Hollywood Mogul Recruited Australian Billionaire to Share Burden of Funding Netanyahu's Lifestyle

Arnon Milchan tried to soften his testimony about Netanyahu in a second round of questioning last week; Haaretz learns that Australian businessman James Packer was not questioned when he was in Israel several months ago.

James Packer and Arnon Milchan.
Ace, Bloomberg

Hollywood tycoon Arnon Milchan recruited Australian businessman James Packer to help share in financing the lifestyle of Prime Minister Benjamin Netanyahu's family, suggests evidence gathered by police during an investigation of graft allegations against him.

The probe, which police have dubbed "Case 1000," looks into suspicions that the prime minister received hundreds of thousands of shekels worth of gifts.

Netanyahu and his wife are suspected of systematically demanding cigars and bottles of champagne from Milchan, and in one instance, asking him for jewelry worth 10,000 shekels. Netanyahu said these were gifts between friends, and that he himself had bought some of the cigars with cash he received from a wealthy relative.

But testimony and other indications have raised suspicions that these were not gifts among friends but perks given by Milchan not of his own good will. One of the indications, Haaretz is reporting for the first time, is that Milchan had turned to his partner, Packer, to help cover some of the costs.

One person who knows Milchan estimated recently that Packer paid for about 25 percent of supplies for the Netanyahu family.

Another person with knowledge of the details said the fact that Milchan asked Packer to help out with the expenses shows he wasn't happy about financing the family's lifestyle. In effect, Milchan was responsible for the friendship forged between Packer and the prime minister.

Last week Milchan testified for the second time about the case. He softened some elements of what he said compared to the testimony he gave in November about the Netanyahu couple, according to sources who spoke to him after he was questioned. Milchan said he did nothing wrong, and that he didn’t give gifts to the Netanyahus with the aim of being compensated. 

But it is worth nothing that Netanyahu did intervene on his behalf, and appealed to U.S. Secretary of State John Kerry and the American ambassador to Israel, Dan Shapiro, to arrange Milchan's visa.

When he was questioned the first time, Milchan said the Netanyahus have been receiving expensive gifts from him for years, on demand. Milchan said that some of the demands sickened him.

A source familiar with the details told Haaretz that even the evidence in the file, which included text messages and testimony from Milchan's employees in Israel, raised suspicions that the Netanyahus had systematically demanded the luxurious items.

Police have had trouble taking testimony from Packer in recent weeks, as he is abroad. But information received by Haaretz shows that Packer was in Israel a few months ago at a time when police already had information connecting him to the apparent perks received by Netanyahu.

Despite this, police did not question him. The opportunity "slipped away," a senior law enforcement source acknowledged.

Packer, 48, is the son of media mogul Kerry Packer, who, until his death in 2005 was the wealthiest and most influential businessman in Australia. The son inherited a media empire, which includes the NINE television network and the CMH media and publishing company.

In early 2015, Forbes Asia estimated that James Packer's holdings made him the fourth-wealthiest person in Australia, with an estimated net worth of $4.7 billion. The sum has decreased to $2.2 billion in recent years as a result of losses in U.S. investments during the financial crisis.

Since his father's death, Packer has avoided the family's media business and decided to develop a global gambling empire.

Haaretz has reported in the past that the company Milchan and Packer were involved in employed senior experts from Israeli intelligence and security services.

The company, Blue Sky International, was set up by Milchan at the end of 2008 and Australian media said that a few years later Packer invested $15 million in it.

According to information learned by Haaretz, the Milchan and Packer initiated the establishment of a new cyber firm and aspired to recruit Mossad chief Yossi Cohen as a partner.