Netanyahu's Code Words for Cigars, a Friend's Luxury Yacht and One Frantic Call: Noose Tightens Around PM

Netanyahu probably understands an indictment is nearing, and is beginning to roll out his defense. The only problem: It contradicts some of the testimonies against him

Prime Minister Benjamin Netanyahu / Arnon Milchan / James Packer.
rancois Mori/ AFP, Vittorio Zunino Celotto / Getty Images, Julian Abram Wainwright/Bloomberg

The cigars that Israeli-born Hollywood entertainment magnate Arnon Milchan bought him for years have been replaced by a pipe – for health reasons, Benjamin Netanyahu tells people who arrive for nighttime meetings.

Some of them also receive a tour of the prime minister’s official residence on Jerusalem’s Balfour Street, so they can see for themselves how poor and neglected it is, how bare the kitchen walls are.

In recent weeks, Netanyahu has spent time briefing journalists and other opinion leaders ahead of Attorney General Avichai Mendelblit’s decision over whether to indict him, subject to a hearing. The prime minister, who said privately a few weeks ago that reaching the hearing stage would be “a failure,” evidently understands that this is no longer realistic.

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Now his guests are treated to an outline of his defense in the three corruption cases in which he is a suspect. He doesn’t display even a smidgen of regret or repentance, just a feeling of victimization.

Netanyahu tells his audience who his enemies are – the ones he accuses of trying to conduct a coup. Critical journalists are described as “nuts,” and the rhetorical question – “Have you gone crazy?” – is his response to several questions that police investigators asked him and his wife, Sara.

He never mentions his antagonist Roni Alsheich by name, referring to him instead as Mr. Police Commissioner. For now, he is careful not to offend Mendelblit, but he expresses fears that the demonstrations outside the attorney general’s home (“financed by the New Israel Fund”) will spur him to prove that he isn’t Netanyahu’s personal lawyer.

Netanyahu says he never asked for cigars or champagne from his friend Milchan. It wasn’t necessary. “Milchan was swimming in cigars and champagne,” he says, adding that his late attorney, Jacob Weinroth, authorized him to accept gifts from friends. If Sara asked Milchan or Australian businessman James Packer for luxuries of her own initiative, Netanyahu didn’t know about it.

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This version of events clashes head-on with Milchan’s testimony, and especially that of Milchan’s right-hand woman, Hadas Klein. They described a regular pattern of demands by Netanyahu and his wife, with the former being well aware of the latter.

Examples include the crates of champagne loaded into the trunk of a government car and the prime minister’s charming way of asking for cigars: “How are the green fields of Cuba doing?” Their testimony portrays the couple as very particular about the gifts they receive and as very determined to obtain them.

The first tip that Milchan was lavishing gifts on the Netanyahus reached the police in late 2015. But only many months later, in October 2016, was Klein finally asked to give a statement. In retrospect, the long period that elapsed before the investigators summoned Klein reflects senior prosecutors’ lack of enthusiasm over an investigation of the prime minister.

Today, however, Mendelblit and his staff consider her a credible witness, the most important one they have in the case, which police refer to as Case 1000. State Prosecutor Shai Nitzan said during a recent Justice Ministry meeting that her testimony is what turned the preliminary inquiry into a criminal investigation.

A new story

And now to a story that hasn’t been told before about the prime minister’s relationship with his tycoon friends. On October 9, 2016, three days after Klein gave her statement to the police, Israel Television News aired a small item by reporter Lee Naim about a big yacht anchored off the coast near Caesarea. The yacht belonged to James Packer. “Who is this mysterious billionaire and what’s his connection to the prime minister?” Naim asked.

Publication of the arrival of Packer's yacht to Israel, from the Israeli Mako web news site.

Shortly after the item aired, Netanyahu called Packer’s agent and forcefully demanded that both Packer and the yacht leave Israel. The agent didn’t pass this hysterical message onto Packer, but the businessman left soon afterwards anyway, before police investigators could question him in Case 1000. Only after about a year of international efforts did they manage to question him in Australia.

This scene reflects Netanyahu’s great sensitivity to his image as a politician who rubs shoulders with the super-rich – an image that is at the heart of this case.

In his background briefings, Netanyahu complains of discrimination: Police investigated him for his ties to Milchan but didn’t bother Milchan’s good friend Yair Lapid, the Yesh Atid party chairman and the former finance minister. Netanyahu says that Lapid, contrary to what he’s been saying publicly, never mentioned his ties with Milchan in the conflict-of-interest agreement he signed when he became finance minister. As finance minister, Lapid met with him to discuss extending the so-called Milchan Law, which grants tax breaks to former Israelis who move back to Israel.

But Netanyahu’s insinuation that Lapid also received gifts from Milchan is wrong. Lapid emerges clean as a whistle from the evidence in Case 1000. In 2013, when Lapid was sworn in as finance minister in Netanyahu’s government, Milchan sent a giant bouquet to his office. Lapid promptly sent it back.

Netanyahu completely denies that he had a quid pro quo relationship with Milchan. “I hammered him,” the prime minister says, recalling his battle to shut down Channel 10 television, which Milchan owned shares, and how in his former role as finance minister, Netanyahu worked to break Milchan’s monopoly on car imports.

James Packer and Arnon Milchan.
Chip Somodevilla / Getty Images

Netanyahu also claims to have “hammered” Arnon Mozes, publisher of the daily Yedioth Ahronoth, who figures in Case 2000. That case involves suspicions that the two discussed a deal, never consummated, in which Yedioth Ahronoth would give Netanyahu favorable coverage in exchange for government action undermining its main rival, Israel Hayom.

“I blocked all of his efforts to pass legislation against Israel Hayom,” Netanyahu says. And he dismisses the explosive question of why he held prolonged negotiations with Mozes, during which he promised to pass legislation to destroy the free newspaper that businessman Sheldon Adelson set up for his benefit, with “I wanted to buy time.”

Netanyahu describes the Bezeq telecom mogul man from whom he is suspected of actually taking bribes, Shaul Elovitch, as a mere “acquaintance.” But in the past, in response to a petition to the High Court of Justice by attorney Shachar Ben-Meir, the prime minister said there’s “a friendship of many years’ standing between the two men and their wives.” Evidently, the relationship has retroactively cooled.

On July 6, 2015, Elovitch, who controlled both Bezeq and the Walla internet news site, ordered that a certain item be prominently featured on the popular news site. In this article, then-coalition whip Tzachi Hanegbi vehemently defended the prime minister against Lapid’s assertion that the imminent signing of the Iran nuclear deal obligated Netanyahu to resign.

Hanegbi termed this demand “brazenly outrageous.” To say Netanyahu had failed because the agreement was signed would be like saying Winston Churchill had failed because the Munich Agreement was signed, he added.

Two weeks before Elovitch gave this order, Netanyahu, in his role as communications minister, had approved a deal in which Eurocom, Elovitch’s privately held company, sold the Yes satellite television company to Bezeq for one billion shekels ($270 million). This deal was extremely important to Elovitch.

But in his background briefings, Netanyahu denies that there was anything exceptional about this, saying he signed the approval just as he did every other document in the stack placed on his desk.

At least one person doesn’t seem to be convinced of this. “The regulator’s approval isn’t a technical issue; it has great substantive importance,” Judge Ala Masarwa said during a hearing on whether Elovitch’s assets should be confiscated. Regarding the timing of the deal, he added, “There’s a vast gulf between granting regulatory approval at one time and granting the same approval at a later time.” And he concluded, “Had it not been for the benefit, the deal wouldn’t have happened.”

Elovitch, represented by attorney Jacques Chen, denies this. He says the deal could also have been concluded at a later date. Netanyahu adamantly denies that he asked for or received favorable media coverage from Elovitch, claiming instead that Bezeq’s Walla news website had attacked him shortly before the 2015 Knesset election. But for his part Masarwa said he had been shown evidence that Elovitch had provided the prime minister “open access that included interference and influence over the Walla website’s news and journalistic content.”

The judge was surely referring to secret reports that the police had presented to him that included correspondence Elovitch and his wife, Iris, had with Walla CEO Ilan Yeshua linking the regulatory benefits and the skewing of Walla’s news coverage in favor of the occupants of the Prime Minister’s Residence.

Shaul Elovitch and Iris Elovitch in court, August.
Moti Milrod

Haaretz has learned that in July 2015, shortly after the Bezeq-Yes transaction was approved, there was a series of correspondents that complicated things for those involved. When he asked for Walla to slant its coverage, Elovitch explained it as something that he need to do to pay the prime minister back. He had been pleasantly surprised by the prime minister, Elovitch explained, and had done whatever he could for Elovitch.

From time to time, Elovitch asked to have subjects promoted that were “important to him,” meaning the prime minister. One source said this month that hundreds of such orders were issued. But under questioning by law enforcement, Elovitch adamantly denied that he had asked that Netanyahu be benefitted or that the prime minister be paid back for the regulatory gestures. As Elovitch would have it, all he was seeking was “not to anger the regulators.”

Elovitch had never wanted to be a news mogul. This mild-mannered man who took pains never to appear extravagant, who wore jeans and a T-shirt and drove a 10-year-old Mercedes, regularly steered clear of media coverage. When Walla held the festive dedication of its own television studio and a camera caught the boss socializing with politicians, including opposition party Zionist Union’s Isaac Herzog, those running the website received a request a short time later to scrap the pictures. The evidence in Bezeq-Walla case, which has been dubbed Case 4000, raises suspicions that Walla was just a tool to provide favors for a single purpose – to advance Bezeq’s financial interests.

In May 2015 Elovitch instructed the top executives at Walla not to provide favorable news coverage of the outgoing communications minister, Gilad Erdan, whom he would call “the boy.” Erdan, who sought to make Israel’s communications market more competitive, was Elovitch’s nemesis. Bezeq’s main concern was over a plan to reform the landline telephone market, which was expected to put a dent in Bezeq monopoly’s main source of revenues. During the period in which the order was issued, Erdan found himself for a brief period without a cabinet position, after he failed to receive an offer of a senior ministry from Netanyahu. During his brief period on the outs, Erdan announced that he would promote a bill to break up Bezeq. This independent streak ended when Erdan landed the post of public security minister.

On September 17, 2014, Interior Minister Gideon Sa’ar astounded the political establishment when he announced that he was quitting the cabinet. The following morning at 8.30, a well-connected lobbyist, Yisrael Yehoshua, sent Bezeq’s VP for regulatory affairs, Sharon Fleischer, a text message reading: “Looks like Gilad Erdan is going to Interior.”

During that period, Erdan had initiated an effort to reform the telephone service sector. He summoned representatives from Bezeq to a hearing ahead of a decision and Fleischer brought the heavy guns in soften the blow. One of them was Yehoshua.

“We received a letter today that they are not giving any further extensions,” Fleischer told him, referring to the hearing date. “It’s a disgusting letter.”

“Don’t worry,” Yehoshua replied, adding “the reform will be deferred until the next minister.”

“That’s your mission!!” Fleischer shot back, and Yehoshua promised to brief Fleischer after the lobbyist met with his good friend Erdan. Two months elapsed, and Netanyahu appointed Erdan as interior minister. On his last day on the job as communications minister, Erdan signed off on regulations requiring Bezeq to sell its landline services to a competitor at a government-controlled price, but he was no longer at the Communications Ministry to see to it that the regulations were implemented.

Yehoshua’s prediction came true. The reform plan landed on the lap of the next communications minister, Netanyahu, who took on the additional portfolio himself, and where it stalled again. Every day that the reform didn’t get implemented saved Bezeq a fortune. Although Bezeq continued to pay lobbyists who had the ear of government ministers and regulators, it appeared that the company’s best lobbying efforts were Netanyahu and Communications Ministry Director General Shlomo Filber. The suspicion is that what was given in return was the trampling of Walla’s journalistic principles.

The investigation of Case 4000 is nearing an end, but no one would be surprised if further work is required after the police release their conclusions. It’s doubtful that there would be a decision this year or early next on a possible indictment against the prime minister in the case, subject to a hearing.