TBILISI, DFWatch–Tbilisi City Court on Sunday ordered the pre-trial detention of two Georgians who are suspected of embezzlement of more than USD 25 million from thousands of microfinance customers.
The court rejected a motion to release the accused – Tamaz Lobhzanidze, owner of the company Ltd Georgia, and its manager Merab Peradze – on bail and said the decision was made in order to prevent the two from escaping justice and interfering with the investigation.
Customers affected by the fraud welcomed the court’s decision and asked to get their money back, but the company’s offices are closed while the owner and director are held in custody.
A crowd gathered in front of the court building in Tbilisi’s northern Digomi district as the judge read out the decision. There is no official figure on the scale of the fraud, but victims claim the company owes them more than USD 25 million. There are people who claim to have been swindled out of more than USD 15 000, 50 000 or 100 000.
Depositors complain that they invested all of their money in Ltd Georgia, as the company promised them 33 percent interest rate on their savings, which is three or four times more than the average interest rates banks are offering in Georgia. After a few months, the company stopped paying them. The company allegedly also refused to give them back their initial deposit sums.
At the court hearing, Peradze blamed Georgia’s National Bank of creating the problems that led to Ltd Georgia’s inability to pay its depositors. He asked the judges to let him go free so he could work to repay people.
A few months ago, the National Bank warned people against financial institutions which offer high interest rates to attract funds and urged them to make reasonable and informed decisions.
“We suggest that citizens, when giving their own funds to other persons, act with caution and check all relevant information, including, whether or not any given legal person is subject to state regulation, and only after studying and understanding all possible risks, make final decision,” the statement reads.
Following the city court decision, depositors affected by the company’s actions decided to hold a rally in front of the government building in Tbilisi demanding their money back.
They also request the establishment of a commission to examine the relationship between the company and the National Bank.