The Surprise Ending to the Rony Fuchs Affair

In October 2010, oil trader Rony Fuchs traveled to the Black Sea resort of Batumi at the official invitation of the Georgian government. The Israeli financier thought the visit would result in the settlement of a $100 million commercial battle he had been waging with the former Soviet republic for almost 15 years. That dispute is now resolved, but not the way that Fuchs had hoped.

Rather than negotiate a compromise in the ordinary fashion, the Georgians threw Fuchs and an Israeli colleague, Zeev Frenkiel, into prison, accusing them of attempting to bribe Georgian officials during an earlier meeting in a luxury hotel room in Istanbul. Georgian agents had secretly videotaped the booze-soaked gathering, during which Fuchs agreed to return $7 million to the officials in an under-the-table side payment. Fuchs and Frenkiel claimed they were entrapped in a scheme by the Georgians to escape or reduce the country’s debt to Fuchs related to the canceling of oil pipeline interests he had acquired in Georgia in the early 1990s (“Trapped,” Bloomberg Businessweek, Feb. 28-Mar. 6).