Organized-Crime Ring Accused of Funding Rallies to Try to Destabilize Government; Ex-Minister Is Said to Funnel $1 Million
By DAVID CRAWFORD

BERLIN—Austrian police are investigating evidence that an organized-crime group with operations across much of Europe funded protests last year in Georgia that were aimed at toppling the country's president, Mikheil Saakashvili.

According to a report prepared for prosecutors in early 2010 by Vienna police and reviewed by The Wall Street Journal, the alleged crime organization is based in Georgia and funds itself through theft, blackmail and money laundering, primarily in Western Europe.

The report alleges that an Austria-based Georgian businessman raised money that was used to finance protests in early 2009.

In April 2009, opposition demonstrators held protests in Georgia's capital, Tbilisi, that lasted days and were attended by tens of thousands of people. The report doesn't say whether investigators believe those were the same as the protests it alleges the Georgian group was planning.

The group's goal in attempting to remove Mr. Saakashvili's government was to "use corruption and intimidation to exert influence over the Georgian economy and politics in order to shield itself from the threat of criminal prosecution" in Georgia, the report said.

Tbilisi's April 2009 protests wrapped up peacefully, with Mr. Saakashvili saying that democracy comes with demonstrations. Strengthening democracy will be on the agenda next week, when Secretary of State Hillary Clinton is due to visit Georgia.

Last year's peaceful protests stood in contrast with those in 2007, when Mr. Saakashvili was criticized for authoritarianism after Georgian police cracked down on demonstrators using tear gas and rubber bullets.

Georgian officials said at the time the protests were in fact an attempted coup organized by Badri Patarkatsishvili, a U.K.-based Georgian businessman. Georgia's government secretly filmed an aide to Mr. Patarkatsishvili as he apparently attempted to bribe a senior Interior Ministry official to take part in the 2007 coup.

Mr. Patarkatsishvili confirmed at the time that his aide offered a $100 million bribe, but said it was to ensure there was no violence. He died in 2008. The Austrian report doesn't mention Mr. Patarkatsishvili and there is no evidence of a link between him and the alleged attempts to foment a coup last year.

The allegations of the 2009 protest plans are part of a broader 46-page police report on the activities of the group, which it refers to only as a "Georgian Organized Crime Organization." The report, which includes details from as recently as this year and says it is based primarily on information gathered by wiretaps, alleges the group has roots in Georgia, an exiled leadership base in Greece and henchmen in Spain, Austria and Germany.

A spokesman for the Austrian federal police investigative service said 48 suspects were arrested throughout Europe in March in connection with the group's broader activities. He declined to comment further on the arrests or on the report.

Georgia's embassy in Washington declined to comment on the Austrian report.

The report says the group's allies include Igor Giorgadze, a former Georgian minister for state security who left Georgia for Moscow in 1995, shortly after an assassination attempt on former Georgian President Eduard Shevardnadze.

Georgian authorities have issued a warrant for Mr. Giorgadze, seeking his arrest on terrorism charges, the police report says.

Mr. Giorgadze, who has denied the allegation, couldn't be reached for comment Friday.

Last year, members of the group allegedly gave Mr. Giorgadze about $1 million to fund a coup attempt in Georgia, the police report says. Mr. Giorgadze then organized demonstrations in an attempt to provoke police violence, as a prelude to an uprising that would topple Mr. Saakashvili's government.

The report says Austrian investigators are interested in the alleged coup attempt because the $1 million was allegedly raised by Rudiko Goguadze, an alleged member of the Georgian organization who operates a Georgian restaurant, Tiflis, in a fashionable section of Vienna.

According to the police report, Mr. Goguadzethe man allegedly forced a Georgian businessman to lend him shares in the Radisson SAS Hotel Iveria. The group used those shares as collateral to take out a $1 million loan from a unidentified Turkish bank that was then used to fund demonstrations, the police report said.

When the Georgian businessman—identified as Mr. "Mito," a phoenetically spelled name gleaned from the wiretaps— sought to reclaim his shares in September 2009, members of the organized crime group flew to Georgia from Vienna, Israel and Ukraine to confront him, the report said.

The assembled gangsters "tried" the businessman in an informal court and sentenced him to forfeit the $1 million because he had broken gangster law by threatening to take the matter to the police, the report said.

In a telephone interview, Mr. Goguadzethe Vienna restaurateur denied the allegations. He didn't say whether he had been formally charged but said he expected to go on trial later this year in an Austrian court. "Everything moves very slowly here, perhaps September or October," he said, referring to his upcoming trial.

He denied he took shares from a hotel or obtained a loan in Turkey. "I don't know why he said that," referring to Mr. Mito. He denied he provided $1 million to topple the Georgian president, but laughed, saying: "$1 million is a lot of money to pay for someone you don't like."

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