TBILISI, DFWatch – Georgia has concluded an advantageous deal with two Israeli businessmen. Simultaneously president Saakashvili pardons Roni Fuchs and Zeev Frenkel, claiming there is no connection with the deal.

Following the deal, Georgia will pay only 1/3 of an old claim dating back to the 1990s, thus sparing the state of a 70 million US dollar loss.

President Mikheil Saakashvili’s press spokesperson Manana Manjgaladze denies that there is a connection between the pardon and the end of arbitration.

According to Manjdaladze, the president made the decision to pardon the Israeli businessmen on the basis of a request from the Israeli government and personally from Israel’s president, in addition to humanitarian reasons.

“This decision was also from a humanitarian point of view, considering the age of the arrested, and what their health condition is,” Manjgaladze announced at a press conference December 2.

Fuchs and Frenkel were arrested in October 2010 on charges of having offered a bribe to the Georgian Deputy Finance Minister. The court sentenced Fuchs to six and a half years and to Frenkel seven years in jail.

According to the Georgian government, the two offered a bribe for  Georgia not to pursue a case against their company at the International Court of Arbitration.

The Georgian government and Tramex International signed agreement in the 1990s, which Georgia has been disputing for years.

According to the Georgian Ministry of Justice, the dispute was about the decision made by Georgia on March 3, 1992, to hand over control over state company Saknavtobi to Tramex International Inc. Ronnie Fux and Jonas Kardasopulos, an agreement now considered illegal by Georgia.

The agreement gave Tramex International exclusive rights to the gas and oil infrastructure in the country.

According to a statement from the Ministry of Justice, the agreement also gave the same company a 30-year exclusive right to any pipeline constructed in the future on the territory of Georgia.

In exchange for this contract, the company did not pay a single tetri [Georgian fractional currency, 100 tetri = 1 lari]. The statement further says that even minor contract obligations were not fulfilled.

When the Georgian Gas and Oil International Corporation was set up in 1996, exclusive rights to control over Georgian oil and gas infrastructure was given to this company. After this, representatives of Tramex International began challenging the legality of the contract they had signed, both in Georgian courts as well as at the International Court of Arbitration.

Following a decision of the latter, Georgia was charged to pay 98 million US dollars in to Tramex International shareholders Ronni Fuchs and Jonas Kardasopolus. Including interest rate the amount reached 110 million US dollars.

Georgia’s government decided to appeal the court’s decision and simultaneously, Ronni Fuchs and Zeev Frenkel were arrested, officially because they had offered a bribe to the then Deputy Finance Minister in return for Georgia not going ahead with the appeal.

After arresting them Georgia appealed the Court of Arbitration’s decision and according to the Ministry of Justice, the Georgian government finally completed the several yyears of arbitration with Tramex International on November 29, 2011, following long and intense negotiations.

“The Georgian government has done everything to avoid the country being subjected to heavy sanctions as a result of illegal actions by a previous government and the corruption existing in the country in those times. With this aim the Georgian government has conducted negotiations with highly qualified and experienced international companies and an agreement has been achieved, as a result of which the several years’ dispute is over,” an official statement from the Ministry of Justice says.