Israeli Watchdog Slams Miami Jewish Charity Used to Funnel Money to Right-wing Groups

Registrar of nonprofits found that the Falic family's Segal Foundation for Israel flouted regulations and failed to meet its stated goals

Leon Falic, Eric Lauzat, Jerome Falic and Simon Falic in 2008.
BILLY FARRELL / Patrick McMullan

Israel’s Registrar of Nonprofit Associations harshly criticized the conduct of a charity funded by a wealthy South Florida Jewish family, terming it a conduit for directing funds to right-wing organizations in Israel.

In an audit conducted over the past few months, the state agency found that the Segal Foundation did not comply with its stated goals and did little more than transfer millions of shekels to right-wing organizations in Israel, without clear criteria.

The entire budget of the Segal Foundation for Israel comes from companies in Panama owned by the Falic family, members of which are among Prime Minister Benjamin Netanyahu’s regular donors.

The foundation was established in 2007 for three purposes, according to its filing with the registrar: “to establish and develop cultural-education projects on Israeli heritage and Jewish settlement in Jerusalem and Israel ... to initiate, establish, produce and support projects and activities to commemorate the heritage of [the Old City of] Jerusalem’s Jewish Quarter [and] ... to initiate, establish, produce and support projects and activities for the sake of Israel and its heritage.” The report, which was commissioned by the agency from accountant Pinchas Cnaany, reviewed the foundation’s activities between January 2016 and April 2017.

“The main activity of [the Segal Foundation for Israel] was to transfer money to nonprofit associations whose goals and activities do not comply with [the foundation’s] stated goals, in violation of the guidelines for the conduct of nonprofits in accordance with the Law of Nonprofit Associations,” the report said.

The report went on to say that the foundation, in violation of the law, does not meet any of its stated goals. Furthermore, it fails to maintain a written protocol for making allocations to the organizations that it supports and does not manage a budget, also in clear violation of the law governing nonprofit associations. In other words, according to the auditor’s report, the Segal Foundation is little more than a conduit for disbursing funds to right-wing organizations.

The registrar of associations said it did understand how the foundation chose which organizations to support. In the absence of a formal request process, prospective recipients “turn to members of the foundation or to relatives of the founders,” the report said, noting that a review of a representative sample of allocations to various organizations “found no grant applications.”

Two sources, both of which spoke on the condition of anonymity, told Haaretz that the foundation’s conduct suggested an attempt to conceal its supporters. And in fact, members of the Falic family did not donate directly to the right-wing organizations, preferring to use secondary channels instead. Family members deposited funds with companies registered in Panama, which then went to the Segal Foundation for Israel, which in turn allocated the money to nonprofit organizations in Israel. That, despite the fact that according to the registrar most of the funding requests were made in the form of “applications to the foundation’s founders,” and without clear criteria. The sources noted that while it was common practice for wealthy businesspeople to make donation through foundations, rather than directly, the fact that the monies in this case went through additional companies, all owned by members of the same family and registered in Panama, a country known for being a tax haven, was unusual.

The report does not list all the organizations the foundation supports, but an examination by Haaretz confirmed that the activities of some of them do not match the foundation’s stated goals. Its beneficiaries include the “foundation for cultivating the Zionist idea,” whose executives include settler leader Zeev Hever and which acts to promote building in the territories.

Haaretz reporter Uri Blau revealed that the Segal Foundation also allocated funds to Elad and Im Tirtzu, which in turn passed on funds to an organization headed by Ben-Zion Gopstein, who also heads Lehava, an organization that is dedicated to preventing personal, romantic or business relations between Arabs and Jews. Segal also funds pre-military yeshivas for teen boys that are associated with the right.

The registrar instructed the Segal Foundation to fix its shortcomings, including by changing its stated purposes (and removing goals it “does not intend to advance in the foreseeable future”); to update its protocol for approving grants and create a grant application form whose use would be mandatory.

The foundation was also ordered to set permanent, egalitarian and publicly disclosed criteria for giving money, which would have to be approved by its management committee.

It bears noting that the association’s documentation includes a proper governance confirmation certificate by the registrar, dated July 2016, for the year 2017.

According to the foundation’s own documents, its entire revenue, amounting to a few million shekels a year, comes from the Panama-registered companies UETA Tzedakah and IBW Tzedakah, both of which are headed by one Leon Falic. The companies’ directors are listed as Simon Panic and Jerome Falic.

Leon, Jerome and Simon Falic, as well as a woman named Nili Falic, each contributed about $12,000 to Netanyahu’s 2014 Likud primary campaign, according to publicly available information on the state comptroller’s website.

Regarding the recommendations of the registrar’s report, the Segal Foundation for Israel said in a statement that one of its purposes is to initiate, establish, operate and support projects activities for Israel, and support for charities complies with that definition. Naturally, it added, the association intends to comply with these purposes explicitly.

The foundation rebuffed the claim that it does not meet its stated goals, noting its support for the Ateret Yerushalayim and Bnei David premilitary academies.

In response to the claim that it does not have a formal, written budget, the foundation said its budget has just three line items and is handled orally. In light of the registrar’s report, the 2017 budget will be written.

Responding to the report’s determination that it had no written protocols for the disbursement of funding, the foundation confirmed that this was indeed the case but added that the protocols governing the conduct of nonprofit associations were irrelevant to its conduct. In the wake of the report, a protocol for disbursing grants was drawn up.

The foundation disputed the claim that prospective recipients simply contacted members of the foundation or relatives of its founders, saying it has a protocol for submitting grant applications.