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

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

TBILISI, Georgia, January 12, 2011 - 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."

Pinhas Rubin, rubin at gornitzky.co.il, +972-3-7109122, or Jack Smith, smith at gornitzky.co.il, +972-3-7109191, or Adrian McMenamin, Amcmenamin at apcoworldwide.com, +447920827490