“This can’t be true,” muttered former Attorney General Yehuda Weinstein three years ago, when he received some volatile information about suspected money transfers to Arye Dery. Weinstein, at the end of his tenure, reacted with emotion. He had represented Dery in the past and saw him as a moderate, wise person. He was hoping the suspicions were false. He couldn’t believe that a politician who had paid heavily for past sins had returned to the scene of the crime.
According to information the attorney general received from the Money Laundering and Terror Financing Prohibition Authority, millions of shekels had been transferred to the account of attorney Shlomo Dery, the Interior Minister’s talented, well-connected brother. Most of the money went to financing Arye Dery’s needs, including the purchase of a vacation home.
‘The Dery file is a sad one’
The investigation of this case is another example of the scandalous rate at which criminal cases against high-level figures are handled in our times. Benjamin Netanyahu is not alone in this category. In March 2016, then-incoming Attorney General Avichai Mendelblit announced that he was opening an investigation of Dery on suspicion of bribery. Behind these suspicions was the belief that businessmen, such as the family of Austrian tycoon Martin Schlaff, were behind these large money transfers to Dery’s brother and from there to the Shas party chairman.
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Preliminary investigations in Germany could not substantiate these suspicions. Schlaff, who visits Israel on occasion, was not called to give testimony. “The suspicion was that Dery wanted to obtain a lot of money before his comeback to politics but this remained a speculation,” says a senior law enforcement figure. “This story never got off the ground.”
Another suspicion related to charities managed by Dery’s wife Yaffa. It was believed that money going to these charities found its way to financing the Dery family. This story is also missing from the latest police recommendations. “The Dery file is a sad one,” said someone familiar with the details leading to the flop of the two main issues that were the subject of investigation, involving serious public corruption.
Millions in cash
However, Dery was unlucky. Tax Authority investigators looking into his accounts and real estate deals, mainly in the years he was preparing his return to politics, were suspicious of tax irregularities involving millions of shekels. “These were serious violations of a criminal nature,” a law enforcement official told Haaretz. “He dealt in cash, just like the lowliest money changers in south Tel Aviv.”
Haaretz has learned that during his years out of office, huge sums of cash, estimated to be in the millions, flowed his way. The Supreme Court ruled in the past that where cash flows in sealed envelopes without documentation, there is an indication that something is fishy. Anyone receiving cash this way has an onerous obligation to prove the legitimacy of the transaction, said the court.
In his own defense, Dery claimed that these large amounts of money were received at family events and celebrations, with the money kept in a safe. He used this cash to cover overdrafts in his account. “That’s how it is with Arabs and the ultra-Orthodox, they work with cash,” Dery once said to an associate. “You wouldn’t understand.”
The Tax Authority also looked into real estate deals Dery made in recent years, suspecting that he had cheated on capital-gains tax payments. In 2010, Dery bought land in Jerusalem’s Givat Shaul neighborhood for $1 million, assisted by a mortgage. Upon his return to politics he sold the plot to his brother. Suspicions arose that the two had defrauded tax authorities, paying reduced capital gains taxes. “We’re good partners,” Dery once said. “He brings it in and I spend it.”
Shlomo Dery is a key figure in this case, suspected of failing to declare millions of shekels of income. “He took the bullet for his brother,” said someone familiar with the investigation. The evidence showed that over the years Shlomo Dery had propped up his brother to the tune of millions of shekels in cash, and through bank transfers.
At the expense of tycoons
Dery’s sponsors included not only his brother. The investigation shows that Dery lived at the expense of wealthy tycoons while waiting to return to politics. A few years ago, he bought biotech stocks for $300,000. Haaretz has learned that he got the money from an American businessman. The loan was repaid by his benefactor brother.
In 2011 Ilan Sharabi, a businessman and good friend of Dery, put 200,000 shekels ($54,000) in Dery’s account. The two later described this as an interest-free loan. It was not repaid until Dery was questioned about it by police. Dery said he’d forgotten about the loan, which is why he didn’t repay it. He is suspected that as interior minister he asked his subordinates to take care of business related to Sharabi. Earlier, Dery sold land in Jerusalem to one of his Shas associates, Moshe Idan. Surprisingly, the capital gains tax was paid by the purchaser, not by Dery. Idan told Haaretz that there was confusion around the issue, which is all he agreed to say.
Dery’s investigation again casts light on the two-sided, enigmatic figure of someone who’s been in the corridors of power for four decades. Two attorneys general have said he is knowledgeable and experienced, responsible and moderate. However, the evidence collected so far shows his poor judgement, haste, incaution and an almost pathological tendency to repeat past sins.
The first Dery trial was about a rising star who was blinded by power and money, living at others’ expense, with high-flying trips to London. When things went awry, he and his associates worked to obstruct the investigation and locate police eavesdropping devices. They worked to install an attorney general who would extricate the guru from the clouds darkening around him.
In this round of investigations, Dery is more mature and restrained, refraining from attacking law enforcement authorities, which he did bombastically in the earlier round. But several elements still reverberate from the previous investigation: his reckless and unsophisticated financial conduct, living at the expense of others, and a suspected clumsy and foolish attempt to obstruct the investigation. Dery was warned by police not to talk to one of the people involved, but proceeded to call that person as soon as he came out of the police station.
The file will now go to state prosecutors, who have promised to make up for the slow pace of the police and reach a decision quickly. The investigation has been looming over Dery for three years, oppressing and sometimes paralyzing him. He said Tuesday that state prosecutors will find that he did not break the law. This is doubtful. A cautious estimate is that he will be indicted, even if some police recommendations are dropped, 16 years after being released from prison, forcing him to gather his strength for another legal battle.