Netanyahu Failed to Reveal Full List of Conflict of Interest and Hid Ties With Moguls

Netanyahu filed false conflict of interest declarations with the State Comptroller regarding his connections to Arnon Milchan and Shaul Elovitch; PM: 'Another attempt to create a storm out of nothing'

Shaul Elovitch (L), Prime Minister Benjamin Netanyahu (C), Arnon Milchan
Shaul Elovitch (L), Prime Minister Benjamin Netanyahu (C), Arnon Milchan David Bachar, Lior Mizrahi (BauBau), Moti Kimchi

A few new pieces of the puzzle concerning Prime Minister Benjamin Netanyahu’s connections to the owner of the Bezeq telecom monopoly, Shaul Elovitch, fell into place on Wednesday when State Comptroller Joseph Shapira released a special report on the matter.

The report, along with previous media reports, paints a picture in which Netanyahu and Elovitch were old friends; and Netanyahu, who was also Communications Minister, still involved himself, directly and indirectly, in a long list of matters concerning Bezeq. At the same time, Netanyahu benefitted from positive media coverage from the Walla website, which was also owned by Elovitch, as was first exposed in Haaretz.

After the exposé was published, Netanyahu was prohibited from handling matters concerning Bezeq, but he left a person very close to him in the post of director general of the Communications ministry: Shlomo Filber. Filber continued to act in ways that promoted Bezeq’s interests, so much so that Shapira feared Filber had been coopted by the telecom firm – and it was the public who was harmed by this arrangement of conflicts of interest.

In laying out the long list of governmental benefits provided to Bezeq, Shapira added another important piece to the puzzle. If we dive deep down into the details and follow the clues Shapira left in toward the end of his report, we discover another piece that could entangle Netanyahu in another criminal affair based on what may possibly be false declarations he made to the State Comptroller.

It seems Attorney General Avichai Mendelblit will have little choice but to look into the matter.

Starting from the beginning  

The latest story begins back in May 2015. Just before Netanyahu formed his new government, his fourth, Shapira asked him and his new ministers to fill out a questionnaire designed to reveal any possible conflicts of interest. The forms were given to Shapira and the attorney general. This was the time for Netanyahu and all cabinet ministers to provide detailed information on those parties who could have an influence on them in their new posts. Netanyahu was prime minister, but he also held a number of other cabinet portfolios, including the Communications Ministry, and he was required to fill out the conflict of interest forms for this position too.

According to Shapira’s report, it now seems that the information requested from Netanyahu on the matter did not end with just the general questionnaire.

Two weeks after the initial request in May 2015, Shapira once again contacted Netanyahu and informed him he had received information that the Shimron, Molho & Persky law firm represented major media groups. Two partners in the law firm were very close to Netanyahu: David Shimron is his family lawyer, cousin and confidant, and Isaac Molho is his personal representative for all sorts of sensitive diplomatic missions. Shapira feared that in such a situation, Netanyahu as the communication minister could find himself at the center of conflicts of interest.

Shapira asked for Netanyahu’s comments on the matter, and at the same time asked him to provide details, as legally required, to list other connections that could be relevant to the post of Communications Minister. In November 2015, six months after Shapira’s request, Netanyahu sent him the conflict of interest questionnaire – and it contained only a potential conflict: the Shimron, Molho & Persky law firm.

Shlomo Filber.
Emil Salman

“Except for the details I provided on this questionnaire, I do not know of any matter that could cause me to be in a situation of suspicions of conflict of interests in my position,” wrote Netanyahu in the signed declaration. In other words, when asked by Sahpira if he had any dealings with friends that could lead to a conflict of interest, Netanyahu said he no such conflicts.

Now, based on the events of the past few months, it seems likely that Netanyahu may have kept important information from Shapira, and the declaration he signed may not have reflected the whole truth.

Netanyahu forgot to note his friendship with one of the most important and powerful actors in the Israeli communications industry: Elovitch. After the Haaretz exposé was published, the attorney general became involved and asked Netanyahu for clarifications on his relationship with Elovitch. In response, Netanyahu wrote: “The Prime Minister has a friendly relationship with Mr. Elovitch. For 20 years they have conducted a friendship between them.” After this response, it was decided Netanyahu would no longer deal with matters related to Bezeq.

Don’t forget Milchan

But Elovitch is not the only friend Netanyahu forgot to mention. Today we know that when Netanyahu signed his declaration for Shapira, he viewed Arnon Milchan, a major shareholder in Channel 10, as one of his close friends. The fate of the ailing broadcaster was directly dependent on regulatory decisions made by the Communications Ministry, then under Netanyahu. This includes items such as the explosive issue on the agenda today: Splitting Chanel 2 into two separate broadcasters and its implications for Channel 10. In addition, according to the evidence gathered by police investigators from the national fraud squad, Netanyahu and his wife Sara received regular gifts of jewelry and supplies of expensive cigars and Champagne from Milchan, a clear conflict of interest.

It is too early to say what the legal implications of this affair are for Netanyahu, but here is one story that could shed some appropriate light on the matter: Over a decade ago, then-Industry and Trade Minister Ehud Olmert appointed Aharon Domb as head of Israel's Investment Center. Two months earlier, Domb had been questioned by police and was read his rights as a suspect in obstruction of justice, a case that was closed in the end.

Just before the appointment was made, Domb submitted to the Civil Service Commission’s appointments committee the standard “candidate’s questionnaire,” required of every candidate for a senior government position. On the form, each candidate was asked whether he was questioned “under caution,” or as a suspect in a crime, by the police in an investigation that was not yet completed, and if so, to provide details. Domb left this item blank. As a result, the State Prosecutor’s office indicted him for fraud, among other crimes. He did not receive the desired job and he was convicted after signing a plea bargain agreement.

The form Domb signed included an explicit warning stating that leaving out relevant information was a violation of the Civil Service Law, but the main crime he was convicted of was fraud. In light of such cases, it is hard to understand how someone so cautious and experienced as Netanyahu could have fallen into such a tap that could have been avoided so easily.

Regulatory capture

For now, the State Comptroller’s report provides public disclosure of the special relationship between Elovitch and Netanyahu. According to the report, Netanyahu handled 12 matters concerning Bezeq, both directly and indirectly, including the sale of the Yes satellite broadcaster to Bezeq, which today is at the heart of a criminal investigation by the Israel Securities Authority against Elovitch and other senior Bezeq and Yes executives.

Most of the report concerns the relations between the Communications Ministry and Bezeq during the period when Netanyahu was no longer allowed to handle affairs related to Bezeq. This is why Filber is the true star of the state comptroller’s report. He is not just a close confidant of Netanyahu; he was a key figure in the Likud campaign during the last Knesset election, before being appointed director general of the Communications Ministry.

Filber appears on almost every page of the report as someone who looked after Bezeq’s interests, even when it came at the public’s expense. In the report, the State Comptroller’s Office expressed its concern that this was a case of “regulatory capture” in which “the regulator is inclined toward the interests of the regulated body at the expense of the interest of the wider public.” 

The Comptroller’s Office has no evidence whatsoever that matters concerning Bezeq arose in the meetings and conversations between Netanyahu and Filber after the conflict of interest agreement removing the prime minister from the picture.  But the report states: “When the appointment [of Filber] has a significant component of a very high level of trust, the question arises as to whether the nature of such a relationship could bring about that the party appointed will carry out the policy of the minister in the way he assumes it should be.” Without saying it explicitly, the authors of the report hint that Netanyahu’s conflict of interest agreement is just a trick.  

Walla for Netanyahu

Shapira relies on the exposé published in Haaretz in October 2015 on the triangle between Netanyahu, Elovitch and Bezeq – and the Walla website. Haaretz showed how Walla News allegedly mortgaged its journalistic integrity in favor of the financial interests of the website’s owners.

The exposé showed how Walla worked to protect Netanyahu and in particular, his wife Sara; how editors were pressured to put up favorable items about Sara Netanyahu, some of which was written originally by the Prime Minister's Office; how it censored items that could have damaged their image; and how they were occasionally asked to publish items against the Netanyahus’ political rivals.

Those behind this support for Netanyahu were Walla’s senior executives, who more than once told the publication's journalists that they were only implementing the policy of their boss, Elovitch, and that a link existed between the coverage given to the Netanyahus and regulatory decisions affecting Bezeq.  

Things seems to have changed at Walla in recent months, after reports of the criminal investigation concerning Netanyahu and the publisher of Yedioth Aharonoth, Arnon Mozes, became public. The affair is being investigated as a possible case of bribery in which Netanyahu made promises to Mozes in return for positive coverage in his newspaper and website. As a result, the censorship and support for Netanyahu at Walla seem to have faded.  

Netanyahu responded to the report, saying: "This is another attempt to create a storm out of nothing against the prime minister. The prime minister doesn't hide anything. His ties with Mlichan are known to everyone. Regarding Elovitch, they had friendly ties but nothing beyond that, but when the issues was raised by the attorney general, the prime minister acted according to the guidelines and instructions he was given. Any decisions he made regarding the media market, and even before that, were taken in wake of professional opinions he was given and with the general public best interests at heart.