Explainer

Millions of Dollars, Favorable Coverage: What We Can Tell You About the New Netanyahu Graft Case Roiling Israel

The so-called Case 4000 involving Israel's telecom giant is 'the strongest case of all the cases, with the most explosive potential'

Clockwise from top left: Shaul Elovitch, Sara and Benjamin Netanyahu, Shlomo Filber, and a Netanyahu confidant.
Eyal Toueg, Kobi Gideon/GPO, Emil Salman, Tomer Appelbaum

The press and political establishment have obsessed over Case 1000 and Case 2000 – cigars and champagne and the deal with Yedioth Ahronoth publisher Arnon Mozes – while ignoring Case 4000 as an obscure matter involving securities violations at Bezeq, Israel’s dominant telecommunications company.

But the fact that the Israel Securities Authority has handed the file over to the police for further investigation and that top Bezeq executives and senior government officials were arrested and questioned Sunday now gives Case 4000 the respect, or infamy, that it deserves.

It means that the allegations are no longer just about securities-law violations, such as those relating to corporate governance, fraud, insider trading and false reporting. They now encompass suspicions of crimes such as bribery, fraud and breach of trust. The suspicions come dangerously close to Prime Minister Benjamin Netanyahu, who has not yet been questioned in the case or considered a criminal suspect.

“This is the strongest case of all the cases, with the most explosive potential,” said investigative journalist Amnon Abramovich on the Israel Television News Company’s “Ulpan Shishi” program Friday night. Haaretz has also reported on the growing volume of evidence piling up in the case.

At least two senior officials close to Netanyahu allegedly worked behind the scenes to influence regulations in Bezeq’s favor. These officials supposedly pressured the Communications Ministry to promote regulatory measures that would benefit Bezeq, including the approval of Bezeq’s acquisition of the satellite television broadcaster Yes.

The two as-yet unnamed officials now join Shlomo Filber, the former director general of the Communications Ministry and a close confidant of Netanyahu who was suspended from his post because of the security authority’s investigation.

1. What is Case 4000?

The case involves suspicions that Netanyahu, in his role as communications minister from 2014 to 2017 (while he was also prime minister), intervened with regulators to help the Bezeq group, which is controlled by Shaul Elovitch. In exchange, Elovitch, a long-time friend of Netanyahu’s, allegedly ordered Bezeq’s Walla news site to provide favorable coverage of the prime minister and his wife Sara. In addition, Sara Netanyahu may have been involved in influencing the website’s coverage.

Israeli Prime Minister Benjamin Netanyahu, his wife, Sara and Shaul Elovitch, February 18, 2018
Eyal Toueg, Mark Israel Salem

So far, it appears that investigators have gathered enough evidence to substantiate suspicions of a quid pro quo, at least on a circumstantial basis. While Netanyahu served as communications minister, Bezeq received significant regulatory concessions concerning the reform of the landline-telephony market, the opening up of its infrastructure for use by its competitors and approval of the acquisition of Yes. All this was done on a timetable that benefited Bezeq greatly even as it was opposed by the professionals at the Communications Ministry. All these moves were well documented, and were reported regularly in Haaretz and other media.

At Walla, meanwhile, reporters and editors regularly received instructions on how to cover the Netanyahus, from senior editors and executives. In fact, the CEO of Walla at the time, Ilan Yeshua never denied the claims.

When Netanyahu took on the role of communications minister after the March 2015 election, he failed to report his relationship with Elovitch as required. He only reported this relationship after Haaretz exposed it, a petition was filed with the High Court of Justice on the issue, and Attorney General Avichai Mendelblit intervened.

2. The police investigation into the case should come as no surprise to anyone.

The case is amazingly similar to Case 2000, in which Netanyahu allegedly conspired with Mozes to advance the “Israel Hayom Law” against the free daily owned by Sheldon Adelson that had become a major threat to Yedioth Ahronoth. In return, Mozes allegedly promised Netanyahu favorable coverage in the newspaper and on his Ynet website.

The Israeli media world is close to Netanyahu’s heart and he has always been willing to go very far to influence its coverage of him and his family. We have also seen it in his actions related to the new public broadcasting corporation, where he risked considerable political capital trying to block the corporation from replacing the discredited Israel Broadcasting Authority

3. We don’t know what evidence the police have, but in certain aspects Case 4000 is a relatively easy one for them to investigate.

As opposed to other cases, such as Case 3000 (the submarines case), Netanyahu can’t claim he didn’t know what was his associates were allegedly up to. He was communications minister, he was in charge, he was responsible and he was the one whose signature was on many of the documents.

4. While we have been writing that Netanyahu promoted Bezeq’s interests at the Communications Ministry, we need to be more precise and say that in a great number of instances what he promoted were Elovitch’s interests, not those of the company itself.

In many cases, decisions came at the expense of Bezeq and its minority shareholders, as the security authority’s own investigation that wound up last November clearly shows.

5. The allegations in the Bezeq case show that Netanyahu in his twin roles as prime minister and communications minister betrayed the public interest.

This cost the public double; first because of the harm it did to competition in the telecommunications sector, and second because of the damage to the investing public, which owns 70% of the company’s shares.