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Non-executive president

In other instances, too, Barak served as a marketer or, more accurately, as mere decoration. In early 2004, the businessman Zvi Birnbaum acquired Satcom Systems, which provides communications services for satellites. Most of the company's revenues are generated by sales of communications services abroad, mainly in Africa. Birnbaum is a neighbor and friend of Zvi Lotenberg, who is married to Barak's daughter, Michal. Lotenberg, like Loni Raphaeli and Doron Cohen, is very much involved in Barak's business affairs, though according to a Barak confidant, "None of them really has the whole picture of Barak's business dealings - in business, as in politics, his policy is strict compartmentalization and secrecy."

Lotenberg was the mediator between Barak and his rich neighbor from Ra'anana. Birnbaum and Barak conducted lengthy negotiations, in which Barak was requested to use his connections to find investors who would buy a hefty portion of the company's shares. In return, Birnbaum was to give Barak a loan of $1 million to purchase a package of shares, whose value would increase substantially after the company went public.

At one point in the negotiations, another Barak confidant, Yoni Koren, tried to hook Barak up with the Israeli businessman Hezi Bezalel so the two of them could jointly purchase a large chunk of Satcom. Bezalel, as profiled by Guy Leshem in the financial magazine TheMarker, is a tycoon who turns over hundreds of millions of dollars in deals involving weapons, banking, metals and other commodities. His deals are with African countries, some of which have repressive regimes that are hostile to Israel. The idea was for Bezalel to use his connections with African rulers in order to drive up Satcom's sales volume, while Barak would accord the company an establishment aura. The intensive talks between the sides ultimately broke down.

In the middle of 2005, Satcom and Barak reached an agreement under which the former prime minister would serve as the company's president in a non-executive role. Barak, who was then beginning to prepare for the Labor Party primaries, made sure that the company's statement to the Stock Exchange contained a clause stating that there was nothing in the agreement to prevent Barak's return to politics. In return for the appointment, it was agreed that Barak would receive a monthly management fee and an option to purchase up to 5 percent of the capital of Gilat Satcom, the subsidiary.

A month later, the company raised $8 million on the stock exchange, and the parent company, controlled by Birnbaum, recorded a handsome profit of NIS 14 million. Exactly six months after the company went public, and after receiving NIS 900,000, Barak resigned as president of the firm. According to TheMarker, the investors in the flotation lost about 20 percent of their money in this period. By November 2006, the company's share value had shrunk by dozens of percent.

In mid-2006, Barak's employment as president of Gilat Satcom reached the court. Businessman Shaul Ashkenazi, Birnbaum's former partner, sued him for, among other reasons, the alleged transfer of illogical amounts of money to unknown persons within the framework of the company's stock flotation. "Whose idea was it to bring Barak into Gilat Satcom?" Birnbaum was asked in the trial, and replied, "Not mine ... the company's management or officials in it. They consulted with me, I thought it was a terrific idea ... But I was not part of those negotiations."

The matchmaker of the deal, Ziv Lotenberg, tried to play down the importance of his father-in-law Barak's activity in Satcom. "It was a kind of strategic advice," he told us, "like being a member of the board. It was not an operative act of day-to-day management, closing deals for contracts and all that kind of thing. Ehud is very careful not to do anything connected to Israel itself, so people will not say 'Ah, he was that, so he has all kinds of connections here and is exploiting them in Israel, and so forth.' It was more a form of advice - what countries to try, the directions, all kinds of problems in countries that might make it not a good idea to go in that direction."

How many hours did Barak devote to work in Satcom?

"I have no idea to tell you [sic]. That is very irrelevant, because it is not a matter of a quantity when you come and punch a clock. It's a matter of the quality of the recommendations, of the ideas."

He received nearly a million shekels for his work there.

"That was another of the things he did. If we were to say that Ehud bought Satcom and managed it, you would say 'The company is not succeeding today. Ehud is a failure.' But it was not an operative position, and the company is failing for a thousand and one reasons."

In the past few years, Barak also earned hundreds of thousands of shekels from his ties with the venture capital fund of Tamir Fishman & Co. In June 2004, Barak was appointed a member of the company's advisory board.

What does he do for Tamir Fishman?

Lotenberg: "Ehud is on the Tamir Fishman advisory board and helps them with thinking and advice, and that's all."

You say he is cautious about doing business in Israel, but all the names that have come up so far are of Israelis.

"I simply cannot give you the far more interesting names which are from abroad."

If he is so careful, maybe he should avoid completely working with Israeli business people, such as Birnbaum.

"But these are Israelis who operate abroad."

But they also operate in Israel. If he is now returning to political life, he may find himself in a conflict of interest with many business people.

"Absolutely not. Even before he returns to politics, I told you that he was careful not to do business in Israel, so people will not say he is exploiting his connections here. To work with Israeli companies is all right - companies that operate abroad. From the aspect of thinking and strategic advice, it is not significant that it is connected with Israel."

One of Barak's colleagues on the Tamir Fishman advisory board said this week, "These meetings are more public relations than substance. There is no responsibility toward the shareholders, and the creation of such a body is done for marketing purposes. In the meetings the talk was about general matters, macroeconomics, the Israeli economy, etc. Stories were told, and as in every social encounter, there were a few good things to eat. I saw Barak in two meetings all told, and he left after an hour due to other commitments."

The managers of Tamir Fishman declined to be interviewed for this article.

Barak also has ties with other Israeli companies. Lotenberg confirms that he also advises the Israeli construction firm Canada-Israel, which belongs to Asaf Tochmair. "I am a partner with Canada-Israel in several activities, and that is how the connection with Ehud came about," Lotenberg explains.

What does he do for them?

"It's mainly through me. Which countries to go into and do all kinds of things. I don't see anything concrete here - opening doors and things like that. In our activities we usually work with local partners. For example, we have now set up a partnership in Central America and are engaged in activities in Panama, the Dominican Republic and so forth."

So what does he actually do there?

"We buy land and develop it. Ehud engages in strategic advice for that kind of thing. Ehud does not invest money, does not manage, does not open doors for us. It's strategic consultation. He is at a higher level. He is not knowledgeable about the details, but one can consult with him at the global level - 'What do you think, is it smarter to go into Russia or Ukraine?'"

Serious, well-connected

According to Lotenberg, the bulk of Barak's activity takes place abroad, for a number of the world's largest hedge funds and investment firms, whose names he declined to reveal. "The big things are those that have to do with the international hedge funds," Lotenberg says. "Ehud made money, but not because of his name, opening doors and closing deals. The money he made is because of his intelligence and the strategic advice he gave. He did not deal in brokering, but in strategic advice. That takes the form of advice to international companies. These funds are the most serious people in the world."

Which fund, for example?

"In the contracts with the funds he works with he undertook not to give names. I am also involved in the contracts themselves. Take the 10 most important investment funds in the world. In that list there are several Ehud worked for closely, with the owners and managers."

But he himself never talks about his business affairs and never reacts to reports about them.

"Yes, true. Based on the concept that this is private. But it's not because there is some kind of hanky-panky here, or anything like that."

A few months after his election defeat, Barak joined the American investment fund SCP Partners. SCP, which is owned by a businessman named Winston Churchill, manages investments around the world, including Israel, with a total worth of more than $800 million. The company invests in a wide range of fields, including information and communications technology, the life sciences and financial services, as well as security spheres, military technologies and deployment for emergencies. Barak's photograph appears on the company's Website (www.scppartners.com) under the "team" rubric, as does the photo of another partner, Doron Cohen. "Mr. Barak is renowned as a leading expert on security matters. He is a frequent speaker in virtually all of the leading business and news forums," the Web site states.

Barak was introduced to Churchill by another of the major partners in the fund, Yaron Eitan, an Israeli who lives in the United States. In the 1990s, Eitan was the founder and CEO of Geotek Communications, which sought to adapt the missile communications technology developed by Rafael, the Israel Armament Development Authority, for civilian-commercial use. The company, which at its height was worth close to $1 billion, collapsed after a few years of activity.

Eitan relates that Barak continues to be active in SCP, "but on a far smaller scale. He is very serious and very well-connected. Over the years, in the projects we involved him in, he had a great deal of influence, both in his understanding of the material and his ability to evaluate our concept. For example, we were looking at a possible investment in South America and weren't sure about the risk profile, so you consult a person like that and he consults his contacts in that country, and you get a far more interesting and far more serious risk profile. That is a very large contribution to a fund like this, to decide whether or not to invest. He helped us both with his judgment and with his connections."

Barak can make a call anywhere in the world and the call will always be taken - is that the idea?

"That's right, but to his credit it has to be said that the man does not make a call if he doesn't understand the material and is not on top of it, and he is very careful not to abuse his connections. He does only what he believes he can do, after studying the matter."

Eitan declines to say anything about how Barak earns money from the fund: "He is a partner in a certain model. I prefer not to get into that."

In March 2004, The New York Times reported that an investigation was underway into the functioning of advisers to U.S. pension funds who are involved in the funds' investments in high-risk projects. According to the report, one of the decisions to be investigated was an investment of $125 million in SCP by the Pennsylvania teachers' pension fund. The report in The Times stated that Barak had persuaded the pension fund to invest in a fund in which he was a partner. Eitan told us that he does not remember the report, and that in any case "the subject does not exist, it's a non-issue. We have no such thing with any of our investors."

A paltry NIS 30 million

Another area in which Barak tried his luck was in mediating and recruiting investors. In a number of cases, Barak was approached by Israeli firms to locate investors for them in return for a handsome commission, generally around 5 percent of the investment. In 2004, Barak asked his confidant Alon Pinkas, then the Israeli consul-general in New York, to arrange a meeting with the New York City comptroller, Alan Hevesi. Hevesi, a Jew of Hungarian extraction, recently resigned his post as New York State comptroller under a cloud after it emerged that he had used state employees to chauffeur his wife. As New York City comptroller, Hevesi controlled many pensions, and Barak tried to get him, unsuccessfully, to invest in various funds with which he was connected.

In other cases, Barak asked his SCP partner Yitzhak Applebaum, who is involved with Lightspeed, another venture fund, which manages assets worth $2.3 billion, to organize a group of investors abroad who would come to Israel, listen to a long talk by Barak, and then take out their checkbooks. "I bring a great many delegations of big-time investors in the pensions field to Israel, and he always helps me when I bring them," Applebaum says. But a Barak confidant says, "It's hard to say that Barak was especially successful as a recruiter of investors. Recruiting investors is a profession."

A businessman who knows Barak well asked us this week not to be bowled over by the former prime minister's earnings. "All told, it's not some dizzying success. Barak, with the analytic and brilliant image, did not manage to get far above the door-opening role. Many projects he promoted got nowhere."

About two years ago businessman Nathan Hetz, a founder of the successful real estate firm Alony Hetz, decided to invest in India. When Hetz told an acquaintance about his plans, Barak came to him with a tempting offer. Hetz: "Ehud said, 'If you need any help there, let me know - I'll know how to set you up.'"

To open doors?

"Yes, if needed. So far I haven't picked up that gauntlet."

Was it on a volunteer basis?

"I imagine that if anything came of it he wouldn't do it on a volunteer basis. In business, no one asks for any favors, but it hasn't come to that."

Barak also tried his luck with diamond tycoon Benny Steinmetz, who is a good friend of Prime Minister Ehud Olmert. In the past few years, Barak has accompanied Steinmetz to various locales, including Eastern Europe, in order to check out possible cooperative ventures in real estate and other areas. Says a friend of Steinmetz: "When you hook up with Ehud Barak, you are convinced that he is at least a Bill Clinton when it comes to opening doors. You say, 'If I adorn myself with his feathers, all the doors will be open to me.' Steinmetz understood that doors are opened without Barak, too."

On another occasion, Barak tried to connect with one of his neighbors in Alrov Towers, Yosef Grunfeld. Grunfeld, an ultra-Orthodox Jew who is board chairman of Kardan Israel, an investment company, was indicted two years ago on insider trading charges and four counts of fraudulently influencing the company's shares. His trial is still under way. Barak's attempt to establish a joint company with Grunfeld was also unsuccessful. Another fund, which Barak tried to set up with real estate tycoon Shmuel Attia, also got nowhere.

Cigar smokers' fraternity

His forays into the business world altered Barak's consciousness very quickly. For example, the former kibbutznik formed close social relations with Alfred Akirov, who is another good friend of Ehud Olmert. In the past two years, Akirov has invited a small group of businessmen and top lawyers to a pampered weekend at the David Citadel Hotel in Jerusalem, which he owns. Some of the invitees take full advantage of the offer and get to sleep in an elegant suite at Akirov's expense, while others come for a few hours, to have lunch or dinner with the prestigious clique.

Last year, shortly after the end of the Second Lebanon War, Ehud Barak was one of Akirov's guests at this gathering. In the hotel, which is down the road from the Old City, and with singer Einat Sarouf warbling in the background, Barak mingled with the other guests: Galia Maor from Bank Leumi, Attorney Eli Zohar and his wife, attorney Ram Caspi and his wife, Prof. Boleslaw Goldman, former director of Sheba Medical Center, ad man Reuven Adler, Benny Steinmetz, businessmen Dan Propper and Sami Ofer, Tel Aviv University President Itamar Rabinovich, members of the family of South African businessman Frank Lowy and others.

On Friday afternoons, Barak is a regular at Raphael Restau-Bistro in Tel Aviv for a "parliament" which is attended by, among others, businessmen Muzi Wertheim and Sami Ofer and media stalwarts Rafi Ginat and Shalom Kital. Not only Barak's social group changed; so did his lifestyle. A person who has accompanied Barak since his army days remembers the youthful excitement that seized Barak when, as interior and foreign minister in the government of Shimon Peres, he stayed in luxury suites around the world for the first time. Today, first class, luxury suites and designer clothes are part of his routine fare. He goes on skiing vacations with Steinmetz, attends cocktail parties at Yossi Maiman's home, and often flies to Honolulu. In his office there is a device that maintains the temperature of the cigars he occasionally lights up. If he joins the Olmert government, the two of them will have at least one subject of conversation in common.

Barak's friends agree about the change that his partner, Nili Priel, brought into his life. "She rounds him out," attorney Ram Caspi said this week. Another friend added, "There is no doubt that she made him a far more human and sensitive figure." The two bought the luxury apartment they live in together. The 350-square-meter residence was purchased for NIS 11 million at the end of 2003, and Priel and Barak split the cost 50-50. He meets some of the wealthy people he wants to cooperate with in the towers' gym.

"Barak explained to me that he earned money so that he and his children would be secure until the end of his life," one of his confidants said. "He emphasized that he did not make the kind of money that would enable him to buy a Greek island or the biggest and best-equipped yacht in the world." Another friend of Barak, former deputy defense minister Weizmann Shiri, said this week, "I prefer a prime minister who does not come to the post hungry, but has economic security and knows that no one will be able to tempt him with all kinds of benefits."

Omer Novinski assisted in the preparation of this article.