Minister's Associates Funneled Millions From Periphery Budget to Religious Groups

The state comptroller is investigating how millions of shekels earmarked for strengthening outlying areas were transferred to religious and settler institutions, according to a draft report devised in recent months. 

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According to sources privy to the draft, the comptroller is looking into associates of Agriculture Minister Uri Uriel who presented themselves as the minister's advisers even though they held no official capacity. Some of the people in question held positions or were associated with officials at the institutions that received the funds. 

The draft deals with the previous government term, during which Ariel served as housing minister. In September 2013, the government agreed to transfer 110 million shekels ($28.2 million) in aid to the periphery. In practice, 51 million shekels ($13 million) of this was channeled to religious institutions, including religious Zionist Torah study centers, through the World Zionist Organization's settlement division. A further 8 million shekels was transferred through the department for rehabilitation of neighborhoods at the then-Housing and Construction Ministry.

Following a meeting of the Knesset’s State Control Committee and after complaints were filed, State Comptroller Joseph Shapira started investigating the matter a few months ago. Government ministries have recently received his 48-page draft report into the affair.

According to those who have read it, the report looks into how Ariel's associates allegedly bypassed the government’s decision and the ministry’s professional staff in order to transfer funds to groups close to their hearts. A source familiar with the draft notes that the state comptroller sees the case as an example of how lobbyists usurp the place of state officials to serve extraneous interests.  

Haaretz has learned that the comptroller examined the manner in which the government resolution was adopted, and at how the “periphery” was defined. He also looked into why a steering committee overseeing the resolution was only set up 13 months after it was passed, after the Housing Ministry had already transferred money to the Settlement Division. He also considered why professionals at the ministry were excluded from the criteria process, and what monitoring procedures were set up in the Settlement Division.

The comptroller also examined the conduct of the then-housing minister’s advisers. He probed how Israel Malachi, the minister’s adviser, seemingly bypassed the ministry’s professionals and determined criteria for distributing the money on his own; how he continued dealing with this matter after he supposedly left office, and how he allegedly ratified the transfer of funds to an NGO he had managed four years previously.

Another part of the report deals with Ariel Dorfman, a member of the Tekuma party’s central committee. He allegedly presented himself as the minister’s adviser, even though he had never been employed by the Housing Ministry. The comptroller examined why Dorfman attended professional meetings as the minister’s representative, despite never having been one, and how millions of shekels found their way to NGOs managed by Dorfman or his associates, or in which he was a board member or in which his wife was employed.

The comptroller also investigated how a cabinet decision to distribute money to the periphery turned into a decision that benefited groups in central Israel, and how the minister’s advisers exerted pressure in order to remove a criterion that benefited the periphery.

Shapira also probed how the Settlement Division transferred funds to NGOs in Ra’anana that the Housing Ministry had refused to fund, and why six biblical study groups in Tel Aviv were funded – including one in the upscale neighborhood of Ramat Aviv.

After receiving responses from all professional groups involved in the matter, the comptroller will decide whether to transfer the material to the police or whether to publish it as part of his annual report.

Ariel is said to be concerned about the anticipated report and has hired attorney Eli Zohar in order to respond.

Israel Malachi said he could not “respond to the issue in a detailed manner” since the matter is still under investigation. “Nevertheless,” he added, “I would like to clarify that all my actions were legal and there was nothing untoward in my conduct.”