(Reuters) - Iran is expected on Wednesday to free two American men convicted of espionage on bail and turn them over to the Swiss embassy in Tehran, their lawyer told Reuters.
Soon afterward, a convoy of Swiss embassy cars entered Iran's Evin prison where Josh Fattal and Shane Bauer were being held, a Reuters journalist reported, signaling that their release was imminent.
"I have got necessary signatures from judiciary officials for their release on bail ... Hopefully the two will be freed today," their lawyer Masoud Shafie said.
Bauer and Fattal were arrested in mid-2009 along Iran's border with Iraq where they said they were hiking. They were found guilty of illegal entry and espionage and were sentenced last month to eight years in prison.
Iran's judiciary, which had said last week that their release was under review, has now confirmed that the pair will be freed on bail, Iranian state television reported.
"Until the final verdict is issued by the appeals court regarding the two American citizens' eight-year jail terms (each) ... they will be released on $500,000 bail each," it quoted the judiciary as saying.
The semi-official Fars news agency quoted the lawyer as saying that the two would be handed over at 1030 GMT to the Swiss embassy, which has represented U.S. interests in Iran since Washington cut off diplomatic relations with Tehran shortly after its 1979 Islamic Revolution.
Ahead of his annual trip to the United Nations, Iranian President Mahmoud Ahmadinejad told U.S. media last week that Bauer and Fattal would be freed "in a couple of days" as a humanitarian gesture.
But the Iranian judiciary, controlled by conservative hardliners at odds with Ahmadinejad, immediately rejected a swift release on bail and said that the president lacked the authority to free the men.
Shafie said last week the men would be freed on $500,000 bail each. A third American, Sarah Shourd, was arrested with the men but allowed to go home on $500,000 bail in September 2010.
"There were some problems regarding depositing the bail ... We are trying to resolve it with the bank ... It will be resolved," the lawyer said.
The release was delayed twice, according to the lawyer, because a judge whose signature was required on the bail paperwork was away on vacation.
Analysts said Ahmadinejad's announcement was an attempt to improve his international standing ahead of the U.N. General Assembly meeting that starts on Wednesday.
Iraqi President Jalal Talabani helped to mediate the pending release of Fattal and Bauer, according to Iraqi officials.
The U.S. government denies that the three Americans were spies and their supporters complain that no evidence against them has been made public. Their trial was held behind closed doors.
(Additional reporting by Ramin Mostafavi, Hossein Jaseb and Sanam Shantyaei; Writing by Parisa Hafezi; Editing by Mark Heinrich)