Israel Taps Settler NGO Lawyer to Handle Bankruptcy of Palestinian Firm He's Working to Evict

Avraham Moshe Segal is using shell companies and other legal means to oust Palestinian owners of the Petra Hotel. Justice Ministry source: An inquiry is needed to determine conflict of interest

Nir Hasson
Nir Hasson
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The Petra hotel in East Jerusalem, the owners of which are under pressure from Ateret Cohanim to abandon the premises.
Nir Hasson
Nir Hasson

The attorney for right-wing settler group Ateret Cohanim has been named the official receiver in a bankruptcy case involving a Palestinian company in East Jerusalem, which he has also been fighting in court via shell companies.

The Palestinian company in question operates a hotel in Jerusalem’s Old City that Ateret Cohanim purchased through a front company. The attorney, Avraham Moshe Segal, has also assumed a debt that the company owes one of its employees, which will enable him to pressure it to abandon the premises.

A source at the Justice Ministry, under which the department of the administrator general and official receiver operates, told Haaretz that an appointment such as Segal’s demands an inquiry to determine whether there may be a conflict of interest.

Ateret Cohanim, which works to augment the Jewish presence in the eastern part of the city, bought the Petra Hotel from the Greek Orthodox Patriarchate via foreign companies as part of a 2004 deal involving the purchase of three buildings in the Old City. The controversial deal was signed by the former patriarch, Irenaeus I, who was ousted from his post afterward in an unprecedented move by the Greek Church.

Former patriarch of the Greek Church, Irenaeus I, who was ousted from his post
Former patriarch of the Greek Church, Irenaeus I, who was ousted from his postCredit: Nir Keidar

Segal has been representing the three foreign entities, registered as tax shelters, as part of a long legal process against the patriarchate that is aimed at pushing the transaction through.

One of the companies, called Berisford, purchased the premises in which the Petra Hotel is located. The patriarchate denied that the deal had been struck, claiming that it was tainted by corruption and a bribe that Ateret Cohanim paid to senior church figures. However, in 2018, Jerusalem District Court Judge Gila Kanfi-Steinitz ruled that the sale was legal.

In the meantime, however, Ateret Cohanim is not allowed to evict the (now-bankrupt) Petra Hotel company that runs its hotel on the premises, because that firm was founded by a Palestinian family whose members have the status of protected tenants.

Thus, along with ongoing legal wrangling about finalizing the sale of the property, Ateret Cohanim head Mati Dann and attorney Segal have sought other ways to make Petra Hotel vacate the premises. Segal signed a deal with former hotel manager Ted Bloomfield to cover Petra Hotel’s debt to him, to the tune of 386,000 shekels ($112,640).

Haaretz has obtained the copy of an agreement signed in 2012 between Bloomfield and a foreign company called Anrech, which is registered in the British Virgin Islands as a tax shelter for companies that do not wish to reveal information about their shareholders. Anrech’s address in Israel is Segal’s office.

According to the document, the company bought all the rights to which it is entitled from Bloomfield while, for his part, he was obligated not to take any action with regard to the debt. Paragraph 8 says he must “keep this agreement under complete secrecy and not reveal its existence under any circumstances to any third party.”

Petra hotel in East Jerusalem, February 10, 2020.
Petra hotel in East Jerusalem, February 10, 2020. Credit: Ohad Zwigenberg

Thereafter, Segal represented Bloomfield in two separate lawsuits against Petra Hotel.

In 2017 Jerusalem District Court Judge David Mintz appointed Segal to be special manager of Petra Hotel, as part of the company’s bankruptcy process, despite the fact that Segal is not experienced in this form of law. Thus not only did he become the company’s receiver (in Bloomfield’s name), and the buyer of the premises in which the hotel operates (in the name of the shell company, Berisford), but also a special manager who would handle the company and its debt payments.

Meanwhile, the company’s shareholders, backed by the Greek Orthodox Patriarchate, have tried to fight the appointment and requested its revocation.

“The job holder in question [i.e., Segal] has been involved as part of his role in more than a few legal processes against the company and they have taken place in every legal instance, over a number of years, enough to enable us to say and even determine that there is more than a fear of a conflict of interests here,” says the request to dismiss Segal that was submitted by the company to the Jerusalem District Court.

Mintz hasn’t commented on the request or rendered any decisions on it. Without offering any explanation, even the official receiver in the Justice Ministry who is in charge of companies facing bankruptcy – and is supposed to be supervising Segal – did not comment on the request.

After an inquiry from Haaretz, the ministry spokesman commented that “due to an oversight in the office, the administrator general has not responded to the request for attorney Segal to be removed from his post, and he will do so in the coming days.”

For their part, Palestinian sources in East Jerusalem have said in the past that the administrator general and officials dealing with receivership at the Justice Ministry advance the interests of settler associations in the city. The same officials have helped Ateret Cohanim become trustees of an entity that handles ostensibly sacred property in the Batan al-Hawa neighborhood in Silwan, East Jerusalem. The transfer of this role to Ateret Cohanim has put hundreds of Palestinians at risk of being evicted from their homes, as has been reported here.

A house in Silwan neighborhood of east Jerusalem Thursday, Aug. 27, 2015 where activists from the Ateret Cohanim settler organization moved into the building taken from Palestinians.
A house in Silwan neighborhood of east Jerusalem Thursday, Aug. 27, 2015 where activists from the Ateret Cohanim settler organization moved into the building taken from Palestinians. Credit: AP

In 2018 Haaretz reported that the Justice Ministry office of the administrator general had transferred responsibility for its East Jerusalem portfolio to a unit headed by an official named Hananel Gurfinkel. Gurfinkel, a right-wing activist and member of the Habayit Hayehudi party, has called for Judaizing Jerusalem. In the same article it was revealed that attorney Segal had been appointed to represent the administrator general in various matters involving Palestinian families in the East Jerusalem neighborhood of Sheikh Jarrah. Since then, however, Segal’s work in that capacity has ended. The ministry acknowledged that this was a result of the article’s publication.

In response to this article, Haaretz received this statement from attorney Segal: “The timing of Haaretz’s query is not surprising because the shareholders of the companies in receivership know well that the Jerusalem District Court, which is supposed to come up with its ruling in the coming days, will not lend a hand to the mass smuggling of assets and wrongful preference for creditors, which the companies and their shareholders have engaged in for years, and by which they accrued huge debts (of more than five million shekels) to the tax authorities, the City of Jerusalem, the National Insurance Institute and others.

“Once the shareholders have begun to understand that the companies in receivership have no defense against the results of the serious actions they took, and that they shall soon need to pay the price for the full severity of their actions in court – they have opted for mudslinging at the special manager via Haaretz, in the vain hope of sparing themselves from the full force of the law.

“We would also point out that attorney Segal’s appointment to the post was done legally, once the full picture – including the fact that Segal represents the receivers of the companies being dismantled – was presented to the Jerusalem District Court. The appointment was done with the agreement of the largest receiver (the Jerusalem Municipality) and with the agreement of the official receivers, and no misdeed was found.”

The Justice Ministry said that “the facts that are mentioned and the reference to attorney Segal working on several fronts against the company owners and representing the company’s debt-holder, were brought before Jerusalem District Court (Judge Mintz), as part of the discussion about the company’s dismantling on March 27, 2017. There was no conflict of interests found that would justify disqualifying him for the job.

“With regard to questions about an article from two years ago, it can be said that following the investigation, the issue was raised by the ministry’s legal department and afterward Mr. Gurfinkel was subject to a process regarding a conflict of interest.”

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