Arrested Israelis Allegedly Tried to Pay Off Georgian Official With $7 Million Bribe to Stymie Appeal

Ron Fuchs and Ze'ev Frenkiel were arrested last week on suspicion of attempting to bribe Georgia's deputy finance minister.

Two Israeli businessmen arrested in the former Soviet republic of Georgia on Thursday were apprehended in the course of their third meeting with Georgian deputy finance minister Avtandil Kharaidze, the prosecution in the case told a court in the capital, Tbilisi, on Sunday.

The two defendants, Ron Fuchs and Ze'ev Frenkiel, were arrested on suspicion of attempting to bribe the minister just prior to an appeal hearing filed by the Georgian government in a London court over a $90 million arbitration award obtained against the government.

The award had been issued by the International Center for Settlement of Investment Disputes, an agency of the World Bank, for what was ruled as unfair conduct on the government's part in revoking oil interests held by Fuchs' company Tramex.

The Israelis deny any wrongdoing.

The central prosecutor's office said the attempted bribe, reportedly $5 million originally, was an effort to get Georgia to drop its appeal.

Georgian websites said that Frenkiel, who immigrated to Israel many years ago from the former Soviet Union, initially met with the deputy minister on behalf of Fuchs and Fuch's Greek partner and allegedly offered the bribe.

Evidence from the investigation submitted to the court indicates that Kharaidze had himself alerted police to the alleged attempted payoff.

A second meeting in September was allegedly held between Kharaidze, Fuchs and Frenkiel in Istanbul in which the amount of the alleged bride was raised to $7 million.

Last Thursday the three met at a restaurant in the Georgian city of Batumi, where the Israelis allegedly confirmed their readiness to pay the bribe and were arrested on the spot.

According to the Georgian Media News website, the Georgian court rejected the Israelis' lawyers request that they be released on bail, in light of the fact that in the court's view, they are a high risk for fleeing the country and disrupting the investigation.

The two are being held in separate jail cells in an effort to prevent them from coordinating their testimony or disrupting the investigation. Local observers believe the two will remain in prison for 60 day until the start of their trial, absent intervention at the highest levels by government officials in Israel.

Frenkiel has been involved in business ventures in real estate, communications, medicine and oil in Georgia since the early 1990s. Baruch Ben-Neria, who was Israel's ambassador in Tbilisi from 1993 to 1996, said the allegations of attempted bribery against Frenkiel and Fuchs are a total fabrication, adding "I think there is a political logic hiding behind this of relations that have cooled between [Israel] and Georgia since the war [in Georgia] in 2008."

Alon Pinkas, a former Israeli consul general in New York and a friend of Fuchs said on Sunday that his friend is an international businessman who specializes in the energy sector. He said Fuchs spent 12 years in New York studying the field and returned to Israel in the 1990s to put together partnerships that did business in the former Soviet Union.

Pinkas said Fuchs had not encountered legal problems of any kind prior to this. He added that there is no "more honorable businessman than [Fuchs]."