Compliance and Compliance and Corporate Social Corporate Social ResponsibilityResponsibility 6th CIS LOCAL COUNSEL FORUM 6th CIS LOCAL COUNSEL FORUM

Mr. Alexander Bolkvadze, Partner, BLC Law Office - TbilisiMr. Alexander Bolkvadze, Partner, BLC Law Office - Tbilisi

Success Story - GeorgiaSuccess Story - Georgia► Georgia ranks 18th out of 178 countries in Georgia ranks 18th out of 178 countries in

Transparency International’s Corruption Perceptions Index (CPI) 2010, a measure of domestic, public sector corruption released on October 26, 2010.

► Out of 1800 respondents of 2010 General Public Survey, 0,2% indicated Out of 1800 respondents of 2010 General Public Survey, 0,2% indicated corruption as most serious problem.corruption as most serious problem.

► 75% of respondents of public official survey believe that illegal payments in 75% of respondents of public official survey believe that illegal payments in public sector do not exist.public sector do not exist.

► Only 16.1% of respondents think that giving bribe to a public official Only 16.1% of respondents think that giving bribe to a public official guarantees the outcome. guarantees the outcome.

► 75% of those surveyed believe that corruption in Georgia has either been 75% of those surveyed believe that corruption in Georgia has either been significantly reduced or reduced in comparison to the situation that existed 10 significantly reduced or reduced in comparison to the situation that existed 10 years ago.years ago.

► 77% of respondents evaluate the government's efforts in fighting corruption 77% of respondents evaluate the government's efforts in fighting corruption as "effective." as "effective."

Enterprise SurveysWorld Bank

►% of Firms Identifying Corruption as a Major Constraint -12.42

►% of Firms Expected to Give Gifts to Secure a Government Contract -0.00

►% of Firms Expected to Pay Informal Payment to Public Officials -14.71

►% of Firms Expected to give gifts to get an operating license-3.51

►% of Firms Expected to give gifts in meeting with tax officials-8.39

World Bank on Corruption in Georgia

► The World Bank's "Anti-Corruption in Transition 3" report places Georgia among the countries showing the most dramatic improvement in the struggle against corruption, due to implementation of key economic and institutional reforms, and reported reduction in the bribes paid by firms in the course of doing business.

► Modern and liberal legislation and a corruption-free environment make it today one of the most business-friendly countries: According to World Bank & IFC 'Doing Business' Index, our country has moved from112th place in 2005 to 11th place in 2010.

► The government continues to make anti-corruption initiatives a priority.

Bribery and CorruptionBribery and Corruptionnational lawsnational laws

Law of Georgia on “Interest incompatibility and Corruption in the Public Law of Georgia on “Interest incompatibility and Corruption in the Public Service”Service”

► Determines authorized bodies in charge of supervising incomes and Determines authorized bodies in charge of supervising incomes and monitoring gifts of public officials: monitoring gifts of public officials:

- Financial Agency- Financial Agency - Public Service Bureau- Public Service Bureau - Revenue Service of Ministry of Finance - Revenue Service of Ministry of Finance

► Obliges public officials to file annual declarations to the Public Service Obliges public officials to file annual declarations to the Public Service Bureau, which is in charge of maintaining database of received declarations.Bureau, which is in charge of maintaining database of received declarations.

► Provides limitations regarding accepting gifts by public officials and their Provides limitations regarding accepting gifts by public officials and their family members. Acceptable value of gift shall not exceed 15% of the annual family members. Acceptable value of gift shall not exceed 15% of the annual salary of the public official. As for their family members, the limit is 1000 GEL salary of the public official. As for their family members, the limit is 1000 GEL for each person.for each person.

► Establishes Establishes Anti-Corruption Interagency CoordinatingAnti-Corruption Interagency Coordinating CounciCouncil-which l-which determines general policy, anti-corruption strategy, action-plan for fight determines general policy, anti-corruption strategy, action-plan for fight against corruption and monitors its implementation.against corruption and monitors its implementation.

Bribery and CorruptionBribery and Corruptionnational lawsnational laws

Law of Georgia “On Public Service”Law of Georgia “On Public Service”

► Prohibits receiving any kind of gift or service that can influence the Prohibits receiving any kind of gift or service that can influence the public official in his /her official capacity. public official in his /her official capacity.

► Imposes obligation to report the illegal gift to Revenue Service of Imposes obligation to report the illegal gift to Revenue Service of Ministry of Finance.Ministry of Finance.

► Imposes obligations to report case of corruption to the supervisor.Imposes obligations to report case of corruption to the supervisor.► Imposes obligation to cooperate with enforcement authorities.Imposes obligation to cooperate with enforcement authorities.

Criminal code of GeorgiaCriminal code of Georgia► Criminalizes both active and passive bribery (bribing and being Criminalizes both active and passive bribery (bribing and being

bribed)bribed)► Criminalizes accepting illegal presentsCriminalizes accepting illegal presents► Criminalizes Criminalizes influence tradeinfluence trade (both active and passive)-use of ones (both active and passive)-use of ones official capacity to obtain improper advantage.official capacity to obtain improper advantage.

National Anti-Money-Laundering LawsNational Anti-Money-Laundering Laws

The Law of Georgia on Prevention of Money Laundering The Law of Georgia on Prevention of Money Laundering

► Establishes Establishes Financial Supervision Agency Financial Supervision Agency which:which:- cooperates with Ministry of Internal affairs and Prosecutor’s Office of Georgia- cooperates with Ministry of Internal affairs and Prosecutor’s Office of Georgia

- maintains information network of suspicious transactions - maintains information network of suspicious transactions - supervised by National Bank of Georgia - supervised by National Bank of Georgia and Ministry of Finance of Georgiaand Ministry of Finance of Georgia

Law of Georgia on InsuranceLaw of Georgia on InsuranceLaw of Georgia on Commercial BanksLaw of Georgia on Commercial BanksLaw of Georgia on Securities Market Law of Georgia on Securities Market

► Obligation to notify National Bank of Georgia on incorporation of subsidiaries or branch offices outside Obligation to notify National Bank of Georgia on incorporation of subsidiaries or branch offices outside Georgia, by insurance companies, commercial banks, registry of securities, brokers.Georgia, by insurance companies, commercial banks, registry of securities, brokers.

Civil Code of GeorgiaCivil Code of Georgia► As of January 1, 2011, mandatory non-cash settlement procedure applies to acquisition of the As of January 1, 2011, mandatory non-cash settlement procedure applies to acquisition of the

immovable property. This novelty constitutes an important step for prevention of money laundering on immovable property. This novelty constitutes an important step for prevention of money laundering on real estate market.real estate market.

Criminal Code of Georgia on money launderingCriminal Code of Georgia on money laundering► Imposes fine or imprisonment for legalization of illicit incomeImposes fine or imprisonment for legalization of illicit income

Thank You!Thank You!