Netanyahu Confidant’s Favors in Telecoms Graft Case Worth Over 1 Billion Shekels, Prosecution Claims

Telecoms tycoon and Bezeq owner Shaul Elovitch complains in court about ‘repeated attempts to break my spirit,’ while his wife, Iris, is released to house arrest for 10 days as Case 4000 probe continues

Shaul Elovitch in Tel Aviv District Court, February 22, 2018.
Ofer Vaknin

Bezeq owner Shaul Elovitch gave and received favors totalling over 1 billion shekels ($286 million) in the graft case involving his telecom giant and Prime Minister Benjamin Netanyahu, according to the prosection in a Tel Aviv court on Monday.

The detention terms of four suspects in the case were also eased by the court on Monday. The state had sought to extend the suspects’ detentions.

Elovitch, however, had his detention extended until Sunday, as did Nir Hefetz, a confidant of Prime Minister Benjamin Netanyahu, who allegedly was involved in coordinating the benefits offered to Bezeq in exchange for favorable coverage of Netanyahu and his wife by the Walla website, also owned by Elovitch. The lawyers for both men said they planned to appeal the decision.

The detention of media adviser Ei Kamir, who is also suspected of involvement in facilitating the benefits, was extended until Wednesday. 

The move followed Sunday’s revelations that the judge previously presiding over the case – known as Case 4000 by the police – had improperly coordinated with a lead investigator over the detention terms of four suspects. Judge Ronit Poznanski-Katz is alleged to have coordinated via WhatsApp with Israel Securities Authority lawyer Eran Shacham-Shavit. The suspects in question were Bezeq CEO Stella Handler; the company’s vice president Amikam Shorer; Shaul Elovitch’s son, Or; and Shaul Elovitch’s wife, Iris.

Justice Minister Ayelet Shaked and Supreme Court President Esther Hayut have asked the ombudsman covering complaints about judges to examine Poznanski-Katz’s actions.

Poznanski-Katz has been placed on leave following the revelations of alleged misconduct.

On Monday, Judge Ala Masarwa, appointed in place of Poznanski-Katz, held an emergency hearing on the petitions calling for the suspects’ immediate release based on claims of judicial prejudice. Or Elovitch and vice-president Shorer were released with restrictions.

Iris Elovitch was released to house arrest for 10 days, with restrictions – including a ban on leaving the country and a prohibition on entering Bezeq’s premises or contacting anybody involved in the affair for 45 days. However, Masarwa rejected the prosecution’s demand that Iris Elovitch be barred from granting interviews.

Bezeq CEO Handler was released to house arrest for seven days, also with restrictions – including staying away from Bezeq’s premises for 30 days. She was also banned from contacting anybody involved in the affair for 45 days.

All of the suspects deny any wrongdoing.

In his decisions, Masarwa referred to the claims by the suspects about the harsh conditions of their detention, but said that public interest in having the investigation continue without disruption outweighed their distress. “My conclusion is that releasing the suspects at this point is liable to severely undermine the investigation, particularly since important investigative steps are expected during the next few days.”

The suspects’ attorneys tried to argue that the revelations about the coordination between Poznanski-Katz and Securities Shaham-Shavit had tainted the whole detention process and that their clients were being held illegally.

“This detention process in this case is tainted,” said Elovitch’s attorney, Jacques Chen. “It is so tainted that one can no longer rely on the [earlier] detention decisions that have kept [Elovitch] detained. […] There is a fault in the DNA, in the entire genetic fabric of the detention process.”

Attorney Sharon Kleinman, representing Kamir, said, “We find ourselves with the very bad feeling that we were extras in what we could term a fixed game.” She demanded that the court “obtain the entire exchange of messages and not just what was filmed. The entire exchange of messages has ramifications for the decisions that were made.”
Masarwa acknowledged the suspects’ anger over the revelations of  coordination but said, “Even if I take into account the feelings of the suspects following this revelation, still, the public interest holds fast, given the combination between the seriousness of the case and the evidence, which is getting stronger.”

Shaul Elovitch acquired control of Bezeq in 2010. The telecom tycoon allegedly had close ties with Netanyahu and one of the prime minister’s confidants, Nir Hefetz – a former journalist turned media adviser who allegedly brought heavy pressure to bear on various news outlets to publish favorable reports about the Netanyahus.

Shaul Elovitch complained to the court Monday about “repeated attempts to break my spirit so I will admit to things I never did.” He vowed that “even if I keel over and have a heart attack, I won’t do it, I won’t lie.”

He added that he suspected his situation was being exploited in order to “finish me. They will finish me, emotionally and my health.”

Speaking for the prosecution about why the detentions should be extended, the ISA’s Yehudit Tirosh said the state took an extremely grave view of Poznanski-Katz’s alleged attempts to coordinate detention terms, but said the gravity of the case was unaffected.

Tirosh said she had been a prosecutor for many years, but had rarely encountered obstruction allegations as severe as the ones leveled at Elovitch and Hefetz, and also the alleged obstruction by Shaul and Iris Elovitch.

The investigation will continue, Tirosh said – which is why the suspects’ detention needed to be extended.

In Case 4000, the police suspect that while serving as communications minister between 2014 and 2017, Netanyahu intervened with regulators to help the Bezeq group. In exchange, Elovitch allegedly ordered the Walla news website (owned by Bezeq) to provide favorable coverage of the prime minister and his wife, Sara Netanyahu.

The police are set to interview the prime minister on Friday, before he flies to Washington on Saturday for the AIPAC Policy Conference and a meeting in the White House with U.S. President Donald Trump.

Shaul Elovitch, his son Or and daughter-in-law Orna Elovitch-Peled notified the Bezeq board on Sunday of their resignation as directors. The board, however, has not discussed whether Handler should stay on as CEO.

Also Sunday, Israeli institutional investors decided that Bezeq’s corporate governance problems have become critical enough for them to intervene. Entropy, a company that advises institutions, said it would call an extraordinary shareholders’ meeting to propose expanding Bezeq’s board from nine to 12, and to name outside directors to the board.

Entropy has tried to intervene in Bezeq before, but couldn’t get enough institutional investors on its side. Now it has.