Israeli law enforcement officials are having difficulty getting information they’ve requested from their U.S. counterparts regarding Prime Minister Benjamin Netanyahu’s buying and selling of shares in a company owned by his cousin, Haaretz has learned.
The request was made several months ago, but U.S. authorities are dragging their feet in providing the information, which is meant to help Attorney General Avichai Mendelblit decide whether a criminal investigation should be launched.
LISTEN: Annexation vexation comes between Bibi and the settlers
A source familiar with the request to the American authorities said, “There is no evidence that the delay in receiving answers is politically motivated, but it is certainly exceptional and makes one wonder.”
The questions relate to Netanyahu’s sale of the shares in the SeaDrift company, which was owned by his cousin, Nathan Milikowsky. According to documents submitted to the State Comptroller’s Office, in 2010 Netanyahu earned millions of dollars from the sale. According to a source familiar with the case, “The answers from the United States are meant to help Mendelblit understand whether in the story of the purchase and sale of the shares there’s a suspicion of criminal violations by Netanyahu, or whether the issue doesn’t warrant an investigation.”
Netanyahu is now on trial in three separate cases involving bribery, fraud and breach of trust. In the past Haaretz reported that the Trump administration had prevented Israeli authorities from taking testimony from former Secretary of State John Kerry and former U.S. Ambassador to Israel Dan Shapiro regarding one of the cases, the lavish gifts case, known as Case 1000. Netanyahu allegedly asked Kerry and Shapiro to extend a visa for tycoon Arnon Milchan, who gave Netanyahu thousands of shekels worth of benefits and gifts, including expensive cigars and champagne.
The stock case came to light when Netanyahu requested permission from the permits committee, which operates in the State Comptroller’s Office, to raise millions of shekels for his legal defense in the three cases from wealthy American associates – his cousin Milikowsky and Spencer Partrich. The committee asked Netanyahu to submit a wealth declaration so they could evaluate his financial situation and determine whether he had the means to fund his own defense.
The prime minister refused to submit the declaration. Then State Comptroller Joseph Shapira did not submit precise details to the committee, writing only, “Based on wealth declarations that Netanyahu has submitted to the comptroller’s office in the past, it’s clear that he’s a wealthy man.”
- For 50 minutes, Netanyahu's fate was controlled by two women in black
- Netanyahu trial: PM is finally facing opponents who won't back down
- Netanyahu on trial: Everything you need to know
Seeking to find out the extent of Netanyahu’s wealth, committee members examined previous requests Netanyahu had submitted to the permits committee, from which it emerged that in the latter part of 2010, he had earned 16 million shekels (over $4.4 million) from the sale of stock in a company owned by Milikowsky.
Milikowsky transferred the shares in SeaDrift Coke, a Texas-based company making products for the steel industry, toNetanyahu for $600,000 in 2007, when he was head of the opposition. Three years later the shares were sold to GrafTech International at a huge profit, as evidenced by documents that the prime minister himself gave to the state comptroller through his attorney, David Shimron.
In a document that Shimron gave to the permits committee and whose contents were made known to Haaretz, he described the transaction as follows: “Mr. Netanyahu, in August 2007, invested a total of $600,000 in a limited partnership called NMSD and he held 1.7 percent of this entity. […] He has no voting or managements rights in this entity at all. The other shareholders are his cousin, Milikowsky, and his immediate family. NMSD in turn holds 61 percent ownership in an industrial concern called SeaDrift Coke LLP, which deals with steel enhancements. […] SeaDrift is an extremely profitable company.”
In a later report, Shimron wrote, “On [November 29, 2010] Netanyahu sold his share in NMSD LLC to the company NDNM Investment LLC for $4.47 million. The sale was part of a transaction in which all the rights in NMSD were sold to GrafTech. The price was identical to the price at which the other partners sold.”
Reports by TheMarker reporter Gur Megiddo show that the purchase of Netanyahu’s stake in SeaDrift valued the company at only $37.5 million, but Seadrift shares that were sold not long after Netanyahu bought his shares valued the company at nearly 19 times that figure. The implication is that Netanyahu purchased his shares at a discount of some 90 percent.
The prime minister also gave conflicting versions of his status during the period he held the shares. At first he claimed that he had purchased them when he was a private citizen, but later, when TheMarker revealed that the company through which he held the shares was only set up in 2007, he explained, “I meant a period in which I wasn’t a minister.” Even before that, Netanyahu claimed he had no connection to Milikowsky’s businesses at all.
The investigation of the lavish gifts case showed that Netanyahu and Milikowsky have had an ongoing financial relationship. The prime minister claimed in his defense that he had purchased some of the cigars Milchan had allegedly given him with money that he received from his cousin. “He gives me a few thousand dollars every year,” Netanyahu said. Milikowsky, who was asked to give evidence in the lavish gifts case, confirmed that he gave the prime minister money, sometimes through Netanyahu’s wife Sara and older son Yair. Milikowsky also bought Netanyahu suits and helped his daughter from a previous marriage, Noa, buy an apartment.
After Netanyahu’s request to the permits committee, the issue of the stock sale was brought to Mendelblit’s attention, and the Justice Ministry began to look into it. Ministry personnel sought to determine whether this was a real transaction or a sophisticated way to funnel money to the prime minister. An associate of the prime minister told Haaretz that the sale of the shares “was a real and legitimate business move that was fully reported to the authorities.”
In addition, officials are checking the veracity of the declarations Netanyahu made to the state comptroller regarding his financial relationship with Milikowsky. Last year, even as the permits committee was dealing with Netanyahu’s relationship with his cousin, the legal adviser of the State Comptroller’s Office at the time, Prof. Yoram Rabin, wrote to Mendelblit in Shapira’s name. In a letter whose contents are being disclosed here for the first time, the comptroller points to substantial problems in the reports Netanyahu provided his office about the sale of the shares, as well as about the funds he took from Milikowsky for his legal defense, approval for which the permits committee never granted.
The letter notes that a few months after Netanyahu became prime minister in 2009, he was told to move the shares into a blind trust, in other words, to someone who would manage the shares based on his own judgment, with Netanyahu unable to intervene. According to the letter, Netanyahu never did so.
Rabin wrote in the comptroller’s name, “It should be noted that the prime minister was to move his securities into a blind trust, but he never did so. Despite this, he sold the securities after three years at great profit.” He added, “Theoretically, the non-transfer to a blind trust as stated above was done to retain control at the time of the sale and leave the choice of the purchaser in the hands of the prime minister.”
In 2017 Netanyahu received $300,000 to finance his legal defense, even though he had no permission to do so. Most of that money was paid to the late attorney Jacob Weinroth, who was representing Netanyahu and his wife. From Rabin’s letter it emerges that Netanyahu didn’t include that contribution in the wealth declaration he submitted for that year. Every minister is supposed to submit a wealth declaration once a year, which is kept in a safe in the comptroller’s office, and in which the minister is to list every sum of income he received from any source.
One of the prime minister’s associates said this week that Netanyahu didn’t think he had to include the money he got from his cousin in the declaration, because it wasn’t “income,” that its omission was innocent and that in general, his declarations to the comptroller were reliable.