Co-Investment Fund: our ‘offshore companies do not own property in Poti FIZ’

The Georgian Co-Investment Fund, backed by former Georgian prime minister billionaire Bidzina Ivanishvili, has denied its connections with the Black Sea Poti Free Industrial Zone and stated that offshore registered companies which are managed by the Co-Investment Fund ‘do not own property and / or assets in the Poti Free Industrial Zone and / or any other company, either directly or indirectly'.

The International Consortium of Investigative Journalists (ICIJ), which examined the leak of about 12 million documents from 14 offshore service providers known as the Pandora Papers, says that Ivanishvili established 12 companies in the British Virgin Islands, an offshore haven, between 1998 and 2016 and Brightstone Finance, which is a shareholder of Poti FIZ Management Company, is one of the 12 companies.

According to the ICIJ, Ivanishvili founded Brightstone Finance to finance debt-equity of certain projects of the Georgian Co-Investment Fund. 

More specifically, the Pandora Papers read that established in 2015, Brightstone Finance is a controlling shareholder of Georgia-based Eurasian Invest, a company that through several other firms holds sizable stakes in Poti Free Industrial Zone, near Georgia’s key port of Poti. The profitability of the Poti Free Industrial Zone is directly related to cargo turnover in the Poti port.

Anaklia Development Consortium, which was supposed to carry out the Anaklia Deep Sea Port project before the government of Georgia terminated its contract with the firm in 2020 over 'unfulfilled obligations', stated on October 4 that the Pandora leaks confirm Ivanishvili 'lobbied' against the project because of his 'personal economic interest' in developing Poti port instead.

Meanwhile, Georgian Co-Investment Fund announces today that they are helping the consortium of the Poti Free Industrial Zone to attract investors, however, the fund does not receive financial benefits from these activities. 

The co-investment fund also states that despite this connection, they have no direct interest in the Poti port. The statement reads that accordingly, the Co-Investment Fund is not against the construction of Anaklia port.

In 2017 the Poti Free Industrial Zone Management Consortium applied to the Georgian Co-Investment Fund with a request of equity participation in the Industrial Zone Management Company... Stating that this [cooperation] was done secretly to protect someone else's interests is a lie. More than 80% of the world’s investment funds are based in offshore zones, and this is a practice accepted in the West. In addition, it is noteworthy that the relationship between Frankston International [a mother company of Brightstone Finance] and Ivanishvili was never covered, it was always transparent to the public", states the fund.

In response to the Anaklia Development Consortium the Co-Investment Fund also stated that no free industrial zone in Georgia has any connection with any port. 

In this particular case the only connection that we can make with the Poti Free Industrial Zone and the Poti Port is their location. In the neighborhood of these two facilities, there are many other terminals and railway stations. By the same logic we can conclude that the Co-Investment Fund has an interest in these objects, which is illogical", reads the statement.

Pledging $1 billion of his own money, Ivanishvili established the Co-Investment Fund in 2013 which has invested in some of the largest projects in Georgia, including Paragraph Resort and Spa in seaside Shekvetili village of Guria region, Axis Towers and Galleria Tbilisi in the capital.