How Political Tycoons in Israel Evade Campaign-spending Limits

A lacuna in the law allows wealthy politicians to spend millions on campaign as long as they have not officially declared their candidacy.

Jerusalem Mayor Nir Barkat in his campaign headquarters in Jerusalem on October 24, 2013.
Olivier Fitoussi

On the second story of a Tel Aviv office building hangs a small, silver sign pointing right and bearing the name “Nir Barkat.”

If you follow the sign you end up at Nir Barkat’s headquarters in the Likud. It is a midsize office with four rooms and a joint central space, decorated with a huge picture of Barkat, the mayor of Jerusalem. Barkat’s consultants and aides man the office. Like in any election headquarters, they answer telephones, develop strategies, organize meetings and run a website.

Omri Rahamim, Barkat’s long-running assistant manages the office. Energetic consultant Kfir Safda will replace him next week. Barak Hershkovitz is the campaign spokesman. The only piece missing is Barkat’s official announcement that he’s running for something in the Likud.

Barkat doesn’t officially run for anything by design. A lacuna in the parties law allows multimillionaires like Barkat and Erel Margalit to spend millions on political campaigns and to ignore the legal spending limits for primaries, as long as they don’t officially declare their candidacy.

The law imposes spending limits based on the number of members in the electing body. In the case of the Likud, the limits are 1.6 million shekels ($424,000) for the party leadership and 415,000 shekels for its national list. The money can be taken from donations or independent sources.

The law defines a candidate as “an elected official or someone who has declared himself a candidate or announced orally or in writing definitively his intent to run in primaries.” Barkat and Margalit intentionally don’t declare, directing their activities to goals like “being counted” or “replacing the regime.”

Barkat made his fortune from his family’s high-tech holding company BRM. Forbes puts his wealth at 450 million shekels. Before he was elected Jerusalem mayor in 2008, he was a city councilman for Kadima. After the party collapsed, he started courting Benjamin Netanyahu. Last November, Barkat announced that he was joining Likud and he has since hosted many parlor meetings and party events. This week, he was in a conference with Minister Tzahi Hanegbi and sat at the VIP table.

His website indicates that he works half-time as a Likud member. He hosts groups of party members, like the Tadmor Forum and Likud Women, in Jerusalem, taking them to various sites around town, serving as a tour guide and ending with lunch in Mahane Yehuda. He bankrolls the whole visit. On Jerusalem Day, he hosted a huge party for hundreds of party members from around the country at his Beit Hakerem home. He will host a parlor meeting at the Tel Aviv Crown Plaza at the end of August.

Eyal Arad, who has been with Barkat since his early days in politics, works on his strategy. Katy Sheetrit shapes his Likud strategy. Sheetrit, a Beit Shemesh resident, is a veteran Likud activist who headed Gideon Sa’ar’s and Yisrael Katz’s offices. She ran unsuccessfully for the 19th Knesset.

She is now VP of business development at BRM, although she lacks high tech experience. Outside the company, she accompanies Barkat on his political rounds like visiting Hebron, which he described as a “professional learning tour meant to strengthen cooperation.” When asked what she does at BRM, she referred Haaretz to the office spokesman.

Barkat keeps his ambitions murky, focusing on registering new party members. His website is mostly dedicated to explaining why people should join the party, preferably registering through him so their contact details can be saved in Barkat’s database.

“The mayor has not made a decision about running for the Likud’s next elections,” Barkat told ynet. “The last elections for mayor proved that there is an important need to increase power in the political system – an important and necessary goal for ensuring the continued strength of Jerusalem, too, regardless of the national stage.”

In the video clip that he distributed during the last elections, he sounded softer. “I will make a decision whether to run again or to continue to serve the public at the national level,” he stated. “The right to be partners for shaping the face of the state in the coming years is in your hands. Join the Likud with me – now.”

Margalit’s fortune is 220 million shekels, according to Forbes. He has served as a Knesset member since 2013. Last year, Margalit made signs he intended to run for the chairmanship of the Labor Party, but he avoided declaring officially.

Margalit’s staff is smaller than Barkat’s. He spends most of his money on communications adviser Moshe Klughaupt, one of the most expensive consultants in the market. Klughaupt received 1.2 million shekels from Habayit Hayehudi in the last elections. Margalit also uploads Internet campaigns to promote himself. He, too, can access his fortune because he has not officially declared his candidacy to lead Labor.

Barkat’s office commented, “According to the law, Barket is permitted to fund” routine political activities “from his own pocket, and this funding does not require reporting on the state comptroller website.

Margalit’s office commented: “In contrast to the prime minister, who was helped by dubious donors who were recently convicted, Erel Margalit funds with his own money, what he has earned with his own hands, and doesn’t owe anything to any interested or wealthy parties.”

The State Comptroller commented that it had drawn Barkat’s attention to the law. In general, elected officials have to behave according to the law, it said. Any activity by Barkat or Margalit related to promoting their candidacy in the primaries will be examined by the comptroller in due time, including expenses paid before the election period.