Ron Fuchs and Zeev Frenkiel were detained in Georgia on Thursday; the two are charged with offering a $7 million bribe to the Georgian deputy finance minister.
Two Israeli businessmen were arrested in the former Soviet republic of Georgia on Thursday on suspicion that they attempted to bribe Georgia's deputy finance minister.
According to Georgian media, the two detained businessmen are Ron Fuchs and Zeev Frenkiel. The two men were arrested in the Black Sea town of Batumi while meeting with Georgian Deputy Finance Minister Avtandil Kharadze.
Fuchs and Frenkiel allegedly offered Kharadze a $7 million bribe.
A court in Tbilisi denied bail to the two men and they will remain in detention until their trial.
Fuchs and Frenkiel said that they are innocent of the accusations against them.
Ioannis Kardassopoulos, a Greek business associate of Fuchs, is wanted by Georgian authorities on similar charges.
According to the Georgian chief prosecutor's office, Fuchs and Kardassopoulos, partners from the Tramex company, offered a $7 million bribe to Kharadze to convince the Georgian government not to appeal an international arbitration decision that awarded the two a $98.1 million payment from Georgia.
Frenkiel allegedly aided Fuchs and Kardassopoulos in their attempt to bribe Kharadze.
The arbitration case involving Fuchs, Kardassopoulos and the Georgian government goes back to 1991 when Tramex entered Georgia's energy sector. Tramex established a joint initiative with the Georgian state oil company to develop oil pipeline networks. The permit was cancelled in 1996 when Georgia established the Georgian International Oil Corporation, which eventually reached an agreement with an international consortium to build an oil pipeline to transport oil from Azerbaijan to the West via Georgia and Turkey.
In November 2004, the Georgian government denied the claims of Fuchs and Kardassopoulos and they filed two separate suits against Georgia in the International Center for Settlement of Investment Disputes (ICSID), part of the World Bank group.
This past March, the tribunal ruled that Georgia violated the multilateral Energy Charter treaty, unlawfully expropriated Kardassopoulos's investments and violated a bilateral investment protection treaty signed between Georgia and Israel.
According to the ruling, Fuchs and Kardassopolous were to each receive $15.1 million compensation payments for losses as well as interest equaling $30 million for each. Georgia was also ordered to compensate to two men's arbitration costs.
In July, Georgia indicated that it planned to challenge the ruling.
The Georgian government released via television footage allegedly showing a meeting between Fuchs and Kharadze in which Fuchs offered the Georgian deputy finance minister a bribe in exchange for the Georgian government dropping its appeal of the ruling.
Of course they are innocent: there are Jewish!!
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