 16,422,000 as evident from the data. Whilst Besik Donadze accurately cited this figure, he mischaracterised it as solely restaurant expenses. In reality, representative expenses encompass a broader range of expenditures, including cultural and entertainment events, souvenirs and guest services organised by institutions, in addition to receptions and official dinners.

Besik Donadze published another post during the preparation of the article, after consulting with FactCheck, accurately citing the figure as representative expenses rather than restaurant expenses. However, Mr Donadze exaggerated the perception of costs incurred in this category by initially referencing only restaurant expenses in his first post.

Reviewing representative expenditures from recent years for the same period suggests an upward trend that has been observed since 2020.

Graph 1: Representative Expenses in 2019-2024 (Six Months, USD Million)

Source: Ministry of Finance, Budget Performance Reports

As illustrated in the graph, representative expenses declined significantly in 2020 and 2021. This is attributed to the COVID-19 pandemic during which the activities that typically generated these expenses were restricted.

The Institute for Development of Freedom of Information (IDFI) conducted separate research on the aforementioned issue from a municipal perspective. The organisation requested public information on representative expenses incurred in 2022 from all municipalities; however, 37 municipalities issued responses, with 14 municipalities providing only partial data.

Whilst several municipalities incurred substantial representative expenses in 2022, many self-governing units did not specify the objectives of such expenditures, according to the conclusion of the study. This contradicts the fundamental principles of transparency and accountability, raising concerns about the potential mismanagement of funds.

Given the analysis of the materials above, FactCheck concludes that Besik Donadze’s statement is MOSTLY TRUE.