Visitors arriving at the parking lot of Kibbutz Neve Yam, one of the poorest in Israel, are immediately struck by a bewildering sight: dilapidated homes, scattered amid uncultivated lawns and neglected trails, are sited next to a Porsche, BMW and Mercedes in the parking lot itself. The cars do not belong to the debt-ridden kibbutzniks at this coastal settlement near Atlit, south of Haifa. They belong to some of Israel’s most affluent people, in particular those close to former Bank Hapoalim chairman Danny Dankner − one of the most powerful men in the country until 2009, but now facing charges in two serious corruption cases.
Set your minds at ease: these high rollers do not live in the shabby homes. But the list of those who have rented wooden suites in the seaside resort includes the former CEO of Poalim Capital Markets, Nir Bronstein; the chairwoman and CEO of Arison Investments, Efrat Peled; and attorney Esther Barak Landes − the daughter of retired Supreme Court President Aharon Barak − and her husband, film producer Ram Landes. Another regular guest at the resort village is Yoram Turbowicz, who was Prime Minister Ehud Olmert’s chief of staff and formerly chairman of tycoon Yitzhak Tshuva’s Delek Group. (Turbowicz was also a candidate to replace Dankner as Bank Hapoalim chairman.) As for Olmert, it is not irrelevant to recall that in 2003, in his capacity as industry, trade and labor minister, he approved an agreement allowing construction on the lands of the Israel Salt Company in Atlit and Eilat (then owned by the Dankner family). Turbowicz, Danny Dankner and their families often get together in Dankner’s home by the sea at Neve Yam.
According to Kibbutz Neve Yam members, since Dankner moved into the kibbutz a few years ago − in a home 30 meters from the waterline − the most attractive beach in the Carmel range has become a hangout for affluent society. For example, in October 2011 guests included Moshe Karadi, former police commissioner and now chairman of Tshuva’s Delek Infrastructure; Maj. Gen. Haggai Dotan, commander of the Police Coastal District; Hadera Mayor Haim Avitan; Haifa District Court Judge Diana Sela; Yaakov Borovsky, retired police commander and former senior official in the State Comptroller’s Office; and Yaakov Ganot, former director general of the Public Security Ministry and current director of the Israel Airports Authority. They were all there to celebrate the 60th birthday of Iki Tzur. A former senior police officer and presently director general of the Hadera municipality, Tzur is also a longtime client of the resort village and a close friend of Danny Dankner.
Tzur, who was Bank Hapoalim’s head of logistics under Dankner, left the post under a cloud. An internal bank report found he had exceeded his authority by approving large deviations from the budgets of construction projects for the bank. Tzur told Haaretz he was not required to respond to the bank report, which, he claims, distorted facts.
The five percent solution
The saga of Danny Dankner, 52, and Neve Yam began in 2007. While he controlled the largest credit source in Israel as chairman of Bank Hapoalim, Dankner decided to buy a 50 percent share in the resort village from an Atilt businessman named Rafi Amit (the remaining 50 percent was held by the kibbutz). Dankner bought Amit’s share in equal partnership with his good friend − and now close neighbor at Neve Yam − David Karpis, 59. The two paid $1 million for half ownership of the resort.
They proceeded to transform the village into a highly profitable business. Instead of short-term rentals, they offered the wooden beach houses for a year, charging $12,000 rent. They estimate their annual profit from the village at NIS 500,000. Karpis started out as a garbage-disposal contractor in Tirat Carmel, a Haifa suburb. Two years ago he sold his company, by then a large nationwide concern, to the French conglomerate Veolia. In recent years Karpis entered the real-estate business. He built residential neighborhoods in Atlit on land he bought from Dankner. A new neighborhood, Atlit Hayeruka, will soon be built on a 30 dunam (7.5 acre) site Karpis acquired from Africa Israel Investments.
However, the story of the Neve Yam resort village is only the tip of the iceberg. An investigation by Haaretz reveals how the partnership agreement between the kibbutz and Dankner and Karpis to operate a small resort − without the title to the land being transferred to the new partners − evolved into a luxury project worth tens of millions of shekels. It will also turn the lovely Hof Hacarmel shoreline into a community and holiday site for the ultra-rich. The investigation also raises questions over why so many kibbutz members told Haaretz they were fearful for their economic future if they did not agree to the new real-estate venture.
The pastoral kibbutz, which is within walking distance of Atlit, was founded in 1939 as a fishing village. It was part of the “tower and stockade” project to create Jewish settlements, and established by new immigrants from Poland and Lithuania (from the Gordonia youth movement). The site was isolated amid marshland and harsh terrain. Economically, the high point for the kibbutz was its conserves company, Nun, which was sold at the end of the 1970s to the giant Koor concern and shut down two decades later.
At the beginning of the 1990s, the kibbutz − in partnership with Amit’s Batei Haemek company − decided to build a holiday village on the shoreline, even though the area was zoned for residential purposes. The Israel Lands Administration subsequently sued the kibbutz for illegal use of the land. In 2000 the court approved a compromise: the illegal usage had to be halted by the end of 2012, and the partnership dissolved.
The contract between the kibbutz and Amit stipulates that their partnership will be of 50 years’ duration, with an extension option. It states, “The kibbutz will make available to the partnership, without remuneration, the site of the resort village for the entire period of the partnership’s existence. However, the kibbutz will retain ‘ownership’ of the land, and lest any doubt arise, it is hereby made clear that the land is not part of the partnership’s assets.”
The agreement emphasized what was self-evident: in any case, the land belongs to the ILA. But 20 years later that clause would be forgotten. Another clause in the agreement, which Dankner is prima facie making use of today, grants Batei Haemek right of refusal in regard to resorts or tourist projects the kibbutz might wish to establish.
In 1999, seven years after the agreement was signed, the kibbutz asked Haifa District Court (with no connection to the ILA suit against the building of the resort) to annul the agreement, claiming it had exploited the kibbutz’s naivete and ignorance. But instead of the partnership being dissolved, an agreement was signed that deepened the parties’ mutual dependence.
It was stipulated that the kibbutz would work to promote a real estate project from which both partners would benefit. Under the terms of the agreement, “Neve Yam will work to draw up a statutory construction plan which will permit the construction of residential units (and construction for tourism and holidaying, if this will be needed for implementation of the residential construction project), as far as possible on the entire area of Kibbutz Neve Yam, and will work to obtain approval for the plan and its implementation, on an economic basis.”
Under the agreement, the kibbutz would also update Batei Haemek about new developments and consult with “an open heart and willing soul” on the project. In addition, Batei Haemek was to make available a loan of $200,000 to design the residential real-estate project. According to the agreement, the kibbutz would receive 95 percent of the profits and Batei Haemek 5 percent. Even though the legality of an agreement that transferred profits from the sale of units built on kibbutz land − which actually belongs to ILA − to private owners was not clear, it was validated by Haifa District Court.
“There were a few restrictive clauses in the original agreement about which the kibbutz members were unaware,” says a source involved in the signing of the agreement. “For example, they [Batei Haemek] had first refusal on every future transaction here. That is why they were taken to court at a certain stage. The agreement that was approved by the court states that in real-estate transactions at the kibbutz, [Batei Haemek] will receive 5 percent of the proceeds. At the time, the kibbutz committee was told this referred to five cottages. I asked what it meant and was told, ‘Either they will get money or they will get five buildings.’ At the time it was said that they had invested in buildings, so it didn’t sound
In response, the current owners of Batei Haemek deny the “five buildings” interpretation and maintained that the reference was to real estate worth millions of shekels.
Even in its glory days, Neve Yam was never an economic success story.
At present, virtually the kibbutz’s entire revenue comes from a small poultry operation. The communal dining hall and the general goods store were shut down, and most of the kibbutz enterprises were transferred elsewhere. They formed a business partnership with a company owned by Carmel Sela, the head of Hof Hacarmel Regional Council, to farm their banana grove. The resort was operated by Batei Haemek, and the restaurant and banquet hall are also under private management. Even the cemetery, which was established so kibbutz members could receive a secular burial, became a profitable enterprise when 400 plots were sold at tens of thousands of shekels each.
Neve Yam, which has been managed for the past 20 years by an appointed committee, was close to dissolution. What saved it was the idea of taking in 24 evacuated families from the Gaza Strip settlement of Eli Sinai as part of the 2005 disengagement plan. Taking in the evacuees was a significant catalyst for pushing a new kibbutz building plan through bureaucratic red tape. It proved a lifeline, as the kibbutz was losing members and suffering from severe financial distress. The new plan, which is intended to triple the number of housing units to 350, was approved two years ago by the Interior Ministry and the ILA, in just five years − considered very fast work. The new plan also permitted two hotels to be built on the seafront, in the southern and northern sections of the kibbutz.
It was in the course of getting the new plan approved that, in 2010, the ILA reached a compromise with the kibbutz, by which the illegal use of the land − for the village resort, cemetery and restaurant − would cease by the end of 2012. The adjacent homes of Dankner and Karpis would also be demolished. The restaurant owners refused to accept their fate and the kibbutz went to court to demand the building’s evacuation and demolition. In the case of the resort village, the kibbutz opted to negotiate.
At the end of November 2012, the members of Kibbutz Neve Yam received an eight-page letter inviting them to a fateful meeting for the future of the kibbutz. The agenda: “Discussion and a decision concerning the evacuation of the resort village from the area of the kibbutz which is designated for residential use.” In practice, it was to discuss how much the kibbutz would have to pay Dankner and Karpis to evacuate the resort. The remuneration would supposedly represent the 5 percent they had been promised in the historic contract in the event of a real-estate deal involving the construction of residential units.
In the letter, Danny Ivri − the chairman of the appointed committee − set forth the developments that had led him to devise the formula he was proposing. Ivri noted that Dankner and Karpis claimed the kibbutz owed them NIS 3.6 million, resulting from an owners’ loan which had swelled, and that the original agreement stipulated that they have the right to operate at the site for another 30 years.
After negotiations lasting three years, according to Ivri it was agreed that in return for forgoing the kibbutz’s debt (which, according to kibbutz documents, was actually NIS 1.5 million) and for dismantling the resort, Dankner and Karpis would be granted the right to refer candidates for 22 lots (out of 200 lots on which the residential units would be built under the new plan) and would purchase 74 percent of the new hotel to be built on the shore in the southern part of the kibbutz for NIS 1.4 million.
The odd wording of the agreement being submitted for the approval of the kibbutz general assembly raises an intriguing question: Since when can a private company decide on the candidates for kibbutz membership, and also receive revenues from the lots on which they will live?
Even though the compromise agreement with the kibbutz stipulates that “the absorption [of the new residents] will be carried out according to the regular conditions set forth in the absorption agreement,” this case seems to present a situation which deviates from the absorption process in other kibbutzim. “Their right is worth a lot of money. We are not stupid,” a kibbutz member said in the general assembly. When Rivka Ohana, a member of the committee managing the kibbutz (and Hof Hacarmel councillor), was asked by a kibbutz member why Dankner and Karpis were being granted the right to recommend candidates for 22 lots in the most attractive places in the kibbutz, she replied, “Because that’s where they can make money from building.”
In their responses to Haaretz, both the kibbutz and the developers emphasized that the process of taking in the candidates would be identical to that of regular circumstances, “without any difference between kibbutz members who will establish their permanent home on the lots now existing in the kibbutz, and those who will establish their permanent home on lots now held by the partners in the resort village,” as stated by the kibbutz. Karpis says he intends to live there, that the lots will be transferred to his children and he has no intention of recommending others. He notes that he asked the kibbutz what would happen if his family was not accepted by the admissions committee and was assured that this would not happen.
In his letter, Ivri explained that the assembly would have the option of launching legal procedures against Dankner and Karpis. However, he warned that taking that route would mean a delay in the kibbutz’s development. “In regard to the alternative, by which legal procedures will be set in motion to evacuate the resort village,” he wrote, “it is necessary to take into account the duration of the expected legal procedures; the cost of said procedures and the kibbutz’s resources for funding them; the implications of these procedures for upholding the kibbutz’s obligations under the compromise agreement with the ILA; and the implications for delaying the development of the kibbutz and for all the absorption procedures that have taken place and are expected to take place in the kibbutz.” Ivri was referring to the 24 evacuated families who are supposed to receive permanent housing in the kibbutz and are currently living in large trailer homes on the kibbutz or in communities in Israel’s south.
In a letter to Nimrod Tepper, the kibbutz’s lawyer, Batei Haemek’s lawyer, Ariel Flavian, wrote: “If for any reason the transaction is not approved as requested, my client will insist on the immediate payment of the kibbutz’s debts and will oppose all development and marketing” of the land based on the new plan. Flavian, who also has a unit in the resort village, is apparently referring to Dankner and Karpis’ right of refusal in regard to the building of hotels according to the original agreement.
Some members of the kibbutz say they are terrified by a possible demand for immediate repayment of the debt, as the kibbutz can barely pay its electricity bills. In the two weeks between the arrival of the letter and the critical general assembly, the compromise agreement was the talk of the kibbutz. The committee members publicly expressed their fear that if the agreement were not approved, the future of the kibbutz − including the pensions of the veteran members − would be placed in jeopardy. “They have us by the balls,” Ohana told friends. “Without the dismantlement of the resort village, Neve Yam cannot take a single step.”
Batei Haemek doesn’t deny that the serious plight of the kibbutz is a weighty factor in the give-and-take between the sides. However, in a response to Haaretz, the company claims it has been the kibbutz’s economic lifeline and that, were it not for the company, the kibbutz would be insolvent now. The company adds that the terms of the deal on the kibbutz agenda are the result of the kibbutz’s request to retain the partnership intact, and to allow the evacuation of part of the land held by the partnership in accordance with the court-validated agreement. That agreement sets forth the mechanism for the evacuation, the demolition of the existing resort and the establishment of the new one.
As invariably happens in cases such as this, there is one person who refuses to give in. One of the 22 lots coveted by Dankner and Karpis, which would give them territorial continuity adjacent to the waterline, was officially granted to a kibbutz member named Doron Hazan. Under the terms of the agreement which was presented to the kibbutz general assembly, Hazan would have to give up his home and receive a new one. Although Hazan declined to talk to Haaretz − like many kibbutz members, who said they feared the consequences if they went public − details about the case can be gleaned from a lawsuit he filed in Haifa District Court.
In his suit, Hazan claims that the arbitration procedure redividing the lots in the kibbutz − including the lots of the resort village − decided that the specific lot in question would belong to him. Accordingly, he argues, the compromise settlement with Dankner and Karpis constitutes a violation of the arbitration agreement. Through his lawyer, Shahar Harari, Hazan maintains that “Batei Haemek is absolutely insisting and is putting pressure on the kibbutz not to transfer Lot 156 and is threatening, in one form or another, that it will not allow the dissolution of the partnership, will insist on its claims regarding debts owed it by the kibbutz and more ... The true implication of the compromise agreement is that Lot 156, to which I am entitled under the arbitration judgment, will be transferred to the Batei Haemek company immediately, and not to me ... You, as members of the committee, are seeking to annul a beneficent settlement and replace it with one in which the kibbutz sells, for free, assets belonging to it that are worth tens of millions of shekels, if not more.”
In a response to Haaretz, Batei Haemek says, “One of the opponents of the compromise plan claims ‘rights’ in Lot 156. Yet this lot is one of the lots which has been in the possession of the resort village for years and is included in the court-validated settlement. Mr. Hazan is not in possession of this lot and it is not clear why he is making allegations about a lot which is included in the contractual agreement validated by the court for use by the partnership.”
In the meeting held last month, the kibbutz members were asked to choose among three options: in favor of the agreement; against the agreement; or in favor of the agreement but with an assurance that Hazan would receive his house. Among the advantages of accepting the agreement listed by Ivri in his letter: there would be no delay in developing the kibbutz; the sale of the 22 lots would bring in NIS 8 million to help the kibbutz cover its deficit; and the building of the hotel would bring in another NIS 1.4 million. Among the shortcomings: “The compromise agreement does not allow the kibbutz to launch any new enterprise that is divorced from the transactions done in the past, and it retains the existing association with the kibbutz’s partners in the resort village.”
In addition he added, “No free procedure was undertaken to find developers for the southern resort village.” Another shortcoming was that if the agreement were to be approved, Hazan would be forced to relinquish the lot allegedly designated for him to Dankner and Karpis.
Despite these flaws, the committee members urged the kibbutz to approve the agreement.
In this state of affairs, with the kibbutz members fearful that failure to approve the agreement would jeopardize their pensions and the future of the kibbutz, many felt the three options were for the sake of appearance and that they really had no choice but to vote in favor. Of all people, Avi Farhan − the representative of the Eli Sinai evacuees, who is living in a mobile home in the kibbutz − sent an email to the kibbutz members, urging them to reject the agreement. However, he was one of the few to take this stance publicly. “A proposal to surrender to dictates regarding the dissolution of the resort village will be submitted to the general assembly,” Farhan wrote. “I imagine that in this assembly, as in other assemblies in the past, there will be some who will present the proposal to us with an explicit or implicit threat that, if we do not adopt it, the skies will fall on us and the development process will supposedly stop. I want to update and share my position with you: I have all along opposed and continue to oppose the transaction.” Farhan urged that the 22 lots not be earmarked “to absorb tycoons into the kibbutz.”
The Batei Haemek company says in response, “It is regrettable that the kibbutz itself does not act as a united front for the evacuation of new residents who are living in new residential units, in an area designated by the plan for tourism (apparently under a temporary construction permit, whose legality has not yet been put to the test). It should be emphasized that the kibbutz was reluctant to sign an undertaking for the evacuation of this land within an allotted time, apparently for fear that the land would not be evacuated in the future by these residents.”
The new Arsuf
Three weeks ago, kibbutz members assembled in the resort village clubhouse, which looks as though it has not been refurbished since the 1980s. Nonmembers, including spouses and lawyers, were not allowed in. The stormy meeting lasted two and a half hours. “Dankner is trying to turn Neve Yam into Arsuf,” angry kibbutz members said, referring to a gated community for the ultra-rich further down the coast. The embattled members wondered how the debt − and with it the five residential units that were supposedly worth 5 percent of the whole real-estate deal − had, over the years, morphed into 22 lots with a probable worth of tens of millions of shekels.
“Who decided that they would get the 22 most beautiful lots in the kibbutz and, on top of that, the southern hotel? What’s the story?” Farhan demanded. “It’s said there is a court-validated agreement. I don’t know what kind of compromise agreement it is if I give someone land that belongs not to me but to the ILA, and the court signs off on it. Maybe the court did accept it, but the court was duped. Because you cannot trade in land that is not yours. If there is a third party that is interfering, all the requisite legal steps need to be taken and we need to harness the ILA to our side. This issue has suddenly cropped up because of people who are now beset by other problems, which I don’t want to get into. Imagine what the reaction will be to the fact that they want 22 lots. The court is not dumb − it will kick them out.” He also called on the members not to assign the 22 lots to “the tycoons.”
Farhan’s fiery speech drew an ovation. Another kibbutz member added, “It doesn’t seem reasonable to me that after they grab us by the throat, threaten us, refuse to evacuate houses and cause the kibbutz financial damage, I should go ahead and take them as partners. I don’t see that. We have to give them the boot.”
One of the kibbutz members described the situation to Haaretz as “absurd,” explaining, “It turns out that now there is an argument over the interpretation of how much 5 percent is worth. It looks to me that they are getting too much. They are being given 22 lots and the whole southern area, with the kibbutz getting only NIS 8 million from those lots, according to the calculation. As the situation was presented to us, the kibbutz has no money ... They promised that money will come in, but only in return for more land and more land. If they pit one against the other, then there is no choice. The kibbutz cannot afford to have everything stop and go to court. We want to live out the time we have left in peace.”
The kibbutz committee called for the agreement to be approved, promising that a solution would be found for Hazan’s house. Two days after the general assembly meeting, when passions had abated, the kibbutz members went to a polling station to cast their vote. Until the last minute, the industrious committee members worked the phones to urge a yes vote.
The result: 61 against the agreement, 55 for it, 11 in favor of the third “Hazan” option. Because an absolute majority is required, a second round of voting was held on December 27.
This time, 91 voted against the agreement and 84 voted for it. Consequently, the kibbutz members have asked the committee to start legal proceedings. The committee has yet to respond to the request.
The vote against an agreement flew in the face of advice from Hof Hacarmel council head Sela, who had also got invoved. In a letter to kibbutz members sent after the first round of voting, he called on them to approve the compromise agreement. “The agreement proposed by the committee is the only solution we have reached,” Sela wrote, using the first person plural, indicating that he had been involved in formulating the agreement. “It is important to point out that unless this solution is accepted, it will not be possible to build and to take in new members of any kind.”
Both Sela and the committee sent the kibbutz members a copy of Batei Haemek’s response to the Haaretz investigation. Asked to explain why a failure to approve the agreement would make it impossible to develop the kibbutz, Sela groped for an answer. “I think the agreement should be honored and that Neve Yam should be led forward, not backward − otherwise 350 lots will not be developed,” he says. “All the members’ allegations need to be examined, but the agreement must be honored, otherwise there will be no development in Neve Yam.
“I did not meet with David Karpis and Danny Dankner,” he continues. “I did not talk to them about this. Is it improper intervention? I think that if people want to look into it, clarify it, that can be done later − there is enough time. First of all, we will embark on development.”
In his capacity as chairman of the local Planning and Building Committee, Sela legalized the building violations Dankner had committed at his Atlit villa. Starting off as workers’ dorms for the employees of the Salt Company, the structure evolved into a spacious estate − complete with pool, winery, olive press and tennis court. Haaretz revealed in 2011 that the approval was given two weeks after Dankner − who was then Bank Hapoalim chairman and director of the bank’s donations fund − donated NIS 350,000 to a school in Hof Hacarmel. Both the Interior Ministry’s district appeals board and the Haifa District Court ruled that the building violations could not be legalized. Dankner’s appeal to the Supreme Court is still pending.
The third partner
The Neve Yam tangle would never have come to light were it not for a legal dispute over the Atlit villa between Dankner and his ex-wife (who now goes by her maiden name of Shoshana Vizen). The divorce, which took place in 2006 after 19 years of marriage and three children, went smoothly until the past year. The original divorce agreement divided ownership of the villa equally between Dankner and Vizen. The latter also received $500,000, a Chevrolet Suburban SUV, a monthly alimony payment of $1,750 for her and NIS 15,000 for the three children, along with a commitment by Dankner to give the children 10 percent of any bonuses received.
In 2011, the two signed a new divorce agreement, which transferred full ownership of the house to Vizen. Dankner had previously estimated it to be worth NIS 30 million. The turning point occurred in May 2012, when ILA filed suit for the evacuation and demolition of the villa, where Vizen and her children now live. The suit highlighted the fact that Dankner was not registered as the villa’s owner. The ILA also claimed that the structure was extended without a building permit.
In the wake of this, Vizen submitted a third-party declaration to the court in which she alleged that “Dankner sold her a pig in a poke and granted her rights that he never possessed and/or a residential home, which is a haven for her and her three children, and is condemned to demolition.” Vizen also submitted the new divorce agreement to the court, even though it contains a clause stipulating that it must be kept strictly secret. As a result, it became known, among other revelations, that in return for relinquishing his share of the villa, Dankner received four lots in Atlit, NIS 250,000 and collectors’ cars from Vizen.
The section of the divorce agreement that is relevant to the Neve Yam affair refers to a company called Mia-Roy Ltd., through which the Batei Haemek company was purchased in 2007. According to this agreement, Karpis owns 50 percent of Mia-Roy; Dankner and Vizen 25 percent each. The documents submitted by Vizen to the court state that Mia-Roy “possesses the right to build a resort village, a hotel and tourist projects at the site, as well as residential homes on the kibbutz lands.”
In addition, “Mia-Roy is the owner of all the rights accruing to the company by dint of agreements with the kibbutz, and is therefore entitled to every right or benefit which shall spring directly or indirectly from the public lands.”
Oddly, these assertions − which predate by a year and a half the dramatic kibbutz general assembly − seem to refer to unalterable facts. For example, the new divorce agreement between Dankner and Vizen declares the value of Batei Haemek to be NIS 28 million − about seven times more than its $1 million acquisition price five years earlier − based on the new real-estate deal in Neve Yam, even prior to its approval. Dankner and his former wife agree that the latter will receive a quarter of the lots to which Batei Haemek is entitled. “In the event that Shoshana will not realize her right to receive a quarter of the lots, Danny will pay NIS 7 million for the shares,” the agreement states.
This agreement is also one of the only proofs that Dankner is actually behind the company. He is barely mentioned in the Batei Haemek documents and is referred to as a member of the board of directors in recent documents. Vizen explained to the court that “Dankner requested her consent to have the agreement state that she supposedly held some of the assets in trust for him. Mr. Dankner claimed that for tax purposes it was ‘convenient’ for him to have it recorded in this way in the agreement.” Dankner denies Vizen’s claim and maintains that disagreements have to be clarified by arbitration and not in the courts.
In Dankner’s full-disclosure report to Bank Hapoalim (to avoid potential conflicts of interest), neither Batei Haemek nor Mia-Roy appeared on the list of companies with which he was associated. Yet Kibbutz Neve Yam has a historic NIS 2.5 million debt to Bank Hapoalim. Haaretz was told that because the company was held in trust, there was no need for a report as board meetings only deal with amounts above NIS 300 million.
The ILA has not been called upon to ratify the compromise agreement − it must first be given final approval by the kibbutz general assembly, something it is proving difficult to obtain. However, it has been aware of the emerging agreement for a least a few months. In the case of Dankner’s villa, it took the ILA 20 years to demand its evacuation and demolition on grounds of contract violation. This time, with the Neve Yam deal brewing, the state prosecution is already asking the ILA for clarifications.
The ILA responds
The ILA’s response to a query from Haaretz about how it is possible for a private company − owned by Dankner and Karpis − to own rights to land that belongs to the ILA, does not indicate what action it intends to take: “To the extent that agreements exist between the kibbutz and the companies, they were not done with the ILA’s concurrence or authorization,” it states. “The agreements that were annexed to a third-party declaration which Mrs. Dankner filed against Mr. Dankner are under study as part of the conduct of the legal procedure between the ILA and the Salt Company and the Dankner couple, and ahead of the ILA’s continued general dealings with the kibbutz.”
The ILA refused to let Haaretz see its agreement with the kibbutz, even though it has been validated by the court. Its reason: the kubbutz’s attorney, Tepper, objects. Tepper also told the members of the committee that he had heard from the ILA that an article on the subject was going to be published. As the committee pointed out in its letter to kibbitz members, and continues to point out, the agreement requires the ratification of the ILA. However, Ohana told the kibbutz members she believes “the ILA will ratify the agreement if it grasps that this is the only way the kibbutz can move forward.”
State prosecution sources told Haaretz that there is more to this affair than meets the eye. Haifa District’s chief prosecutor, attorney Eytan Lederer, says: “It is very possible that we do not yet have the full factual picture. However, on the assumption that the situation is as it seems from the material we have now, the emerging settlement prima facie contains elements which in our understanding are contrary to the law. I do not believe it can receive authorization from state bodies, including the ILA.”
Lederer is puzzled by the vague formulation of the real-estate deal, which is being presented as a transaction to transfer the right of recommendation of candidates for absorption in the kibbutz: “When we saw the agreements that were annexed to the countersuit in the Dankner case [referring to Vizen’s suit] and the peculiar mechanism − to put it mildly − for granting the right of recommendation, and given that a natural suspicion arises that it also involves financial benefits,” he says, “we contacted the relevant authorities in the light of the apparent illegality of the settlement.”
Batei Haemek: ‘Good partnership’
It seems to us that the very request for a response on the eve of a general assembly meeting for approving the compromise agreement between Batei Haemek and Kibbutz Neve Yam stems from extraneous considerations by kibbutz members (apparently new members who are not knowledgeable about the details) who have vested interests and are trying to appropriate for themselves parts of the kibbutz lands unlawfully. The description of the contractual relationship with Batei Haemek, as provided by these self-interested individuals, is far from the truth and constitutes libel and serious defamation.
The partnership between Batei Haemek and Kibbutz Neve Yam (hereafter: the kibbutz) was established in 1992 for a period of 50 years. The contractual agreement stipulates explicitly that it cannot be brought to an end before 2042. As part of the compromise agreement, which was validated by the court on May 1, 2000, the kibbutz was given the opportunity to implement a real estate project on land that is in use by the partnership, under the conditions set forth there. Within the framework of the compromise agreement, the kibbutz requested payment of millions of shekels from Batei Haemek and asked the company to write off large debts.
Moreover, over the years Batei Haemek and its affiliated corporations made huge loans of millions of shekels to the kibbutz and/or the partnership. The kibbutz’s debts total millions of shekels; the claim that the kibbutz’s debts to Batei Haemek amount to only NIS 3.6 million is not correct.
From 2007, ownership of the Batei Haemek company was transferred to Mia-Roy Ltd., which invested money in the resort village and transformed it into an economically profitable business for the benefit of the partnership, and the kibbutz is still enjoying the fruits of this step. Around the year 2010 or proximate to it, the kibbutz asked Batei Haemek to vacate the land held by the partnership, even though, under the terms of the contract, the land is so held until 2042.
The proposed format of the alternative resort village originates from the kibbutz’s inability to meet its share of all the payments required to finance the development and construction costs attendant upon relocating the resort village. The arrangement is conditional upon the approval of the kibbutz institutions and the Israel Lands Administration.
The establishment of the alternative resort village [referring to the hotel contained in the new plan] in the southern section designated for this involves development and infrastructure work, including sewage, roads and so forth, and its cost is estimated at tens of millions of shekels, which the kibbutz is unable to finance even in part.
Contrary to what was claimed, it is not a case of giving lots for residential units as a gift to recommended representatives of Batei Haemek. On the contrary: full payment is made to the kibbutz for every lot. The payment required from each such member is about NIS 700,000. That is more than the amount paid by the kibbutz members who have joined to date. The revenues accruing to the kibbutz under the agreements for the lots will total approximately NIS 15 million. [The kibbutz claims it will receive about half that amount.]
In addition, anyone found unsuitable by the admissions committee will not be accepted as a kibbutz member − exactly like any other candidate.
The full payment being demanded by the kibbutz from every new tenant is in part earmarked (according to what the kibbutz’s representatives said) to ensure the future of the kibbutz members, whose economic future is at present cloudy owing to the kibbutz’s inept economic management.
Accordingly, the compromise agreement proposed by the kibbutz is beneficial to its members and will enable it to vacate the area and develop the kibbutz according to the existing development plans. The result of all this is that the kibbutz, instead of being obligated to pay millions of shekels to Batei Haemek (money it does not have), will take in expected revenues of tens of millions of shekels from the deal.
We wish to emphasize that without the agreement of Batei Haemek, it will not be possible to vacate the area and inject the “economic oxygen” needed in order to establish an alternative resort village that will generate immediate profit for the kibbutz and future income for the kibbutz members, without their having to invest anything. Evidence that the compromise agreement that is being worked out benefits the kibbutz significantly is the fact that the Hof Hacarmel Regional Council supports the arrangement between Batei Haemek and Neve Yam wholeheartedly, in all its aspects. Batei Haemek did not approach the head of the regional council on this matter, but the company is in possession of a copy of his letter to the kibbutz members, which indicates that the council supports the compromise agreement unreservedly.
The allegation that the tenants in the resort village are confidants of one or another of the shareholders is misplaced. All the tenants are approved by the partnership and pay rent according to the rental agreements concluded with them (to avoid doubt, Danny Dankner is not involved at all in the rental agreements and is not an authorized signatory in the company).
As for the wording of the compromise formula, it is hereby clarified that the draft which the kibbutz’s lawyer conveyed to the lawyers of Batei Haemek was agreed to only in principle by the institutions of Batei Haemek, subject to comments which have yet to be made known to the kibbutz, including a prior condition that approvals from all the authorities must be obtained.
Regrettably, we often hear about debtors who try to evade their legal obligations. The approach of the opponents in this regard is a product of this atmosphere of evasion and an attempt to repeatedly extort Batei Haemek.
The allegation that Batei Haemek is threatening to take legal action is misplaced. Until now, and for a lengthy period, Batei Haemek did not take the legal action which is called for by the fact that debts owed to the company were not paid − this out of consideration for the kibbutz’s shaky financial situation and pleas by representatives of the kibbutz to Batei Haemek to wait until a suitable arrangement can be worked out.
Batei Haemek has always tried to meet the kibbutz and its institutions halfway, while also making donations to the kibbutz and aiding it because of the good partnership relations that have existed between the parties for years. Batei Haemek was surprised by the approach of the new members of the kibbutz, who are trying to evade legal obligations.
Kibbutz Neve Yam: ‘Open debate’
Kibbutz Neve Yam was established before the creation of the State of Israel, in part on land granted to it in leasing contracts and duly recorded in the Land Registry − by PICA [Palestine Jewish Colonization Association], among others. In the 1980s, the kibbutz found itself in a deep socioeconomic crisis, as a result of which only 55 members remained in the kibbutz at the start of the new century. In the wake of the crisis, the Registrar of Cooperative Associations appointed a committee to manage the kibbutz. The kibbutz is now undergoing renewal and currently has about 200 members, following an extensive absorption process undertaken a few years ago − including 24 families who were evacuated from Gaza and Northern Samaria.
In the past few years, the appointed committee has been trying to regularize the kibbutz’s activity with the state authorities. This includes a relocation agreement with the Tnufa Directorate in the Prime Minister’s Office [referring to the 2005 Gaza Disengagement] and a compromise agreement with the Israel Lands Administration, which was validated by the court after a special decision was made by the ILA in this regard [referring to the evacuation of illegal structures and the approval of a new building plan].
In 2010, the District Planning and Building Commission approved the new master plan for the kibbutz. This was done within the framework of the Disengagement Law. As part of the constellation of agreements between the kibbutz and the state, it was agreed that the kibbutz would relinquish its rights as vested in the prestate leasing contracts, and that these would be converted into a leasing contract with the ILA under the same conditions that are in effect with all the kibbutzim in the country.
Against this background, the kibbutz made far-reaching concessions to the state, as part of which 20 lots were deducted from the kibbutz’s quota of lots. In practice, the kibbutz returned more than 600 dunams (150 acres) of developed farmland to the ILA. This was in addition to the lands returned to the ILA within the framework of the general agreement with the kibbutzim, for which the ILA recently issued a tender for the construction of 126 detached homes, all of them on former kibbutz land. Under the terms of its commitments in its compromise agreement with the ILA, the kibbutz is working to regularize all the usages on its lands in accordance with the procedures of the ILA.
Within the framework of a suit filed by the kibbutz in Haifa District Court for the dissolution of the partnership and its removal from the territory of the kibbutz, a compromise agreement was reached, which received court validation and whose interpretation and implications are in dispute between the kibbutz and Batei Haemek.
In 2007, Mia-Roy Ltd. acquired control of Batei Haemek. The resort village partnership is a private corporation which is not required to publish its financial reports. In the absence of agreement between the partners, the differences between them will be decided in court.
In order to meet its commitments under the compromise agreement with the ILA and to remove the resort village from the area designated for kibbutz residences, the kibbutz general assembly was asked to decide between two alternatives: a legal confrontation for the removal of the resort village in a judicial procedure, or to ratify the compromise agreement that was worked out in negotiations.
The kibbutz members have not yet made their decision in the voting booth. [They subsequently voted against the agreement.] A trenchant open debate is underway in the kibbutz about this fundamental and tangled issue.
We wish to emphasize that every compromise agreement between the kibbutz and Batei Haemek will be subject to the approval of the ILA. For obvious reasons, and in light of the judicial procedure which will take place if a compromise agreement between the sides is not ratified, the kibbutz believes that a newspaper article is not the proper or appropriate platform to explicate its arguments. This will be done, to the extent that it will be necessary, in the appropriate legal procedure.
The question about the adamancy of Batei Haemek concerning Lot 156 should be addressed to that company.
The kibbutz is not familiar with the divorce agreement between Danny Dankner and Shoshana Vizen, and is not a party to it. The quote that was cited by the Haaretz reporter from the agreement [concerning Mia-Roy’s rights in the kibbutz], if accurate, is not consistent with the actual situation known to the kibbutz.
The partnership agreement between the kibbutz and the A.S. Bananas Company [which is owned by Carmel Sela] received all the authorizations required under the law, including court authorization of an agreement between the kibbutz and the Agriculture Ministry.