On 27 February 2015, on Imedi TV air, representatives of both the Parliamentary Majority and the Parliamentary Minority, Zurab Tkemaladze and Zurab Japaridze, respectively, discussed the currency crisis and the economic situation in the country. According to Zurab Tkemaladze, the 36 Point Plan, drafted by the United National Movement which aims to help the country overcome the crisis, is unrealistic. According to Zurab Tkemaladze, it is impossible to announce an amnesty for financial and economic crimes with a tax amnesty being especially unrealistic. According to him, there was no such thing as an amnesty in the past as well. Mr Japaridze further declared that there was a precedent when a financial amnesty was announced on 1 January 2005.

FactCheck took interest in the accuracy of the statements of Messrs Japaridze and Tkemaladze.

On 24 December 2004, the Parliament of Georgia adopted a Law on Amnesty and Undeclared Tax Liabilities and Property Legalisation. The Law stripped off all unpaid (hidden) tax obligations for entrepreneurs if those obligations were accumulated before 2004 and granted them an opportunity to legalise their undeclared finances and property.

According to the Law, all of the undeclared finances and property were to be declared before the end of 2005. Finances were considered legalised if the individual paid 1% of the total sum to the budget.

The initial draft of the Law covered every individual who had not acknowledged his tax liabilities before January 2004 and had committed an economic crime. The Law did not only cover high-ranking government officials. However, as a result of different opinions both within the Parliament and the Government, the list of individuals covered by the Law was significantly reduced. According to the final draft of the Law, amnesty did not cover middle-level public servants because it appeared that employees of every unit of law enforcement agencies had been frequently involved in corruption. The list of individuals who were not pardoned for having undeclared finances and property was expanded and included the President of the National Bank of Georgia and members of the National Bank’s council, members of the National Security Council and the Justice Council, members of regulatory commissions, the Chair of the Central Elections Commission together with his deputies and secretary, governors and lieutenant governors, gamgebelis and chairs of sakrebulos. The list also included judges, the Prosecutor General and high-ranking officials of the Prosecutor General’s Office.

As we have already mentioned, the government also lacked unanimity in regard to amnesty. Some government officials thought that amnesty should have covered every businessman and public servant whilst others deemed it appropriate to have financial amnesty only for businessmen.

Eventually, the Parliament voted for a compromise document which was drafted after several different positions had been taken into account. Firstly, the amnesty did not cover those individuals who amassed their fortunes through illegal drug and arms trades, terrorism, human trafficking and other transnational crimes. Amnesty did not cover the directors, members of the board of trustees or chairmen of the boards of big enterprises which were founded with 50% (or more) government funds and which since 1997 have been managed by those individuals. Amnesty did not cover the family members of those individuals as well.

According to the information of the Treasury Service of the Ministry of Finance of Georgia, a total of GEL 13.5 million of undeclared property was legalised as a result of the 2005 financial amnesty. This amount was paid by approximately 30 individuals.

In regard to the data about the legalisation of money through bank channels, it is difficult to say how many people used the opportunity provided by the Law and what amount of money was transferred to bank accounts. However, after the Law on Amnesty went into force, the total amount of deposits rose by GEL 47 million in May-June 2005 according to the National Bank. At the same time, the amount of deposits increased by GEL 49 million in the first four months of the year. Hence, bank savings grew by almost the same amount in two months as they did in the previous four months. This increase perhaps may be attributed to a financial amnesty.

FactCheck contacted the principal sponsor of the financial amnesty bill, Roman Gotsiridze, who was the Chair of the Parliament’s Budget and Finance Committee at that time. According to Mr Gotsiridze, the amount of legalised money could have been much more if the owners of hidden property were given sufficient incentives and if the amnesty had covered former public servants. However, the amnesty was only about hidden taxes which had previously not been detected by the respective law enforcement organs. Additionally, the Law included two components: 1. the legalisation of illegally acquired property and, therefore, the cessation of legal prosecution and 2. a tax amnesty. According to Mr Gotsiridze, the process of property legalisation did not yield the desired results because the list of those individuals who were supposed to be covered by the amnesty was reduced. If the initial draft of the Law had been adopted, the amount of money obtained from the amnesty could have been much greater.

Conclusion

On 1 January 2005, a one-time Law on Amnesty and Undeclared Tax Liabilities and Property Legalisation went into force. However, it must be noted that the list of individuals covered was significantly reduced before the Law was adopted by Parliament. Consequently, the Law failed to fully meet those high expectations which it generated at that time.

Nevertheless, a financial amnesty was, in fact, launched from 1 January 2005 and lasted until 31 December 2005.

Therefore, according to FactCheck, Zurab Japaridze’s statement: "On 1 January 2005, a financial amnesty was announced," is MOSTLY TRUE whilst Zurab Tkemaladze’s statement: "This is completely false. There was no such thing as an amnesty in 2005," is FALSE.