Georgia Leader’s Nephew Feels Strain of Family Ties

The Rolls-Royce is out of action. It can’t cope with the potholed tracks that pass for roads here.

Construction on the mansion is just crawling along. And business is slow for Nugzar Shevardnadze, one of the richest and most controversial men in Georgia, the former Soviet republic to the south of Russia.

He also has one of the most famous names in the country. His uncle is the longtime president of Georgia, Eduard A. Shevardnadze, and his opponents claim that he seized a good slice of the economy thanks to his relationship with the president.

And in Georgia, that may not be difficult: This is a country where the three big business clans are all related to the president, and analysts say it’s impossible to get anywhere in big business if you are not.

But Nugzar Shevardnadze, 50, has become a political embarrassment for his uncle, especially with media accusations of financial misdeeds. He claims that he’s being victimized and that it’s hurting his business.

Shevardnadze is open about how he started out in business: dishonestly. In Soviet times, he argues, it was OK to be dishonest. Lying and stealing came easily when you were merely cheating the Soviet regime. But now, he says, it’s impossible for him to be dishonest.

After the collapse of the Soviet Union, he insists, his business went legitimate. His company is now mainly involved in gasoline and fuel transport, and he says he wants to expand into tourism.

“In my heart, it’s difficult to do anything illegal now,” he said. “Life is tough in Georgia today. Why would we want to steal from the poor? We don’t want to, because God would punish us.”

Apparently, he’s also worried about punishment from more secular avengers: Shevardnadze’s office and adjoining apartments are protected by steel doors so thick they can withstand a blast from a grenade launcher. And he drives a $100,000 armored Mercedes sport-utility vehicle.

Like many Georgians, Shevardnadze is effusive, proud and given to extravagant and sentimental rhetoric. He reigns at the center of his financial clan like a Roman emperor, surrounded by fawning subordinates. The heavy gold wrist chain and the necktie that he has impatiently pulled askew convey his casual authority.

His father was a district party boss under the Soviets, someone who lived modestly and was so strict about refusing bribes that he once returned a box of chocolates someone left at his home. He was unaware that Nugzar, then a child, had carefully broken into the box from underneath to steal most of its contents.

“We were honest but poor,” said the son, recalling “broken parquet and only one chandelier.”

‘Stealing Money From the Soviet Budget’

When he was 19, Shevardnadze defied his father, skirting the Soviet regulations that outlawed private business.

“I decided to work in black business,” he said. “I’d been taught to live by the laws of the USSR, but I had to work against those laws.”

He was soon part of a fast-living set of young people who would fly to Moscow for the weekend to party. He took over a wool factory and built another, concealing his control through managers who were his allies. To make it in business, he paid big bribes.

“If they caught you, they’d shoot you,” he said. “Back then, we were stealing money from the Soviet budget. Everyone was stealing money wherever they could.

“We were stealing money in a very civilized and cultured manner.”

Shevardnadze hid the illegal proceeds of his factories in a honey business and managed to get false certification exaggerating how much honey was sent to the Soviet authorities.

“That’s how I legalized my proceeds and was able to buy a car,” he said. But he had to hide his new BMW, unheard of in Soviet Georgia, in a garage in Moscow.

Shevardnadze hasn’t lost his love of concealing things. In a hall at ground level of the mansion he’s building, the marble floor glides back to reveal a swimming pool.

He got the land for the house during Soviet times, when it was illegal to own property. A professor who was entitled to use the land acquired it for him.

The vast home is designed to look like a European palace, with layers of balconies and turrets. Its construction is Shevardnadze’s hobby.

“It will stand for centuries,” he boasted. He loves interfering to change the balconies and layouts, or to choose timbers and tiles.

“I’ve had so many fights,” he said.

But the pet project suffers. Shevardnadze had to lay off half the 200-member crew at the work site. His gasoline business, he says, can’t compete with fuel smugglers.

Nonetheless, he surrounds himself with the trappings of wealth and power. Lunching at his favorite restaurant, Shevardnadze is accompanied by a large group of associates and managers, all of whom agree with everything he says, unless it’s to question whether the best dish on the banquet table is the Georgian cheese bread or the fried trout. There are so many dishes, they have to be piled up, one on top of another.

At work, he sits in staggering luxury in a room more like a gilded banquet hall than an office. He is never behind his desk, which is tucked in a corner under an array of glowing religious icons, its surface crammed with family photos and golden figurines. Instead, he sinks into a deep leather chair or entertains visitors at a vast marble table.

So swift was Nugzar Shevardnadze’s rise and so wide his grasp of the Georgian gasoline business, he began to attract unfavorable attention.

“It was all the bad government ministers who said, ‘The nephew is everywhere,’ ” he complained.

When the media reports accusing him of financial crimes surfaced three years ago, his uncle came under political pressure, and the president was clearly irritated.

The president, who as Soviet foreign minister helped end the Cold War, ordered a probe into his nephew’s business three years ago. The president said he had no idea about his nephew’s competency as a businessman, “but I believe that if he did it in a competent manner, he would not cause such a sensation.”

The prosecutor’s office later announced that it had found no wrongdoing. A tax commission audit also found nothing.

Although Nugzar Shevardnadze insists that family relations are fine, he says he hasn’t spoken with his uncle for several years.

“I have no contact with him. I try not to see him and not to ask him to see me,” he said.

Akakiy Gogichaishvili, a journalist from a newsmagazine called “60 Minutes” on the independent Rustavi 2 network, detailed the accusations: Nugzar Shevardnadze allegedly made a deal with a Greek firm to transport gasoline to Armenia, but the deal collapsed and $5 million from the Greek company disappeared. The company lost its court action against Shevardnadze in 1998 after a third company with negligible assets came forward, claiming responsibility for the deal.

Accused of Smuggling Gas and Evading Taxes

Shevardnadze has also been accused of gasoline smuggling and tax evasion, allegations he denies.

Instead, he says he can’t compete with cheap smuggled oil in Georgia.

Now, he says, he is lying low, waiting for the moment when he can expand his business.

Dato Usuprashvili, head of an anti-corruption commission that reported to President Shevardnadze, is skeptical of the nephew’s claims that he has had no hand in smuggling.

“Any businessman trading in gasoline in Georgia always tells you that he is innocent and points his finger at others who are surely smuggling gasoline, not him. But in short, you can’t do business in oil and gasoline in Georgia and not be to at least some extent involved in either smuggling or selling smuggled gasoline,” because Georgia’s bureaucracy is so deeply corrupt, Usuprashvili said.

According to Gogichaishvili, the journalist, Shevardnadze has nothing to fear from law enforcement officials or the tax police.

“What Nugzar really did was basically daylight robbery, and it wouldn’t take a genius of an investigator to bring him to justice. But the law enforcement agencies are all involved in illegal business, in smuggling gasoline, cigarettes and other things,” Gogichaishvili said, “and they would never move a finger to act against people like Nugzar.”

Gogichaishvili says he believes that Nugzar Shevardnadze has fallen out of presidential favor, while Guram Akhvlediani, the father-in-law of the president’s son, is gaining ground.

He says the main thing Nugzar Shevardnadze has to worry about is competition from members of his own family.

Dixon was recently on assignment in Tbilisi.