Israelis in Custody over Oil, Energy Projects (Republic of Georgia)

Al-Quds – AFP – Tbilisi – The Georgian press broke today (October 15th) that the Georgian court ordered that two Israeli businessman, Ron Fuchs and Zeev Fraenkel, be put in custody on suspicion of offering a bribe worth seven million dollars to a senior official of the Republic of Georgia.

Fuchs and Fraenkel were arrested by the Georgian police and were unable to obtain bail according to a statement released by the Georgian judiciary. The Georgian court stressed that the police is searching for a Greek, Ioannis Kardassopoulos, a third businessman connected to this case.

Prosecutors suspect the Israelis provided a bribe to the deputy finance Minister of the Republic of Georgia to persuade him to abandon the appeal case brought by the Georgian state in an arbitration decision of the World Bank which had been in favor of Fuchs and Kardassopoulos, according to Georgian sources. The two Israeli men met the Georgian official twice in Istanbul on September 15, and then in Batumi, Georgia, on October 14.

According to information posted last Friday by Investment Reporter news, a site specialized in Arbitral Awards, Fuchs and Kardassopoulos were awarded compensation valued $ 90 million in a decision of International Centre for Settlement of Investment Disputes (ICSID) of the World Bank issued last March 3 2010.

The two men had worked through their company Tramex in a joint venture with a Georgian public company, in which they got involved in the early nineties in a project to build an oil pipeline and other infrastructure in the energy sector. Later, the Georgian republic canceled the contract after they decided to work with other partners, according to the news.

For further background information about this issue, read this report.