A helicopter makes a dramatic night landing in Georgia and out steps the symbol of a new rush of foreign direct investment: an executive from Ras al Khaimah. This scene from a recent advertisement for Georgia on CNN is designed to show that the former Soviet republic is open for business after the brief 2008 war with Russia, but it also tells a story of the growing importance of Gulf investors in the Caucasus.
The investment ties between RAK and Georgia stretch back more than two years, before the war, and before the financial crisis. Those two events, however, have made the RAK connection more important than ever to the Georgian economy, which depends heavily on foreign direct investment. Mikheil Saakashvili, the Georgian president, visited the UAE several times last year, garnering promises of as much as US$1 billion (Dh3.67bn) "within the next two to three years", he told Reuters last October.
That is the amount Georgia's finance ministry expected the country's $12.8bn economy to receive from all foreign direct investment for last year, and makes the UAE the largest foreign investor in the country. The main UAE players have been the Ras al Khaimah Investment Authority (RAKIA) and its property development arm, Rakeen. Rakeen has several residential and business complexes in and near the capital of Tbilisi, while RAKIA bought a majority share in Georgia's Poti Sea Port on the Black Sea in 2008 and has announced plans to create the region's first industrial free zone next to it.
In October, Mr Saakashvili announced Rakeen would shortly break ground on "the biggest airport in the Caucasus" at Poti. A senior executive of Rakeen said the company was "seriously considering" the project. The Georgian government has actively encouraged such investments, and RAKIA has become a major advocate for the country, so much so that the website for the RAKIA Georgia Free Industrial Zone confidently declares: "Politically stable with a functioning democracy, Georgia has a forward-looking, responsive government with a progressive, pro-business attitude and a strong commitment to the private sector."
Last February, Gela "Zaza" Mikadze, the general director of Rakeen Georgia, told The Christian Science Monitor that the Georgian government had given almost "too much support" to Rakeen. "When we have a problem, they always help us," Mr Mikadze said. Such deep political ties are not without controversy, however. One investment, in particular, has opened RAK to new-found political intrigue and highlighted the unexpected political risks large investors face in emerging markets.
With the footprint of Gulf investment spreading ever wider, the case of Rakia's alleged purchase of Imedi TV, Georgia's second largest television network, offers an important case study. But the most important question about the case is whether the purchase happened at all. In February last year, Reuters reported that RAKIA had bought a 90 per cent stake in Imedi TV, which was founded by Badri Patarkatsishvili, a billionaire opposition figure who died in 2008.
Joseph Kay, a distant relative of Mr Patarkatsishvili's, took control of the station after the tycoon's death and is said to have retained a 10 per cent stake after the alleged sale to RAKIA. RAK's Government-backed investment and development vehicles, however, deny any involvement in the purchase. Dr Khater Massaad, the chief executive of RAKIA and Rakeen and an adviser to Sheikh Saud bin Saqr, the Crown Prince and Deputy Ruler of Ras al Khaimah, has denied that RAKIA, Rakeen or any other RAK-related entity bought Imedi TV.
"We have nothing to do with that," Dr Massaad said. "Why should I buy a TV station in Georgia? It's a small country. What would I need with a TV station there?" The "RAK" brand, which had become synonymous with deep pockets in Georgia, has been co-opted by imitators, he said. News reports from Georgia list ownership of Imedi's parent company, Georgia Media Production Group, as an entity called RAK Georgia Holding, reported to be a subsidiary of Rakeen.
Bidzina Baratashvili, the chief executive of Imedi TV, said the station was bought by a company called RAK Georgia Holding, while Zawya lists RAK Georgia Holding as 100 per cent owned by RAKIA and registered in Georgia. But Dr Massaad said the confusion came from assuming that the Government of RAK had anything to do with this entity. "There is somebody in Georgia who has created his own company with the name RAK Georgia Holding," he said. "This company exists indeed. But we have nothing to do with it. The problem is that I have not registered the name RAK as a brand."
Ownership of the station has not been registered with the Georgian National Communications Commission (GNCC), as required by law. In October, Transparency International Georgia released a report, Television in Georgia: Ownership, Regulation and Control, that criticised the GNCC as being politically motivated in its actions and said its weak enforcement of laws requiring disclosure of media ownership contributed to a deterioration of media freedom in the country.
"The GNCC, however, lacks the mandate to establish who the actual owners of television stations are - and to investigate who is behind the legal entities that directly own the licence holder," the report said. Maia Mikashavidze, the head of the Georgian Institute for Public Affairs' school of journalism and media management, was quoted in the report as saying it was important to know who owns the media. "If there is a bias or any leaning in the editorial stand, it is acceptable as long as one knows the nature of the bias," he was quoted as saying.
The whole imbroglio has presented yet one more unintended consequence: the reports of the sale have prompted an outcry from Georgia's opposition of political meddling. The original owner of Imedi TV, Mr Patarkatsishvili, was once Georgia's richest man and a long-time business partner of the Russian oligarch Boris Berezovsky. He had once been a supporter of Mr Saakashvili, the president, helping to fund the Rose Revolution that brought him to power in 2003, but soon became disenchanted. He then became the largest funder of the opposition to Mr Saakashvili, and eventually ran against him for the presidency.
Not long afterwards, Imedi was shut down by the government during opposition protests against Mr Saakashvili in November 2007 and seized by a Tbilisi court in January 2008 when the government accused Mr Patarkatsishvili of plotting a coup during the protests. The shutdown was reported to have caused major financial losses for the station and its partner, News Corp, which had signed on a year before in search of advertising revenue from the booming economy. News Corp declined to comment.
When Mr Patarkatsishvili died of a heart attack it emerged he had no clear inheritance plan for his assets, and Mr Kay was claiming a large portion of them, including Imedi. But Mr Patarkatsishvili's widow is contesting the claim in international arbitration in what a Vanity Fair article in September called "one of the biggest estate battles in history". Politicians see foul play. Some in the opposition have said the sale of Imedi by Mr Kay to Rakeen Georgia - if it indeed did happen - was an attempt by the government of Georgia to take the station out of opposition hands.
"This is a highly contested, politically linked entity inside the country," said Mark Hauf, a spokesman for the Patarkatsishvili family. "Saakashvili took a lot of bad press in Georgia following the announcement of this Imedi sale. Everyone came out against him with messages that this is just an act to solidify the government's hold on this TV station. "I can't understand what advantage it would be for the RAK Government to get involved."
Without information, rumours thrive, the report noted. "The legal structure of Rakeen and its subsidiary, RAK Georgia Holding, which owns 90 per cent of Imedi, is not transparent and fuels allegations about the involvement of Georgian individuals in this enterprise." Almost a year into the case, there appears to be no clear resolution. It may, however, offer important lessons as Gulf countries pursue ever more adventurous investments in high-growth, but sometimes turbulent, emerging markets.
"The main focus for companies investing in emerging markets without clear media laws needs to be the careful management of relationships with the government and media regulator, which are of course likely to be effectively the same entity," said Matthieu de Clercq, the senior manager of AT Kearney Middle East. "Media is a highly politically sensitive sector, especially in emerging markets that have a high level of state involvement in most businesses."
* additional reporting by Nathalie Gillet @Email:email@example.com