Stonewalled abroad

A Huntington Beach entrepreneur has enlisted Rep. Dana Rohrabacher’s assistance in bringing attention to a business conflict that extends halfway around the world, to the republic of Georgia in Central Asia.

Ilya Zhuganov said he has had two businesses destroyed by governmental corruption, and has been stonewalled for more than a year in his attempts to reclaim his right to do business.

“I started iZee Enterprises back in 2001, and at that time we started doing business in Kazakhstan,” Zhuganov said.

The company distributed Sony products.

The business operators soon met a Sony representative from the Ukraine, who eventually worked with iZee to become the sole authorized Sony dealer in Georgia, opening a business called Lazeri-2 and a Sony Center store.

Zhuganov’s company later decided to become a 50% shareholder of Lazeri-2, the owners of which also operate the adjacent Café Rustaveli restaurant, on what Zhuganov said is the equivalent of Rodeo Drive in Tbilisi, Georgia’s capital city.

Mzia Kakabadze, the building owner, leased the store and restaurant spaces to the business owners until 2015 and 2019 respectively, Zhuganov said.

All was going well, until everything changed in November 2006.

“The minister of economic developments of Georgia came in and coerced Kakabadze to sign away her building in exchange for a smaller one in a worse area,” Zhuganov said.

Rohrabacher said in his letter that Kakabadze signed an affidavit stating that ministry officials threatened Kakabadze with harm to her family if she didn’t “gift” the property to the officials.

She has since scheduled a court date, which has been stalled, Zhuganov said.

“You see, Georgia is trying to be pro-Western, but some Soviet corruption is still in there, obviously,” Zhuganov said.

“They sent a letter saying we have to vacate the premises. We told them, ‘You can’t just kick us out. We have a long lease.’”

The Georgian officials contended the leases were due to expire much sooner. The Georgian government contends it made a fair exchange for the stately building, but Zhuganov cried foul.

“You could make millions on that thing,” he said. “We’re hearing rumors that they want to sell it to Hilton.”

Zhuganov’s company has gone back and forth with the Georgian government for more than a year over the breach of contract, he said.

“In July of 2007, we appealed to the minister of internal affairs, and said we have papers showing our right to the space. Regardless of that, the internal affairs department sent about 200 officers to the building.”

The officers, Zhuganov contends, blocked off the area, broke the door and took products, furniture and fixtures from both the cafe and the Sony Center store in August 2007 and put them in trucks; other fixtures and equipment were destroyed, as reported by Georgian media. A video of the incident was also put up on YouTube.

A short article in the Georgian Times said the business owners’ lawyer, Soso Baratashvili, called the incident “the recurrence of the Bolshevism.”

“Café Rustaveli ceased to exist, and Sony Center was shut down. That’s when the battle began,” Zhuganov said.

At a meeting in Paris with government officials, iZee was told that the Georgian government wanted to solve the situation as soon as possible, Zhuganov said.

After that, court dates were postponed several times, and long extensions were granted. Hearing dates were set, with no follow-up. Judges called in sick.

Rohrabacher said he has has sent two strong letters to Georgian President Mikheil Saakashvili, Parliament Chairman Davit Bakradze, U.S. Ambassador John Tefft and a State Department official.

A Georgian public defender has spoken out on the side of iZee as well.

The business owners are facing the prospect this month of a lengthy and expensive arbitration process under the Bilateral Investment Treaty between the U.S. and Georgia, Zhuganov said.

“The problem is that we have given them so many opportunities to settle with us — but we hear nothing,” Zhuganov said. “They drag it on and on. It’s like living in the Soviet Union. … I don’t think they’re taking us seriously, to be honest.”

Rohrabacher said in his letter that the settlement offer made by iZee was a request for reinstatement of their leases and reimbursement for financial losses incurred since August 2007 — which, he wrote, amounted to about $2.5 million at the time the letter was written.

“Following the conflict between Georgia and Russia this past summer, and the recent turmoil in world financial markets, iZee remains a rarity: a U.S. company that wants to continue to invest and do business in Georgia,” Rohrabacher wrote.

“iZee remains a true friend to Georgia. Yet I am concerned, based on the facts presented to me, that iZee’s friendship toward your country is being rebuffed and ill-treated by certain persons in your government.”

REP’S LETTER TO PRESIDENT OF REPUBLIC OF GEORGIA

Following is an excerpt from Rep. Dana Rohrabacher’s letter to Georgian President Mikheil Saakashvili, published Oct. 27 in the “Georgian Times.”

“Following the conflict between Georgia and Russia this past summer, and the recent turmoil in world financial markets, iZee remains a rarity: a U.S. company that wants to continue to invest and do business in Georgia.

“iZee remains a true friend to Georgia. Yet I am concerned, based on the facts presented to me, that iZee’s friendship toward your country is being rebuffed and ill-treated by certain persons in your government.

“Although I have my difficulties with your government, Mr. President, I believe that a strong Georgian economy, in which U.S. and other foreign companies can invest safely, is in the best interests of everyone. I am very concerned that if the allegations by iZee against your government are further publicized, it will make the prospects for further U.S. investment in Georgia even more difficult that they are under the present circumstances. I believe that discussions of further U.S. aid to Georgia, and of free trade agreements and the like, could also be jeopardized.

“That is why I believe that a prompt, amicable resolution of this situation is in the best interest not only of iZee but also of the Georgian government. Based on everything that I have heard, I also believe, Mr. President, that only your direct intervention can achieve a prompt and fair settlement.”

CANDICE BAKER may be reached at (714) 966-4631 or at candice.baker@latimes.com.