Israeli businessmen imprisoned: possible outcome

On April 1 Tbilisi city court announced the final verdict in the case against Israeli businessmen. 61 year old Zeev Frankiel was sentenced to 6 years and 6 months in jail and 64 year old Ron Fuchs was sentenced to 7 years. The businessmen are also liable to pay Fines to the Georgian state budget: Frankel 60 000 USD and Fuchs 300, 000 USD. While the trial is formally over, the scandal is not and as it has had a serious impact on relations between Georgia and Israel. Frankel and Fuchs were detained on October 14, 2010 in Batumi and charged with attempting to bribe a deputy finance minister.

The story began in 1992 when Ron Fuchs’ company received exclusive rights to carry out all oil and gas operations including exploration and transit in the entire Georgian territory. Later, when new Georgian authorities realized the nature of this agreement they deprived the Israeli company of these rights and granted them to GOGC – the Georgian International Oil & Gas Corporation. The Israeli company applied to the International Arbitration Court which on February 28, 2010 found for the plaintiffs and determined that Georgia had to compensate the Israeli company 95 million USD. However, Georgia challenged this decision and was in the process of preparing documents for another trial. Meanwhile the Israeli businessmen were detained in Batumi. Israeli leadership including PM and Knesset members asked Georgia to release Fuchs and Frankiel. Israeli clergy as well as Georgian Jews in Israel got involved in different negotiations but all in vain. Rumor has it that the Georgian side even refused to accept the promise of Israeli businessmen to carry out some very solid economic projects in Georgia in return for freeing those businessmen.

Of course nobody expected that the two Israeli businessmen would be released. As their lawyer Archil Kbilashvili mentioned in this case it would cause even more political damage since, if they were released, it would have been determined that these people were illegally detained and kept in prison for 5 months. It also would have shown that Georgian special service organized and carried out an illegal operation. Therefore they were tried and convicted. As Georgian analysts note the case has already seriously affected Georgian-Israeli relations. For instance the planned visit of Georgian chair of the parliament David Bakradze was postponed if not cancelled. The same happened with a visit of the Minister of Economy Vera Kobalia to Israel. Georgian analysts think this as an unpleasant state of affairs which should be resolved as soon as possible.

Some opposition parties consider the detention of Israeli businessmen as illegal and demand that the government immediately release them. For instance leaders of conservatives and peoples’ party made a statement of this type.

There is a view among some Georgian analysts that the damage to relations between the two countries can yield some negative political and economic results for our country. There is yet another concern as well, how would imprisonment of Israeli businessmen influence the investment climate in Georgia which is continually boosted by Georgian authorities. So there are many controversies and it is early to say definitely what consequences this sentencing would have.