Ties With Telecoms Exec May Stump Netanyahu's Role as Communications Minister

Following a Haaretz report on effective quid pro quo between PM and owner of Bezeq, Israel's attorney general likely to bar him from dealing with the company.

Prime Minister Benjamin Netanyahu / Walla! House, Tel Aviv.
Ofer Vaknin / AP

The attorney general seems likely to bar Prime Minister and Communications Minister Benjamin Netanyahu from dealing with regulatory issues involving the country’s biggest communications conglomerate, due to an investigative report published by Haaretz in October. If this happens, Netanyahu will probably be unable to continue serving as communications minister.

Haaretz’s report detailed Netanyahu’s relationship with Bezeq, the telecommunications company, and its controlling shareholder, Shaul Elovitch. It described how Walla, a popular Internet news site owned by Bezeq, provided positive coverage of Netanyahu and his wife Sara in order to further Elovitch’s economic interests. Walla’s CEO, Ilan Yeshua, even told the site’s reporters that this policy was dictated by Elovitch, because the site’s coverage of the Netanyahus would influence regulatory treatment of Bezeq.

Prime Minister Benjamin Netanyahu.
Reuters

And indeed, in his role as communications minister, Netanyahu in effect repaid the positive coverage by working to advance Elovitch’s business interests. For instance, a few months ago, he allowed Eurocom, another company owned by Elovitch, to sell the satellite broadcaster Yes to Bezeq for 680 million shekels ($180 million) in the deal’s first stage.

But Netanyahu must also rule on an issue much more fateful for Elovitch: whether and how a planned reform of landline telephony, Bezeq’s chief source of revenue, will be implemented.

Previous Communications Minister Gilad Erdan had signed regulations obligating Bezeq to sell landline services to its competitors at regulated prices. Finance Ministry official Assaf Wasserzug told the Knesset Economic Affairs Committee a few weeks ago that the reform could be implemented immediately and would save consumers hundreds of millions of shekels. But Netanyahu has sat on the issue for months, thereby saving Bezeq a lot of money.

Moreover, his hand-picked ministry director general, Shlomo Filber, evidently plans to go easier on Bezeq than did his predecessor, Avi Berger, who had numerous conflicts with the telecommunications giant before Netanyahu fired him. Filber told the Economic Affairs Committee that Berger’s policy – which would have hurt Bezeq but helped consumers – would result in court battles and “imposing things by force,” so he and Netanyahu planned a different policy.

“There was a view that said, ‘there’s a lot of profit there [in Bezeq], let’s divide it among the other companies,’” Filber said. “I don’t want this money distributed now, like alms for the poor,” because it will lead to a “dead end in which there’s no longer any possibility of investing in infrastructure and upgrading it... I want this money reinvested in infrastructure.”

But Wasserzug disputed this argument, pointing out that Bezeq isn’t short on cash for investment; it merely chooses to use it instead to pay enormous annual dividends – 1.8 billion shekels in 2015.

Controversy goes to AG

Immediately after Haaretz’s report on Netanyahu’s ties with Elovitch was published, MKs Zehava Galon (Meretz) and Nachman Shai (Zionist Union) asked the attorney general to consider barring Netanyahu from making any decisions related to Bezeq, on the grounds that he had a conflict of interests. Over the past few months, the Justice Ministry’s legislation department discussed this issue with the Prime Minister’s Office and then drafted a legal opinion which it submitted to Attorney General Avichai Mendelblit.

The opinion recommends that Netanyahu be barred from making decisions on any of Elovitch’s businesses, which would essentially turn him into a figurehead as communications minister. Mendelblit, who is supposed to make a final decision, is widely expected to adopt this opinion.

Walla said, “The picture you paint is inaccurate. This is another stage in Haaretz’s obsessive persecution of Walla. Walla News has legitimate editorial considerations, like any media outlet, even if they don’t match Haaretz’s editorial line.”

The Communications Ministry said the landline telephony reform as approved by Berger had proven technologically unfeasible, and therefore, the ministry has consulted with all the relevant parties on ways “to supply the service in a different format.” Its decision will be issued “in the coming days,” it added, and “will enable companies to sell the product – and not just on paper!”

The Justice Ministry said merely that its handling of the issue is “at an advanced stage.”