As the leaders prepared to leave, the microphone caught Mr Putin saying "greetings to your president".
The microphone then went dead, but journalist Andrei Kolesnikov told the BBC he heard the rest of the comment.
He said the president continued: "What a mighty man he turns out to be! He raped 10 women—I would never have expected this from him. He surprised us all—we all envy him!"
The lucky object of envy, of course, is Israeli Prez Moshe Katsav. A pal of Putin's explains away the whole misunderstanding:
A Kremlin spokesman admitted Mr Putin made a joke, but said it was not meant to be overheard.