Attorney General Curbs Netanyahu's Duties Due to Links With Telecom Magnate

The prime minister, who is also communications minister, will not be able to handle issues linked to Shaul Elovitch's telecom group Bezeq, Israel’s largest communications company.

Prime Minister Benjamin Netanyahu speaks at a Ch. 9 event marking the 25th anniversary of the aliyah from the former Soviet Union, June 14, 2016.
Michal Fattal

Attorney General Avichai Mendelblit said Wednesday he was prohibiting Prime Minister Benjamin Netanyahu, who also serves as communications minister, from dealing with matters involving companies owned by businessman Shaul Elovitch due to the friendship between the two.

Elovitch is the controlling shareholder in companies including telecom giant Bezeq, satellite TV provider Yes, web portal Walla and satellite operator Spacecom.

Mendelblit said Netanyahu would sign a conflict-of-interest document, handing over Bezeq-linked matters to another cabinet member. 

“Netanyahu will be barred from dealing with matters pertaining to companies that are under Elovitch’s control in order to avoid claims of a conflict of interest and for the sake of public propriety,” a Justice Ministry official said.

Netanyahu, for his part, says he has not received any donations, funds or loans from Elovitch.

Bezeq Chairman Shaul Elovitch.
Dudu Bachar

Mendelblit also said Netanyahu should completely avoid areas where there is heavy competition with communications group Hot. On Wednesday, Bezeq shares were little changed on the Tel Aviv Stock Exchange despite the news.

Associates of the prime minister said the decision reflected a harsh double standard that could impair the work of cabinet members. 

Mendelblit's decision is based on a recommendation several months ago by Deputy Attorney General Dina Zilber. Writing to Mendelblit, the prime minister's lawyer, David Shimron, noted that no similar prohibition applied to friendships between lawyers and judges.

Netanyahu is expected to appoint Tourism Minister Yariv Levin to handle communications issues in his stead. But with his decision, Mendelblit let Netanyahu continue handling the broadcasting segment of the communications market.

In any case, implementation of Mendelblit’s order might prove problematic because Bezeq is Israel’s largest communications company, affecting all areas of communications. No communications minister has ever been forbidden from dealing with Bezeq.

The company has a monopoly in internet infrastructure and land telephony. It is part of the duopoly in the TV market through Yes. Internet provider Bezeq International, with its 44 percent of the market, is almost a monopoly as well, providing Bezeq with 90 percent of the net profit made in Israel’s communications industry.

Mendelblit added in his legal opinion addressed to Netanyahu: “Following a story published by Haaretz, we received a request by MK Zehava Galon [Meretz] to investigate whether you are in a conflict of interest as communications minister due to your personal ties with Shaul Elovitch. In light of these claims, the legal counsel at the Prime Minister’s Office, Shlomit Barnea-Farago, was requested to find out from you the nature of your ties to Elovitch.”

The Prime Minister’s Office responded that “the prime minister has had friendly relations with Shaul Elovitch for 20 years and these include social contacts.”

The legal opinion notes that the two meet “every few months or once a year, and the circumstances of their becoming friends could not be recalled .... You have noted that your meetings are of a social nature, with your wives present, and that you talk about current events.”

Netanyahu has been communications minister since November 2014. Since Netanyahu assumed the post, the ministry’s polices have been lenient toward Bezeq, including the removal of Director General Avi Berger, who was keen to increase competition. The ministry is also striving to exempt Bezeq from an obligation to split up its different segments.

On Wednesday, aides to Netanyahu argued against Mendelblit’s decision.
“It’s a decision that will open a Pandora’s box and could paralyze a lot of the ministers’ work. It’s a new norm more stringent than anything before regarding conflicts of interest,” one aide said.

“It’s a double standard. It’s the same Justice Ministry that four years ago, when Communications Minister Moshe Kahlon was found to be in a conflict of interest with Hot, banned him from dealing with Hot but not with Bezeq.”

The decision this time is a lot broader, the aide said.

“If mere friendship is enough for a conflict of interest, the media will have to go over all the ministers and determine which economic leaders they had dinner with at a friendly gathering over the past year, and demand that they cease dealing with their affairs,” he said.

“It’s a double standard where a stringent standard is applied to Netanyahu and another standard to everyone else.”