The failed appeal of two Israeli entrepreneurs in a high-profile bribery case is raising questions about fairness in Georgia’s judicial system, as well as the confidence of foreign investors.
Ron Fuchs and Ze’ev Frenkiel were arrested in 2010 on charges of attempting to bribe Deputy Finance Minister Avtandil Kharaidze. Their purported motivation for offering the bribe was to get the government to pay out a $98 million international arbitration award to Fuchs and a Greek partner, Ioannis Kardassopoulos, made to them by the World Bank’s Washington, DC-based International Centre for Settlement of Investment Disputes (ICSID).
Some critics, however, contend that the Georgian government set up Fuchs and Frenkiel on the bribery charge in order to avoid paying the $98 million arbitration judgment -- a sum that amounts to roughly 28 percent of Georgia’s budgeted expenditures for 2011.
Fuchs and Frenkiel are serving seven and six-and- a-half year prison sentences, respectively. Meanwhile, Tbilisi, is appealing the ICSID judgment, which awarded the money to Fuchs and Kardassopoulos after a 14-year dispute over usage of an oil pipe on which they held a lease.
On July 26, the Tbilisi Court of Appeals denied the pair’s appeal. The defense will next petition Georgia’s Supreme Court to vacate the appeals court decision. Government officials insist the bribery case has no direct connection to the arbitration award.
Deputy General Prosecutor Davit Sakvarelidze, in an email interview with EurasiaNet.org, cited the bribery case as evidence that justice was blind in Georgia. The convictions of Fuchs and Frenkiel showed that “the anti-corruption and criminal justice reform process has gone very successfully in Georgia,” Sakvarelidze maintained.
“No matter who commits a crime … [they] will be treated adequately by our law,” the deputy prosecutor general also contended.
The defense team never held out much hope that the appeal would succeed. Convictions are almost never overturned during the appeals process in Georgia. For example, out of the 1,646 cases handled in 2010, the Tbilisi Court of Appeals overturned only two convictions. “The statistics show that almost in every single case, the judges decide in favor of the prosecution office,” said Tamar Chugoshvili, executive director of the Georgian Young Lawyers Association.
It’s Chugoshvili’s belief that a self-preservation instinct prompts many judges to issue rulings that conform to prosecutors’ wishes. Judges, Chugoshvili added, do not want to attract the attention of Georgia’s High Council of Justice, a body responsible for the hiring, disciplining and firing of members of the bench. The 13-member High Council comprises appointees selected by the president, parliament and the Georgian Judiciary Conference.
Chugoshvili alleged that High Council members routinely meet with judges about ongoing cases and send “signals” on how they should rule. Representatives of the High Council of Justice did not respond to EurasiaNet.org’s requests for an interview.
Zaza Bibiliashvili, a board member of the Georgian Bar Association, suggested that psychological factors also may prompt judges to go along with the desires of prosecutors. He stressed, however, that the problems with Georgia’s judicial system are too complex to pinpoint any single reason for the appeals trend.
“I have known cases where the judges were simply not mature enough professionally to say, ‘Well, this is how the case should be decided on merits,’ and have instead acted in a way they perceived was expected from them,” Bibiliashvili said.
Sakvarelidze, the deputy prosecutor general, said strong evidence, not any pro-prosecutorial bias, was responsible for the convictions of Fuchs and Frenkiel being upheld. “[T]his is one of the strongest cases for the prosecution standpoint and the court decision was logical,” he insisted.
Bibiliashvili, an investment lawyer and founding partner of BGI Advisory Services Georgia, said investor confidence in Georgia hadn’t shown signs of being dented by the state’s case against Fuchs and Frenkiel. Investors know “there are too many specific commercial and political issues involved,” he said.
Investors believe that “Georgian courts are, by and large, competent,” he added. “[B]ut they also know that if there is a state interest involved, even indirectly, that the chances for success are low.”
“[U]nless you address that last element, one cannot say that we have an independent judiciary,” Bibiliashvili said.
Molly Corso is a freelance reporter based in Tbilisi.