Conflict of Interest at GNCC

 Irakli Chikovani, Chair, GNCC is facing conflict of interest at the position since he is the 35 percent shareholder of Magi Style Media whose main field of activity includes TV ad placement, reads the report published following the monitoring on GNCC activities carried out by Mikeladze Foundation and the Georgian Young Lawyers Association (GYLA) thanks to the financial backing of the Open Society Georgia Foundation. The presentation of the report was held On October 18 at Courtyard Marriott Hotel Tbilisi.

The representatives of media, international and non-governmental organizations were attending the meeting.

Along with Irakli Chikovani, according to the monitoring, Magi Style Media Ltd is owned by Rustavi 2’s Director General Giorgi Gegeshidze (49 percent) and the company Magi Style (16 percent). Magi Style itself is owned by Chikovani, Gegeshidze and Giorgi Kurtskhalia with 33 percent per each.

According to the agreement concluded between Magi Style and the broadcasters Chikovani’s company shall place ads submitted by the advertisers according to the media plan on the following TV channels Rustavi 2, First Stereo, Imedi, Mze, Sakartvelo, First Channel. Therefore, monitors believe, Irakli Chikovani’s revenue depends on the amount of ads placed by Magi Style and the tariffs levied.

Following the information provided by Institute for Development of Freedom of Information (IDFI), based on the declaration filled out in July 2010 Irakli Chikovani’s revenue, through the activities of the enterprise, amounted to GEL 201, 708.

According to Levan Dolidze, co-author of the survey Chikovani, thanks to his official power, enjoys a possibility to ignore the broadcasters violating the limit set for ad placement. “The Commission chair is concerned into the maximum running time of the ads produced by his company and that’s the conflict of interest,” stressed Dolidze speaking at the presentation.

The Georgian Law on Broadcasting stipulates the periodicity and the length of advertising on TV air. In case of its violation the Commission shall issue a warning at the first stage and in case of repeated violation imposes a penalty.

According to the same law “conflict of interest may arise if a Commissioner has any other direct or indirect financial interest towards an entity, whose activity is subject to regulation by the Commission.”

Speaking at today’s meeting Kakhi Kurashvili, head of GNCC’s legal department said the survey is biased and emphasized that legally there is no conflict of interest since the Commission is responsible for the regulation of the broadcaster not the ads.

“The Commission chairperson cannot determine the number of orders on the advertising market, he is either unable to levy the tariffs for ad placement since the broadcasters are entitled to do that not advertising companies,” said Kurashvili. The limit of ad placement, he added, is being regulates by law, and Chikovani enjoys no competence to amend it.

According to the results of the monitoring only two out of 47 penalties issued by the Commission within the last year referred to the breach of the ad time limit. 

According to the editor-in-chief of the Georgian daily Rezonansi this data denotes the Commission is not providing relevant responses through taking Chikovani’s interest into account.  

“Media receives money from advertising, the Commission takes no interest in advertising due to some comprehensible reasons. While companies repeatedly breach the ad time limit, no observation needed to detect it,” stressed Tugushi.

Journalism organizations have repeatedly appealed to GNCC in regard to Rustavi 2 and Imedi breaching the ad time limit set by law.