The State Security Service of Georgia (SSSG) held a press briefing today concerning the involvement of former senior officials of Georgian Railway JSC in a major corruption scheme. SSSG officials stated that eight individuals are implicated in the case. Specifically, during their tenure at the company, corruption schemes were deployed to misappropriate large sums of state funds through various fraudulent means, before laundering the illicitly obtained assets.
According to the SSSG, the offences include large-scale fraud committed by an organised group, aiding and abetting fraud, the joint fabrication and use of falsified settlement documents, the fabrication and use of forged official documents (alongside aiding and abetting this offence), and money laundering by an organised group involving exceptionally large amounts of illicit income.
“A total of eight individuals have been arrested and prosecuted in connection with this case. Two of them face charges in absentia and will be placed on a wanted list. The investigation established that in the autumn of 2019, Davit Peradze, the then-General Director of Georgian Railway JSC, formed a structured, coordinated organised crime group with the intent of fraudulently seizing large-scale property belonging to the joint-stock company.
Operating under a pre-arranged plan, the group systematically collected, transported, cut, and sorted scrap ferrous metal belonging to Georgian Railway JSC, deliberately obscuring its true volume. In parallel, fraudulent tax documentation was generated via pre-selected front companies to fabricate a legitimate origin for the illicitly acquired ferrous metal before its sale. Davit Peradze gradually inducted several individuals into the criminal scheme, including the then-Director of Infrastructure at Georgian Railway JSC. Another individual involved in the scheme exercised de facto control over several business entities: Kakheti LLC, Nova Trans LLC, Jadexa LLC, Khuro Construction and Repair Company LLC, and Grand Kakheti LLC.
In line with their criminal agreement, Georgian Railway issued two tenders in two stages, on February 8 and September 9, 2020, for procurement services involving the transport, sorting, cutting, and consolidation of ferrous metal scrap. Kakheti LLC, a company established and effectively managed by individuals involved in the criminal scheme, was declared the winner. Meanwhile, by arrangement with Davit Peradze, one of the conspirators bypassed authorised Georgian Railway employees to ensure that the scrap metal was removed from the sites without being counted or weighed, or in some instances, by recording artificially reduced quantities of scrap that had already been documented. Consequently, the paperwork was doctored to ensure no one could be held responsible for future shortages, ultimately making it easier to write the assets off Georgian Railway’s balance sheet.
While Kakheti LLC was carrying out the contract work organised by Davit Peradze, portions of the collected scrap metal were systematically moved by heavy-duty vehicles directly from Georgian Railway premises to the Geosteel LLC plant in Rustavi, bypassing the warehouses entirely. Pre-selected representatives of the railway company, alongside other accomplices, namely the nominal founders and directors of Kakheti LLC, Nova Trans LLC, Jadexa LLC, and Khuro Construction and Repair Company LLC, participated in and supervised this process. At the same time, the organised crime group fabricated false tax documents to disguise the criminal origin and ownership of the scrap metal sold behind the back of Georgian Railway, to facilitate its transport and sale, and to create artificial surpluses for the businesses involved.
Consequently, through this fraudulent scheme, a total of 22,120 tonnes of ferrous metal scrap belonging to Georgian Railway JSC was unlawfully misappropriated between 2020 and 2021. After its origin was obscured, it was purchased by Geosteel LLC for 17,391,121 GEL. The funds received from Geosteel LLC were funnelled into the bank accounts of Nova Trans LLC and Jadexa LLC, before being periodically withdrawn in cash and split among the group members.
The investigation also revealed that on April 29, 2022, a contract worth USD 999,768 was signed between Georgian Railway JSC and Raveldi LLC for rail defect repair services. In total, no more than 1,600 individual rails were to be welded, with payments released upon the signing of relevant delivery and acceptance certificates. During the work, the Director of Raveldi LLC colluded with Georgian Railway’s then-Director of Infrastructure to inflate the completion certificates, falsely claiming that Raveldi LLC had welded 1,200 rails instead of the 987 actually completed. On the orders of the then-Director of Infrastructure, authorised subordinates at Georgian Railway signed the falsified document. As a result, the supplier, Raveldi LLC, received an overpayment of 403,844 GEL from the purchaser.
The investigation into these actions is being conducted under Article 180 (Part 3, paragraphs ‘a’ and ‘b’; Part 4, paragraph ‘a’), Article 194 (Part 3, paragraphs ‘a’ and ‘c’), Article 210 (Part 2, paragraph ‘a’), as well as Articles 25-180, 25-362, and 362 of the Criminal Code of Georgia. These offences carry a prison sentence of between 9 and 12 years.
Active investigative operations continue at the Anti-Corruption Agency of the State Security Service to identify other members of the organised group and to take all necessary legal measures against them,” SSSG officials stated during the briefing.
