China Watch Report Series

For four years, Civic IDEA yearly has been publishing several reports about the Chinese companies that, within the framework of the “One Belt, One Road” initiative, actively continue to operate in the Georgian market, and more specifically in the infrastructure sector of Georgia, and are responsible for the construction of the main highway, roads, bridges and on the construction of tunnels. If you move from the Eastern part of Georgia to the Western part of Georgia, you will find many abbreviations of different Chinese companies on your way while going through the Ricoti Mountain pass. This is exactly the pass where the construction of a 51.6 km long road is planned, which includes 96 bridges and 53 tunnels. 

In our reports, we have already reviewed the activities of China State Construction Engineering Corporation Limited and China Road and Bridge Corporation in Georgia and the related misconduct based on a comparative analysis of foreign examples. This time we offer an analysis of the projects won by Hunan Road and Bridge Construction Group in Georgia and its shady practices in Uganda and mainland China. 

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Civic IDEA is pleased to share with you the 10th China Watch report related to another Chinese company operating in Georgia, China State Construction Engineering Corporation Ltd. (so-called CSCEC), and reviews its scandals and misconduct that occurred in Georgia and worldwide.

CSCEC is one of the largest Chinese state construction companies, founded in 1982. Since then, it has operated in more than 100 countries worldwide. The company’s main activities comprise real estate, construction financing, operation and engineering (housing and infrastructure), as well as design and survey. This company has been embroiled in numerous scandals in the past two decades. More precisely, the CSCEC and its subsidies have been exposed to corruption and fraud schemes in the US, Philippines, Pakistan, Hungary, and several other countries and have been blacklisted by different state and international institutions.

Read more about the company’s reputation and activities in our report: ?

In 2018-2020, “Civic IDEA” intensively published research concerning the shady links of Georgian political/business elite representatives with the notorious Chinese companies. Among them was a study named “Chkhartishvili Leads in China’s ”Closed Business Championship'”. According to our research and analysis of the materials found, the interests of CEFC China Energy, a company that has been exposed in many criminal cases in different countries of the world, were pursued by former Prime Minister Bidzina Ivanishvili and Vice Prime Minister of Eduard Shevardnadze’s government and Minister of Economy, Ivane Chkhartishvili.

The findings presented in the reports published by us over the years are fully corroborated by the Pandora documents published by the International Consortium of Investigative Journalists in late September 2021, portraying the links between the former Prime Minister of Georgia and Brightstone Finance Limited registered in the Virgin Islands.

This report is a continuation of the studies published by us in 2018-2020. We will tell you how the judicial and the executive branches of government handed over one of the most important strategic assets of Georgia – the Poti Free Industrial Zone, to the bankrupt Chinese company CEFC China Energy. The report will also evaluate how Poti FIZ was brought under the total control of Bidzina Ivanishvili and Ivane Chkhartishvili after the bankruptcy of the Chinese CEFC. The court decision, which can not withstand any criticism, serves the sole purpose of retaining complete control of the former prime minister on Poti FIZ and preventing the return of property to the state.

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Civic IDEA’s China Watch Report N7 deals with misconduct related to the activities of the Chinese company “China Road and Bridge Corporation” (CRBC) in Georgia, tenders won illegally, violations related to labor rights, and shady practices in various countries worldwide. The company is collaborating with the Georgian Roads Department on two major infrastructure projects. Like other Chinese companies in Georgia, it was blacklisted by the World Bank in 2009 for fraudulent conduct in the tender of the first phase of the Philippine National Road Improvement and Management Program (NRIMP 1). CRBC was banned from participating in all World Bank-funded infrastructure projects for eight years. The mismanagement of the Chinese company in Georgia is mainly related to the violation of labor safety rules. In particular, China Road and Bridge Corporation did not adhere to minimum sanitary norms in the workplace, forced employees to work overtime and, most importantly, did not create labor safety conditions in the area, which endangered the health of local workers. The local Labor Inspectorate gave only a few recommendations to China Road and Bridge Corporation, and in fact, no sanctions were imposed on the company. Controversial activities of China Road and Bridge Corporation are also observed in Kenya, Uganda, Kyrgyzstan, Croatia and Ukraine. However, despite the shortcomings in other countries, the Georgian government continues to actively cooperate with the representatives of the Chinese company and sign new contracts with them.

More information about the activities of China Road and Bridge Corporation can be found at the following link ?

Civic IDEA has published the 6th China Watch report “Nuctech Company Ltd. in Georgia”, which evaluates the controversies over the Chinese biggest security scanner distributor “Nuctech Company Ltd”. The latter covers the company’s cooperation with the Georgian government, fraudulent activities related to Georgian and foreign tender procedures, malfunctions of its security equipment, and corruption scandals worldwide. More specifically, the report discusses the cases of Georgia, Namibia, Taiwan, and Europe, reveals Nuctech’s military ties with the Russian Federation, and reviews the US adversarial policies towards it.

Chinese company Nuctech company limited first appeared on the Georgian market in March 2008. At that time, The Minister of Finance of Georgia, Nika Gilauri, signed an agreement with Nuctech Company Limited on behalf of the Government of Georgia. The contract was on the implementation of the project for the supply of inspection complexes to the Government of Georgia. According to the 2014 report of the State Audit Office, in 2012, within the framework of simplified procurements, two contracts were signed with Nuctech Company Limited for the purchase of stationary X-ray scanners (NUCTECH MB1215DE). The X-ray inspection system was to be delivered at the Kazbegi customs checkpoint. The total value of the procurement was 4,566,775 USD. Within the tenders announced by the Revenue Service in 2011-2013, participating suppliers filed several claims against the National Procurement Agency over the fact that the Revenue Service adapted required technical specification to the Nuctech Company Limited catalogs; also, they were so complicated that many suppliers were barred from participating. In 2018-2020, the Revenue Service purchased a total of 5,870,722.48 USD goods from Nuctech Company Limited through simplified procurement. The objects of procurements were the preventive and corrective maintenance service of the X-ray scanners owned by the Revenue Service. One of the countries that properly resist Nuctech and restricts its access to critical domestic industries is the United States. The US Transport Security Administration (TSA) banned Nuctech installations in 2014 and provided a detailed review of the company’s misconduct leaning on its international experiences in the classified document. Furthermore, the US government is calling on its European allies to restrict Nuctech’s access to public tenders and disregard the baggage screening equipment it provides. Moreover, the US government is calling on its European allies to restrict Nuctech’s access to public tenders and abandon its baggage screening equipment. However, today European states respond individually to the allegations against Nuctech and its activities. For example, while Nuctech has successfully won tenders in Estonia, Finland, and Croatia, the Lithuanian government has officially banned equipment manufactured by this company. We are often asked about the specific damage Nuctech can bring to the country. For instance, in Ukraine, Nuctech not only supplied incomplete and defective equipment to the Ukrainian customs checkpoints but even won the case against the State Security Bureau and the Ministry of Finance in court. Namibia also has a painful experience, as Beijing removed it from China’s internet search engines and imposed all kinds of media censorship on it all over the country just because the latter had launched an investigation regarding the Nuctech-related corruption scandal. The Chinese authorities removed Namibia because Hu Haifeng, the son of the Chinese Communist Party leader Hu Jintao, was involved in the corruption scandal there. Despite the global technological development, the Chinese Communist Party still effectively manages to ban undesirable internet searches from its population. It is noteworthy that in addition to expanding economic influence and participating in corrupt and fraudulent activities, Nuctech and its owner, Tsinghua University, also seek to spread influence through the academic sphere. The company works closely with St. Petersburg State University to develop high-energy X-ray machines, anti-terrorist equipment, and other technologies that have the potential of being used for military purposes.

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Civic IDEA’s 4^th China Watch report addresses another Chinese state-controlled company Tebian Electric Apparatus Stock Co Ltd. (TBEA) which has already won two tenders in Georgia and is distinguished with its tainted international reputation. Below, we provide the readers with the key findings of our research:

• The report explains TBEA’s origins and activities in order to expose its affiliation with the Chinese Communist Party (CCP). TBEA is the enterprise group designated by the Chinese government and has its full support to conduct import-export and business relations outside China. TBEAs activities extend to almost every continent, including Asia, Europe, North and South America, Australia and Africa. The main protagonists of its actions worldwide are the Chinese Communist Party and the Chinese state-owned Exim Bank. Moreover, the company’s chairman Zhang Xin, is a member of the Chinese Communist Party (CCP), his name is recorded in the list of members of the 11th and 13th National People’s Congress and he also represents the city of Changji in the National People’s Congress. In addition to that, TBEA has been involved in illegal machinations with the Xinjiang Changji Forced Labor Camp, where detainees are tortured, starved, and inhumanely treated. The company exploited the prisoners’ labor rights by forcing them to work without any compensation.
• Our research has revealed particular breaches in the contracts signed between the Georgian state and TBEA Shenyang Transformer Group Co. These agreements were followed by redundant extensions, violation of the fixed terms, futile expenditures. However, the state agencies involved in the procurement procedures, turned a blind eye to these legal violations while granting TBEA with various privileges. To encourage the Chinese company TBEA, the tender commission does not spare any effort to change the terms of the projects while also disqualifying competitors for utterly incomprehensible reasons.
• Our report thoroughly reviews the TBEA corruption and fraud scandals in Gambia, Kyrgyzstan and Tajikistan, proving that its reputation is being questioned internationally.  However, this occasion did not prevent JSC “Georgian State Electro system” to entrust the implementation of the large-scale infrastructural projects to TBEA that left the Kyrgyz population without electricity and heating at -27 degrees Celsius, a company whose branch in India is facing the problem of insolvency, a company that is exposed to corrupt dealings with various governments.

• Similar to other Chinese companies operating in Georgia, the state did not even try to implement the so-called “due diligence” concerning TBEA and its activities worldwide. The government failed to examine the company’s international reputation, while even the simplest and the most accessible search platform, Google instantly provides information regarding TBEA’s scandalous and corrupt deals sourced from trusted and qualified media outlets.

Civic IDEA’s third China Watch Report covers the controversies over SinoHydro & China Railway 23rd Bureau Group Co. The latter brings the story of Sinohydro Corporation Limited and China 23rd Railway Bureau Co, the Chinese companies that are responsible for the main infrastructural projects in Georgia and have a tainted reputation globally. We discuss the misconduct of the projects led by them in Georgia, particularly, the violations of environmental laws, violations of labor rights, violations of contractual terms, and regulations. Also, we evaluate the experiences of foreign countries to highlight the absence of due diligence on the side of the Georgian government while granting contracts to the company.

Civic IDEA’s third China Watch Report ?