Republic of Georgia Holds Israeli Businessman on $100 Million 'Ransom', Says Jailed Man's Law Firm, Gornitzky & Co

Jan 12, 2011, 10:03 ET from Gornitzky & Co

Georgia Accused of Human Rights Violations As 'Show Trial' Begins

TBILISI, Georgia, Jan. 12, 2011 /PR Newswire/ -- Georgian authorities are proceeding with the trial of Israeli businessman Rony Fuchs, who has been held without bail in Tbilisi, the capital of the republic of Georgia, since Georgian authorities arrested him on October 14. Mr. Fuchs is little better than a hostage; he has been told he can only be released if he waives a $100 million arbitration award issued by an independent international arbitration panel  in favor of Mr. Fuchs and his business partner and against Georgia, says Pinhas Rubin, a senior lawyer at Gornitzky & Co, the Israeli firm representing Mr. Fuchs and his family.

Mr. Fuchs has been in prison since October when he was arrested in Georgia after being invited to the country by a letter from the Prime Minister.  Georgian officials have charged Mr. Fuchs with bribery. His trial opened briefly last week and resumed yesterday (January 11, 2011). It is, says Rubin, no more than an attempt at state-sponsored extortion.

Renowned human rights lawyer Geoffrey Robertson has signed an emergency Petition filed with the European Court of Human Rights which accuses Georgia of violating European human rights laws and seeks Mr. Fuchs's immediate release on bail. The petition demonstrates that Georgia's entrapment of Mr. Fuchs and the use of illegally obtained evidence deprives him of any hope of a fair trial. The petition asserts that, if Georgia is able to retaliate against successful claimants by setting out to trap them in trumped-up bribery schemes, others will be afraid to challenge Georgia for fear of suffering the same consequences.

The entrapment and trial come as Georgia touts itself to international investors as the world's "Number One Reformer" and a safe haven for international investment.  In fact, property protections are weak in the face of a legal system where 99.9 percent of all criminal defendants are convicted when tried in Georgia, according to statistics and analysis by independent and respected anti-corruption watchdog Transparency International.

Mr. Fuchs, a prominent Israeli investor in major international projects, put funds into Georgia's energy infrastructure in the early 1990s. Those investments, it has been ruled, were unlawfully expropriated by the Georgian government in the mid-1990s.  On March 3, 2010, Mr. Fuchs and his business partner Yannis Kardassopoulos won a major case from the an arbitration panel appointed under the auspices of the World Bank, and are now due over $100 million from the government of Georgia.

After Georgia sought to annul the award, Georgian officials asked Mr. Fuchs to engage in in-person "settlement talks" for the supposed purpose of agreeing to discounted terms on which Georgia would drop the annulment proceedings and pay the award. The talks were a ruse arranged by Georgia for the sole purpose of secretly and illegally recording conversations with Mr. Fuchs, in which Georgian officials pressed Mr. Fuchs to pay back a portion of his funds to senior Georgian officials to speed the Georgian government's payment.

Georgian officials set-up and covertly recorded a meeting with Mr. Fuchs in Turkey, prepared a secret arrest warrant against Mr. Fuchs and his business partner, and invited him, members of his family, his lawyers, and business colleagues to travel to Batumi, Georgia on October 14 to sign settlement papers and speak to the press about investing in Georgia. Before any signing ceremony took place, Georgian authorities secretly taped Mr. Fuchs, seized him while his lawyers waited in another room, charged him on previously prepared charges of bribery, threw him in jail, and refused him bail. Immediately after his arrest, they communicated an offer to the Israeli ambassador that Mr. Fuchs would be freed from jail as soon as he agreed to give up his own rights -- and the rights of third parties not involved in the Georgian sting operation -- to the arbitration award.

Mr. Fuchs adamantly denies the charges, and his supporters characterize the case as classic Soviet-style abuse by law enforcement authorities in violation of international legal standards and Georgia's obligations under applicable European legal conventions.

Despite substantial multi-year assistance programs from the United States and the European Union to strengthen rule of law in the country, Georgia's human rights record remains weak. Last year, Freedom House found Georgia's judiciary "continues to suffer from significant corruption and pressure from the executive branch," and "the payment of bribes to judges is reportedly common." In its most recent report on human rights in Georgia, the U.S. Department of State found Georgia suffers from a wide range of abuses, including "politically motivated kidnappings and assaults, poor prison conditions, abuse of prisoners, including juveniles, arbitrary arrest and detention, politically motivated imprisonment, excessive use of force to disperse demonstrations, pressure that appeared politically motivated on owners of property, lack of due process, government pressure on the judiciary, and senior-level corruption in the government."

SOURCE Gornitzky & Co