Saturday, April 02, 2011

Georgia: Israeli Hostage Rony Fuchs to Appeal Conviction by Georgia to European Court of Human Rights

SOURCE Gornitzky & Co

As predicted by lawyers representing Rony Fuchs, the Israeli businessman victimized by a sting operation authorized by officials operating at the highest level of the Georgian government, a Georgian court today found Fuchs “guilty” and sentenced him to 7 years in prison on "bribery" charges. Fuchs has been held in a Tbilisi jail since October, after being lured to the country by a phony invitation from the Prime Minister. Since that time, Georgia has steadfastly insisted that Fuchs forfeit a $100 million judgment awarded against Georgia by a blue-ribbon international arbitration panel as the condition for his release.

After a three-month trial in which Fuchs' lawyers were not permitted to question key witnesses in his case -- and in which the court refused almost every defense request to introduce evidence and witnesses proving the entrapment scheme -- Fuchs' family and supporters fear that the verdict is pre-determined. Indeed, fewer than one out of every thousand criminal defendants in Georgia are acquitted, according to Georgian court records analyzed by Transparency International.

Addressing the court on the final day of the trial, Fuchs stated that he is “the victim of a criminal plan by the prosecutors of the state of Georgia to subvert an arbitration decision lawfully given against Georgia by an independent panel of arbitrators appointed by ICSID, the international arbitration body affiliated with the World Bank.” Declaring his innocence, Fuchs stated that “the evidence shows that Georgia, through its Ministry of Finance and its prosecution office, set out to execute a criminal scheme . . . obviously devised and instigated by government agents with the connivance of the Prime Minister and others in order to get Georgia out of a debt that it was morally and legally required to pay me.”

Transparency International has accused Georgia of practicing "tax terrorism," using tax collection as a tool of political intimidation and control. Shake-downs of investors, foreign and domestic, by Georgian officials are increasingly routine. As described in Freedom House's 2010 Report on Georgia, Georgian authorities abuse state resources, intimidate public employees and opposition activists, and apply improper pressure to a judiciary that suffers from "significant corruption."

Fuch’s lead attorney in Georgia, Archil Kbilashvili, a partner from MKD Law Firm, said that Fuchs would appeal the conviction and take Georgia to the European Court of Human Rights in Strasbourg. “The State’s behavior has violated fundamental standards of human rights and international law in every aspect of this case,” he said.

In addition to a sentence of 7 years in prison, Fuchs was fined $300,000. Ze'ev Frankiel, another Israeli businessman who was also lured to Georgia along with Fuchs, was sentenced to six-and-a-half years plus a $100,000 fine.


Fuchs has been held without bail in Tbilisi, the capital of the republic of Georgia, since Georgian officials lured him to the country on false pretenses and jailed him on October 14, 2010. The Government of Georgia deliberately targeted Fuchs for entrapment on bribery charges and arrested him to avoid paying a judgment awarded by a blue ribbon international arbitration panel to Fuchs and his business partner, Ioannis Kardassopoulos. Georgian authorities have said he will be released only if he agrees to waive his rights to the award or pay a fine for the full amount of the arbitration award due to Fuchs and his partner from Georgia, which now amounts to $100 million.

In making the arbitration award, the international blue ribbon panel unanimously found that Georgia unlawfully expropriated Fuchs' and the other investors' rights in February 1996, repeatedly committed to compensate the investors, and ultimately reneged on that promise when the new government was installed after the Rose Revolution in 2004. The panel stated that Georgia's treatment of the investors (including the conduct of the current administration) was a "wholly unacceptable. . . farce" which amounted to unfair and inequitable treatment under international law. During the arbitration, Georgia's counsel expressly confirmed that Georgia did not have any evidence of corruption in connection with the original investment.

After losing the case, Georgian officials reached out to Fuchs and requested a principal-to-principal settlement meeting which took place at a hotel in Istanbul, Turkey in mid-September 2010. This meeting was covertly and illegally videotaped by Georgian officials in an effort to unlawfully entrap Fuchs. The tape shows the Georgian minister repeatedly pressing Fuchs for a payment and attempting to incite Fuchs into making incriminating statements concerning a payment which the Georgian government is now alleging was an offer of a bribe. This conduct so disturbed the government of Turkey that it has since issued a demarche to Georgia protesting the apparent unauthorized use of covert surveillance equipment by Georgian agents while on Turkish soil – which, a Turkish law expert found violated Turkish law.

The Prime Minister of Georgia then issued a formal, hand-signed invitation to Fuchs for final negotiations and an "official" signing ceremony on Thursday, October 14, 2010, in the port of Batumi. Just before the formal signing ceremony was to begin, the Deputy Minister for Finance asked Fuchs to speak privately upstairs, and then placed him under arrest, accused him of bribery, and transported him to jail in Tbilisi.

Fuchs adamantly denies the bribery charges.

“This case was manufactured by the government to avoid having to pay a $100 million international arbitration award,” Kbilashvili said, “Instead of being paid what he is due, Rony Fuchs is now being held in illegal custody. His conviction should send a chilling message to international investors that their investment in the country is not safe.”

Kbilashvili added that “The State’s behavior in this case is intended to destroy the World Bank arbitration system and make it absolutely useless as a remedy for investors against government’s misappropriation of their property. “ He regretted that “obviously, no one in their right mind would invest in Georgia in view of what happened to Rony Fuchs.”