Nine charged over organised embezzlement of large-scale public funds allocated for 16 kindergartens’ construction

The Prosecutor’s Office of Georgia has launched criminal proceedings against nine individuals in connection with the large-scale embezzlement of public funds, allocated for the construction of 16 kindergartens across various municipalities, through abuse of official position, money laundering by an organised group, wilful neglect of duty, and the forgery and use of false documents. Four of the nine individuals have been detained.

According to the Prosecutor’s Office, an investigation conducted by the Anti-Corruption Department of the Chief Prosecutor’s Office of Georgia established that contracts were concluded, across nine tender procedures, between the LEPL Municipal Development Fund of Georgia and the construction company MshenGroup LLC between 2023 and 2025. The contracts covered the construction and rehabilitation of 16 kindergartens with a combined capacity of 1,550 children, located in the municipalities of Khelvachauri, Keda, Ninotsminda, Tsalenjikha, Khobi, Lagodekhi, and Kaspi.

“MshenGroup LLC received a total of 18,648,018 lari for the execution of the said works, of which 4,762,587 lari was misappropriated by members of the organised group in accordance with a pre-devised scheme, causing substantial financial damage to the state. During the same period, members of the organised group jointly developed and implemented a criminal scheme for laundering the illegally obtained proceeds, whereby the embezzled funds were transferred, under various pretexts, into the personal bank accounts of group members, as well as into accounts of companies they had established and individuals close to them. As a result of these actions, dozens of properties and companies worth in excess of four million lari were acquired. A portion of these assets was subsequently re-registered in the names of various private individuals and legal entities to conceal them.

The investigation further established that certain senior officials of the LEPL Municipal Development Fund of Georgia failed to properly discharge their official duties due to wilful negligence, with grave consequences ensuing. Specifically, MshenGroup LLC submitted fifteen written requests for advance payments, without justification, purportedly for the purpose of carrying out rehabilitation and construction works. The officials were fully aware that MshenGroup LLC was not meeting its obligations under any of the tender contracts, yet rather than acting in accordance with the procedures established by law and taking appropriate measures, they neglected their duties and, on each occasion, authorised the full disbursement of advance sums to the company. This ultimately led to grave consequences: of the 16 kindergartens, construction and rehabilitation works on four had not even commenced, whilst works on the remaining ones were carried out only partially, with the result that not a single one of the 16 kindergartens has been handed over to date.

The investigation also found that the engineering supervision of the aforementioned works had been delegated to a private specialist company, which was responsible for conducting both quantitative and qualitative inspections of the completed work. Even though employees of the supervisory company were aware that, in some instances, the data recorded in work completion certificates did not reflect reality, they nonetheless certified that data at the request of the director of MshenGroup LLC, thereby enabling members of the criminal group to misappropriate state funds.

The senior officials of the construction company and members of the organised group have been charged with large-scale misappropriation of state funds through abuse of official position, money laundering, and the forgery and use of false documents, offences carrying a custodial sentence of up to 12 years.

Former senior officials of the LEPL Municipal Development Fund of Georgia have been charged with wilful neglect of duty, an offence carrying a custodial sentence of up to five years.

Expert supervisors from the private company have been charged with forgery of documents, an offence that carries a potential custodial sentence of up to six years.

Assets acquired through money laundering have been seized, and the investigation is ongoing with a view to identifying further individuals connected to the offences, including any other public officials who may be implicated,” the Prosecution Service stated.