April 1, 2011 / 2:48 PM / 9 years ago

Georgia court jails two Israelis for bribery

TBILISI (Reuters) - A Georgian court convicted two Israeli businessmen of bribery Friday and sentenced them to prison, dismissing their allegations of entrapment.

Ron Fuchs and Zeev Frankiel were convicted of offering a $7 million (£4.4 million) bribe to Deputy Georgian Finance Minister Avtandil Kharaidze in October 2010, in exchange for dropping plans to protest the decision of an international arbitration court.

“The court found the Israeli businessmen guilty,” Zaza Kachibaia, an official from the Prosecutor General’s office, told reporters in the Georgian capital.

He said Fuchs was sentenced to seven years in jail and was ordered to pay a fine of $340,000. Frankiel was handed down a sentence of six and a half years and a $70,000 fine.

Fuchs’s defence lawyers said they plan to appeal against his ruling at the Strasbourg-based European Court of Human Rights.

“The State’s behaviour has violated fundamental standards of human rights and international law in every aspect of this case,” defence team member Archil Kbilashvili said in a statement.

Defence lawyers say their clients were ensnared in a plot orchestrated by senior government officials trying to wriggle out of an arbitration payment of $90 million, a huge sum for a country that saw foreign direct investment in 2010 at $543 million.

Western diplomats say the judiciary in the former Soviet republic, a key transport route for energy supplies to Europe, is far from independent — a concern for the country’s investment-driven economy as it tries to attract foreign capital.

Local media reports say Fuchs is politically well-connected in Israel, causing the case to slightly dent ties between the two. A Georgian political visit to the Jewish state last month was cancelled.

The Georgian Foreign Ministry later said ties between the two, which have enjoyed a good relationship, would not be hurt.

The case has roots in the early 1990s, when Fuchs and Greek businessman Ioannis Kardassopoulos were reported to have entered a joint venture with a Georgian state oil firm and obtained the rights to develop an oil pipeline.

The government later terminated the concession and picked other partners.

According to Investment Treaty News, a news service specialising in international investment law, Fuchs and Kardassopoulos were awarded just over $45 million each in compensation by the World Bank-affiliated International Centre for Settlement and Investment Disputes (ICSID) in March 2010.

Georgia has appealed against the ruling.

Fuchs and Frankiel were arrested in October last year in the Black Sea resort town of Batumi, and were charged with trying to bribe a government official to drop the arbitration appeal.

Reporting by Matt Robinson and Margarita Antidze; editing by Michael Roddy

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