The Schlaff Saga / The 'Mysterious Billionaire' Who Shuns the Media

Son of a very wealthy but modest man, Martin Schlaff's lavish lifestyle was foreign to his family. 'A former top official in the Israeli civil service who was interviewed for this story told me he was afraid of what would happen to him if it was discovered that he was a source.'

Contact Gidi Weitz at investigations@haaretz.co.il

Early one morning in April, the foreign minister's official car stopped at the entrance to the Mount of Olives cemetery in Jerusalem. Bodyguards cleared the way for Avigdor Lieberman, who strode into the large group of mourners accompanying Haim Schlaff to his final resting place.

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Lieberman stood beside the open grave and listened to the large ultra-Orthodox crowd pray for the deceased, whose body had been flown in by a private plane to Israel, in addition to another plane that brought family members from the Austrian capital to the funeral. Next to Lieberman stood Aryeh Deri and attorney Yaakov Bardugo, former head of the Mifal Hapayis national lottery. Former justice minister Haim Ramon was there too.

Martin Schlaff, however, was in Vienna, reciting kaddish for his father from there. On the eve of the funeral the police here informed Schlaff's lawyers that if he came to Israel he would also have to pay a visit to the police's fraud squad investigation offices. Schlaff decided to give it a miss.

Immediately after the funeral, a number of the Israeli businessmen and politicians present - some of whom held or still hold key positions in the country - left for Vienna to pay shivah calls to Martin Schlaff, who was observing the seven days of mourning there.

Haim Schlaff was born in Poland and belonged to the Bobov Hasidic community, part of which perished at the hands of the Nazis. After surviving the Holocaust and ending up in a displaced persons camp in Vienna, Schlaff became a successful businessman and a partner in the firm of Robert Placzek, which traded in wood and paper, particularly with Eastern Europe countries, at that time behind the Iron Curtain.

Haim was a very wealthy man, but rode buses around Vienna, lived in a modest apartment and tried to maintain anonymity. Every year he would visit Jerusalem, where he owned a house on Ethiopia Street. His eldest son, James, Martin's business partner today, is also considered a modest man, whom people remember pedaling a bicycle through the streets of Vienna. Schlaff's sons were sent by their father to be educated in yeshivas in Israel.

Martin, born in 1953, received an ultra-Orthodox education as a boy and spent long periods in Israel, acquiring the good command of Hebrew that he has to this day. He is also fluent in English, German, Italian, Russian, Yiddish and French. Over the years, Schlaff became less and less observant, which was a source of tension between him and his father. Rabbi Yisrael Meir Lau, former chief rabbi of Israel, relates that on one occasion Martin Schlaff asked to consult with him about a sensitive matter: His daughter was about to marry a man from a very observant family, and Schlaff was afraid the tensions he had experienced surrounding religion with his father would be carried over to the next generation as well.

The lifestyle Schlaff adopted was foreign to his family. During the years when he was traveling frequently to Israel until last April, he would arrive in a private plane, and was met by a driver and a Jaguar that remained at the ready for him. In June of 1994, for the record price of $7 million, he bought a plot of land on Galei Tkhelet Street in Herzliya Pituah, after outbidding another billionaire who had his eye on the same property - American casino mogul Sheldon Adelson - in an auction.

Schlaff built a house in Herzliya with more than 2,000 square meters of floor space, including a 200-square-meter bomb shelter said to be safe from nuclear attack, a wine cellar, a film-screening room, a fitness room and pool, and dry and wet saunas. Many architects were involved in the project, among them London-based Israeli designer Ron Arad, and all of the building materials were specially imported. In 2005, the house was bought by businessman Zaki Rakib. Its price-tag: $22 million.

Several years ago Schlaff purchased a luxurious estate in Austria, covering some 9,100 square meters, for 15 million euros. The mansion is located in Obersievering, one of the most costly and beautiful of Vienna's suburbs. In his day, Austrian president Thomas Klestil (1992-2004 ) considered establishing an official residence there, but gave up the idea when he discovered the house had once belonged to Jews and had been confiscated by the Nazis.

Patron of the arts

On the fourth floor of the Jewish Museum in Vienna, a number of objets d'art from the 19th century are on display behind clear glass, all with clearly anti-Semitic motifs. In 1993 Schlaff bought and donated thousands of such works to the museum, most for research purposes and some for display or loan to other museums. Among the works in the collection, which also is sent abroad for exhibition, are a cane with a handle in the shape of a long "Jewish" nose and a postcard depicting the ritual murder of a Christian boy at the hands of Jews in the Rhineland. At the museum they explain that Schlaff purchased the items mainly out of fear they would fall into the hands of people with an anti-Semitic agenda.

Schlaff has also made substantial contributions to the Sigmund Freud Museum at No. 19 Berggasse, as well as to the famous Hakoah Vienna sports club, which opened a new center in 2008. Before World War II its all-Jewish soccer team was considered the best in Europe and some of its members played on what was referred to as Austria's national "wonder team" in the 1930s, headed by (Jewish ) coach Hugo Meisl. Most Hakoah Vienna players were captured by the Germans, or were turned over to them, and ended their lives in Nazi death camps.

Despite the fact that Schlaff leads a secular life, he makes a point of maintaining certain Jewish traditions. "He goes to synagogue on Yom Kippur, but theoretically he may go out to drink coffee before that at some cafe in Vienna," says one of his friends. Some of his acquaintances say he quotes from Jewish sources from time to time; others note that he hosts a strictly kosher Passover seder each year.

"All his children study Hebrew and he makes sure they also absorb Judaism and observe a bit of tradition. He has accounts to settle with the Creator of the universe," says one good friend of his.

The person with perhaps the most religious sway over Schlaff is Aryeh Deri, to whom the billionaire donated hundreds of thousands of dollars to underwrite his legal defense, after Deri was convicted of corruption a decade ago. It was Deri who nailed up the mezuzahs in Schlaff's new penthouse in downtown Vienna, and he has also presided over the weddings of the Schlaff children. Schlaff himself married for a third time over a year ago, but in a civil ceremony.

After completing his master's degree in economics in London, Schlaff joined the Robert Placzek company and married Suzy, daughter of Friedrich Wiesel, at that time the firm's chief shareholder. They had three children together, Nina, Benny and David. After their divorce, Schlaff married his second wife, Andrea, a convert, whom he met in the course of his work. They had two more children, Naomi and Yoni , but their marriage was beset by even more problems than the complex relationship Schlaff had with his father: In 2008 the couple signed a divorce settlement in which Schlaff paid an estimated 200 million euros to Andrea and left her the luxurious estate on the outskirts of Vienna.

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His current wife is Dr. Barbara Koenig, 34, a Hungarian-born lawyer with movie-star looks. Her father is a professor of art history, and she is the former wife and mother of the children of metals magnate Peter Koenig. She met Schlaff through her children.

Schlaff and Koenig are regular visitors, as well as financial supporters, to the opera and theaters of Vienna. Indeed, Schlaff is one of the major sponsors of the Vienna Opera. He flies especially to their performances around the world.

"Every time he meets me, he asks me whether I have seen one performance or another. He is really addicted to opera. Altogether, he is a man of broad horizons," says an Austrian who knows him well. On one occasion Schlaff was seen attending the opera with Lieberman.

In the summer months, Schlaff tends to flee Vienna. Until recently, his destination was often Israel, where he would stay at the Hilton in Tel Aviv, the King David in Jerusalem and the Dan Accadia in Herzliya. Today, his friends relate, he goes to his favorite Italian island, Sardinia, or sails on the well-equipped yacht that awaits him in Monte Carlo.

Despite his rather showy, hedonistic lifestyle, Schlaff avoids almost all contact with the media. He does not grant interviews or respond to reports about his life. "The mysterious billionaire" is how some Austrian media describe him. There are those in Austria who believe he is very close to the Israeli Mossad espionage agency and that he continues to come to Israel under a false identity.

A former top official in the Israeli civil service who was interviewed for this story told me he was afraid of what would happen to him if it was discovered that he was a source. We met in an obscure cafe in the greater Tel Aviv area, and I had to strain my ears to hear his whispers. Someone else told me that spending time with Schlaff affected him so much that afterward he spent a long time standing in the shower in order to "purify myself."