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Watchdog Group on Geocell Tax Probe
Civil Georgia, Tbilisi / 18 Feb.'14 / 16:44

Watchdog group, Transparency International Georgia, has suggested that ongoing probe by the financial police in Geocell over alleged tax evasion might be linked to mobile operator’s recent efforts to change legislation that currently allows law enforcement agencies to have direct access to communication networks without proper judicial oversight.

Probe into Geocell, which is part of the Swedish-Finnish telecom operator TeliaSonera, was launched by the Finance Ministry’s Investigative Service, known informally as financial police, on February 13. The financial police said without providing other details that the probe was ongoing into alleged “large-scale tax evasion.” Geocell said in a statement on February 14 that it operates transparently and is one of the largest taxpayers in the country, which has no reason whatsoever to evade taxes.

Over the past year, anti-corruption and rights watchdog, Transparency International Georgia, has been cooperating with Geocell in lobbying for legislative amendments that would help impose stringent surveillance regulations.

“The allegations against the company are brought just before a reform of legislation on government surveillance [is expected to] be discussed in Parliament – a topic on which Geocell had taken a strong stance,” TI Georgia said in a statement on February 18.

“The case might be seen by business leaders as a warning against speaking out, and might undermine efforts to attract foreign investment,” it said. “So far, any changes to the status quo that would introduce actual oversight over surveillance have been sharply opposed by the MIA [Ministry of Internal Affairs] and the Prosecutor’s office.”

Geocell has declined at this stage to comment on suggestions about possible link between ongoing probe and company’s lobbying for legislative changes.

Finance Minister, Nodar Khaduri, said on February 18 that the ongoing probe has nothing to do with politics. Company’s operations have not been hindered by the ongoing probe, he said.

Secret surveillance, privacy rights and personal data protection have been a source of concern in Georgia for years already, but the issue became subject of intense discussions with an active government engagement last year and the authorities have pledged to establish strong mechanisms both on legislative and executive level to prevent illegal surveillance. But concerns still remain as law enforcement agencies maintain 'black box' devices in the server infrastructure of major telecommunication companies, giving security agencies direct access for simultaneous monitoring of thousands of mobile phone numbers.

“At present, Georgia operates a mixed system. In some cases, operators receive court decisions requiring them to give the authorities access to their networks, in other cases, the authorities can establish access directly without the knowledge of the operators,” Pasi Koistinen, CEO of Geocell, wrote on TeliaSonera’s blog in October, 2013.

“We have actively participated in the work of the committee [tasked to develop new legislation to tackle the problem], and we believe it has significantly contributed to the recent initiative of the Government of Georgia to draw up a new draft law on surveillance activities,” Koistinen wrote.

Transparency International Georgia said that while Geocell is not the only telecommunication operator in the country that has been supportive of better regulations, “its Chief Executive Officer has been outspoken on the issue.”

TI Georgia has warned that if the ongoing probe against Geocell “turns out to lack substance, this high-profile case could have a further chilling effect on foreign investment in Georgia.”

“We call on the Ministry of Finance to provide the public with all facts concerning the Geocell case. It is important that no further questions arise about the actions of the financial police,” TI Georgia said.

“Furthermore, the Geocell case will likely be perceived by large parts of the business community as a strong warning – a message that any activism and statements that could be interpreted as public criticism of the authorities, most importantly of the Ministry of Internal Affairs, are not tolerated. This might result in a similar atmosphere as in the final years of the United National Movement government, when the private sector refrained from any criticism of the authorities, fearing arbitrary retaliation,” the watchdog group said.

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