The Secret Trial of Arcadi Gaydamak

With various trials and investigations against him underway, Russian oligarch Arcadi Gaydamak says he regrets ever coming to Israel in the first place

Tel Aviv District Court Judge Gilad Neuthal will begin a technical deliberation today over the trial of Arcadi Gaydamak and six others (including three bankers from Bank Hapoalim ) on charges of money laundering. All of the defendants deny the accusations. Gaydamak remains abroad after requesting through his attorney, David Libai, that he would be excused from this session of the trial for medical reasons.

Reuters

The tycoon's illness did not prevent him from giving an interview Wednesday night to Raviv Drucker of Channel 10, during which he claimed that he does not miss Israel and in fact regrets ever going there at all. This is Gaydamak at his best: disregarding the advice of his attorneys and babbling away unrestrainedly.

But he has his reasons for not missing this place. Since trying to take Israel by storm, he has lost approximately $500 million in bad business transactions and unsuccessful investments, wasted finances on Beitar Jerusalem and on donations to charities, according to some of the dozens of attorneys he employed here - some for a $1 million retainer. In addition, he may also lose the $10 million he deposited as a guarantee for his appearance at the trial. Gaydamak, based on the impressions of those who have spoken with him, does not intend to come back here.

On top of his trial, which will likely last a long time, a mysterious minor affair is also underway. Around two weeks ago Guy Peleg reported on Channel 2 that the defense minister had issued a security order to classify certain details relating to the case. Nahum Galmor, the second defendant who is suspected of being Gaydamak's straw man in the money-laundering scheme, appealed to the Supreme Court through his attorney Navot Tel Tzur, requesting that at least parts of the classified material be shown to him. Gaydamak joined in this appeal.

Ehud Barak's spokesman declined to remark on why the defense minister was intervening in a trial of a criminal-financial nature, and through which agency he classified the material - the Mossad or the Shin Bet security service, or perhaps the defense ministry's supervisor of security.

Classification of material - and based on precedents set in the trials of those suspected of security offenses (Nachum Manbar, for example ) - is intended to prevent the publication of sensitive security information which could harm the intelligence community and the defense establishment, or embarrass it. Given these restrictions, and to avoid violating the law or breaking the censorship regulations, only material published in the past can actually be evaluated here.

Friends in high places

Gaydamak has rubbed shoulders with the intelligence community quite a bit. The indictment issued against him by the French prosecutor's office on charges of illegal arms trading with Angola (he was convicted in absentia and sentenced to six years in jail ) described him as having the rank of colonel in the Soviet intelligence community. In his businesses in Russia, he employed former intelligence officers. Former French interior minister Charles Pasqua, a fellow defendant in the trial, stated that Gaydamak had worked for French intelligence and helped them to rescue hostages and pilots who had been taken prisoner in Serbia and the Caucasus.

In Israel, Gaydamak employed Mossad people and senior Israel Defense Forces officers, such as Brig. Gen. Zeev Zachrin and former Mossad chief Danny Yatom. Yatom has said on several occasions that, before joining up with Gaydamak, he conducted a background check on him and did not find any security related disqualifications.

The current Mossad chief, Meir Dagan, made it clear in a meeting some years back with the police's international investigations unit that Gaydamak was not helping his agency. Gaydamak himself hinted on several occasions, during interviews, that he has contacts in the Israeli defense establishment.

The previous supervisor of security for the Defense Ministry, Yehiel Horev, also took an interest in Gaydamak during the Israeli police's undercover investigation of the Russian oligarch. A police investigation squad member, who suspected that Horev was trying for unknown reasons to help Gaydamak, politely asked him to stop. Horev, it seems, was looking into the possibility of using Gaydamak's services for the benefit of the defense establishment. It has been reported in the past that Gaydamak was the owner of the Kazphosphate phosphate plant - which was managed by Galmor, and which at one point in the past included a uranium production line.

In the petition Galmor submitted to the Supreme Court, he refers to a report that appeared in the Dutch paper De Telegraaf in October 2009. The article stated that the reporters had confidential documents in their possession that had been sent by the Israel Police to the Dutch authorities in 2002 and 2003 to warn them against selling the Dutch Thermphos phosphate plant to Galmor - because he is "the straw man for Gaydamak, who intends to take over the plant in order to sell banned materials to Iran."

'Blood libel'

Galmor says this is "a blood libel" and that "there is no need to elaborate on the seriousness of suspecting him of seeking to trade chemical substances with Iran - a loyal Israeli citizen, a son of Holocaust survivors, who served in the IDF and is now being portrayed as someone willing to betray his people." About a month after the article was published in Holland, Barak moved quickly to issue the certificate of classification.

Is there a connection between the two events? It is doubtful if we will ever know, because the defense minister does not intend to disclose the details of the certificate. Supreme Court Justice Hanan Melcer rejected the petition filed by Galmor and Gaydamak, arguing that publicizing details of the classified material would not help them in their defense. In other words, there is no connection between the classified information that the defense minister is not allowing to be exposed and the subject of the trial.

In contrast to all his troubles in Israel, Gaydamak can relax a bit in Cyprus. The court there is planning to soon lift the freeze it imposed on assets he deposited in the Russian Commerce Bank there. The order froze $47 million held by the Matanel Foundation and was issued at the request of Luxembourg banker Pierre Grotz.

Grotz managed Gaydamak's money that had been deposited in funds and trust companies registered in tax havens around the world. The court in Luxembourg ruled a few years ago in favor of Grotz, who argued in a suit filed in courts in Israel and Cyprus that Gaydamak and the companies Grotz managed for him had stopped paying him management fees and owed him around $49 million. According to Grotz, the Matanel Foundation is not a real charitable organization, as it presented itself, but is essentially another financial tool of Gaydamak's in every sense.