The disputed Rustavi Iron and Steel Plant and JSC Georgian Steel reverted to State ownership last week despite the fierce protests of British investor Thomas Blake, who still claims full ownership of these assets.

Thomas Blake is a Director of Thames Steel UK Limited and says he paid 70m USD in 2007 for Energy & Industry Complex, which owns 100% of the share capital of JSC Georgian Steel .

On November 2 the Rustavi tax authorities reran the auction of these assets but no bids were made on this occasion either, just like last time. David Jachvadze, Head of the Kvemo Kartli Department of the Ministry of Justice’s National Bureau of Enforcement, wrapped up the auction in 5 minutes. Under the repeat auction law one of the creditors of the company automatically becomes the owner of it if it fails to sell. Jachvadze said one such creditor is the Georgian tax authority, to which Jachvadze says the company owes 380,000 GEL. He added that there is one more creditor who may receive a share of it too, but refused to give its name.

“This auction is illegal, secret and we believe that the reason it is being held is that a complaint was made against us without any arguments being heard,” said Thomas Blake, who was not allowed to attend the auction. A week earlier at a press conference Blake had claimed that these assets had been unlawfully put up for sale and accused the Georgian court of supporting an illegal action. He said that the previous management had apparently been dismantling the plant and selling it as scrap metal. Thames Steel’s attempts to replace the local managers were unsuccessful as they protected themselves with court injunctions. The first prevents Thames Steel UK Limited from removing the Director of Energy & Industry Complex LLC, their local holding company for the plant, or amending that company’s charter. The second prevents it from interfering in the activities of Energy & Industry’s operating subsidiary JSC Georgian Steel or taking any other action connected with the management or governance of the company.

Blake has addressed the Georgian President and Prime Minister about this issue, setting out the company’s concerns and asking for their intervention. But he says he has received no reply and the actions against the company continue. The British Embassy in Tbilisi, the UK Minister of State for Europe and the British Foreign Secretary himself have also raised their concern directly with Georgia’s Minister of Foreign Affairs, but to no avail as yet.

In an interview with GT David Gale from the British Embassy said that they are aware of the difficulties the British company is currently facing in the Rustavi plant. He also said that Blake has discussed the matter with Embassy staff and the Ambassador himself has written to the Ministers of Foreign Affairs, Finance and Economic Development and the Prime Minister. The UK’s Minister of Foreign Affairs has also discussed the subject with his Georgian colleague, Grigol Vashadze, who visited the UK recently. Mr. Gale withheld comment when asked about the results of these actions.

Kakha Kozhoridze, Head of the Legal Consultancy Centre at the Georgian Young Lawyers’ Association, said that he had no knowledge of this particular case concerning the Rustavi plant but that there have been occasions when the Government has illegally confiscated assets from some companies or individuals. Furthermore, he said that Thomas Blake certainly had the right to attend the auction. “Any individual is empowered to attend such auctions and the organisers had no right to prevent Thomas Blake doing so,” he said. The Ministry of Justice’s National Bureau of Enforcement was not available for comment.

In a previous interview with GT the Economy Ministry stated that this dispute is an internal affair concerning the plant’s management and the State has no concern with it. Thomas Blake however says that his assets are being unfairly seized in Georgia and he will go to the international court to reclaim them and then demand compensation.