The Fraud of Israel’s 'Air Force One’ Exposed in State Comptroller Report

The 'Wing of Zion' cost Israeli taxpayers 600 million shekels ($183M), and some people turned a profit from it. So why are the culprits nowhere to be found in the new report?

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According to the comptroller’s report, it didn’t take long to realize that this project would not meet the budgetary restrictions.
According to the comptroller’s report, it didn’t take long to realize that this project would not meet the budgetary restrictions.Credit: Nir Keidar
Avi Bar-Eli
Avi Bar-Eli
Avi Bar-Eli
Avi Bar-Eli

At first glance, there’s nothing about in the latest state comptroller’s report on Israel’s first official prime ministerial plane, dubbed Wing of Zion. Place a grandiose project based on considerations of personal comfort over a low flame, wrap it in security pretexts, add covert elements according to taste, scatter a few financial fig leaves, sprinkle a pinch of confidentiality on top – and mix well with loyal hands.

The result: an Australian passenger plane that entered service in 2000, landed in Israel six years ago under the cover of fictitious economic calculations, became a target of criticism in a report taking up at least 100 pages (not counting the censored ones), and that, even though 580 million shekels ($176.5 million at current rates of exchange) in public funds have already been sunk into it, remains grounded.

Ezra Saidoff, a former deputy director general of the Prime Ministers Office, put the deal together; Yossi Cohen, national security adviser at the time, was allegedly behind the scheme; Yoav Horowitz, the PMO’s former chief of staff, approved the upgrades to the plane’s VIP section, even though work on the plane had already begun – and despite all this, none of these men is mentioned by name in the report, nor does it point an accusing finger at them.

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And for some reason, no finger is pointed at Benjamin and Sara Netanyahu, whose whims are alluded to throughout the report, without their involvement being explicitly stated. The consequences of a six-month delay and a 47-million-shekel price hike due to “configuration and design” demands? A cursory reprimand to the Prime Minister’s Office for “failing to specify in detail the changes in aircraft configuration and interior design and to examine their cost versus their benefit and necessity.”

Then Prime Minister Benjamin Netanyahu boards a plane with his wife, Sara.Credit: Haim Zach / GPO

Apparently, that’s what happens when a rebellious “office” allows itself to be pampered. And who exactly in the “office” gave the instruction? We’ll presumably have to wait until the next report for that. This report was issued by the comptroller a year late, and unilaterally, because as part of the boycott of Knesset committees by Likud and other opposition parties, the State Control Committee has not yet begun its work.

‘No documentation found’

Instead of the prime minister, whose involvement in Wing of Zion was barely mentioned, the State Comptroller’s Office correctly identified the real role of the National Security Council: to do the PMO’s dirty work and then assume responsibility as a scapegoat. As though successive national security advisers ordered a deluxe plane for themselves, and at double the price that was planned.

The report reviewed the administrative work at the National Security Council during the tenures of Cohen and Yaakov Amidror, as well as the project’s management under Ze’ev Zuk-Ram, the council’s deputy director at the time. Under Cohen, the NSC presented at early discussions cost estimates for the plane’s purchase and conversion, with the goal of seating more than 100 passengers– but it “forgot” to include in the estimate the value-added tax and additional costs associated with the plane’s intended operation by the air force. The NSC didn’t explain why the plane’s owner had to be the Prime Minister’s Office and why it had to be flown by air force pilots, a more expensive option (that was, by the way, introduced only well into the process – and without any justifications given).

It was the National Security Council that raised the puzzling demand that the prime minister’s plane be able to carry 150 to 200 passengers – triple the size of the prime minister’s biggest flight entourage in those years (61 passengers). In the end, the plane was converted to a passenger capacity of 100-120. It was the NSC (then under Jacob Nagel) that allegedly concealed from the members of the inner cabinet that their decision to increase the Wing of Zion budget to 729 million shekels would exceed the previously presented costs by 20 percent, and it was the NSC that once again presented the inner cabinet with an outdated presentation with no basis for comparison, with costs that did not include VAT and were given in dollars (although in the decision-makers’ proposals the amount appeared in full, in shekels).

According to the state comptroller’s report, it was the National Security Council, which is depicted as an organization without a leader, which failed to bring up the cost issue and did not consider the economic significance of purchasing a 20-year-old plane, of a model no longer in use (Boeing 767) – and whose operating and maintenance costs will end up skyrocketing. (The IAF admitted: “The risk did in fact materialize.”)

The Israeli Prime Minister's plane during a test flight, in 2019.Credit: Nir Keidar

And what of the Prime Minister’s Office? Even after reading the comptroller’s report, much is unclear about the former prime minister’s involvement in the project. “No documentation was found [in the PMO] for the administrative work carried out in 2010 for the purpose of drawing up the main demands” for the plane, the report says. “Many changes in the interior design of the plane and delays in decision-making in the Prime Minister’s Office – including in regard to finishing materials and colors on the plane – led to delays in the design, production and supply of equipment because they were in the critical path of the project,” the report said.

In a summary of a meeting in July 2018, two years after work began on the plane, the Prime Minister’s Office made a “substantive conceptual shift from a plane for flight – to an airborne office,” the report stated. Who was behind the conceptual change? The report doesn’t say. However, the deputy director of the defense desk in the Prime Minister’s Office told the comptroller that “the determination that the plane will have a conference room did not stem from security considerations, but as soon as it was decided, the security requirements were derived from it.”

The focus on the conference room is public relations spin, of course. Most of the late changes to the plane’s configuration, which increased costs by 36 million shekels and pushed back delivery by six months, resulted from upgrades to the VIP area. These include: raising the ceiling (15.2 million shekels); adding a staging area (2.3 million shekels); a secluded area for four people (3.6 million shekels); a conference table (5.4 million shekels) and installing shower stalls at a cost of 4.3 million shekels. All of these were added the approval of the “office of the PMO’s chief of staff” and not of the chief of staff at the time, Horowitz.

Comptroller: Unprofitable to make the plane operational

The initiative for purchasing a plane for the country’s leaders began in 2010. Consultants who were hired by the Finance Ministry’s then-accountant-general Michal Abadi-Boiangiu found that the profitability of such a venture was capped to an investment of no more than $40 million (including value-added tax). Otherwise, it would be cheaper to charter a plane from an Israeli airline on a long-term basis, or to buy a dual-purpose plane that could be used as a cargo plane when not in use by the country’s leaders.

According to the comptroller’s report, it didn’t take long to realize that this project would not meet these budgetary restrictions. An analysis carried out by the Defense Ministry found back in 2012 that an initial investment in purchasing a plane and refurbishing it would cost $77.5 million, with maintenance and running costs amounting to $13 million, not $5 million, as had been determined by the treasury.

These numbers did not prevent the prime minister’s secretary from recommending that “given the extensive security considerations relating to this mission,” it would be best if the plane were operated by the air force, with the purchase handled by the Defense Ministry. Why? Because. The ministry subsequently picked Israel Aerospace Industries as the project’s franchisee, thus completing the triangle of the ultimate beneficiaries of the entire project (the Israel Defense Forces, the Defense Ministry and the IAI).

And what about the professional committee headed by former Supreme Court Justice Eliezer Goldberg, asked in 2014 to examine the necessity of such a plane? Well, between the lines of the comptroller’s report one can read that the committee was required mainly for the purpose of covering the rear ends of those involved, while the relevant parties had already commenced putting things together behind the scenes.

Saidoff, the PMO’s deputy director-general, was tasked with integrating all these demands. Saidoff was later charged with acceding to demands made by Sara Netanyahu, billing the costs of lavish meals she ordered for the prime minister’s residence to the state. Who put him in charge? The report does not contain the answer. What is known is that while the PMO was busy with incorporating belated and unclear changes in décor, security-related changes to the plane were also presented too late.

These requirements, estimated at 92 million shekels ($28 million), were set only after the projected was approved by the cabinet. Cybersecurity requirements were presented only two weeks before the project’s approval, since representatives of the Shin Bet’s technology division were not involved in the project before it was approved by the cabinet. They only came in after the public bidding stage, in early 2017.

Ultimately, the $40 million (152 million shekels at the time) allocated by the accountant-general for the project ballooned by 158 percent, to 393 million shekels. The security cabinet approved 729 million shekels for the project (in contrast to the 592 million shekels described to the Supreme Court committee).

Even more significant, that according to the comptroller’s calculations, the cost of an average Wing of Zion flight is 108 percent higher than the cost of an average flight on a chartered civilian plane (amounting to 5.2 million shekels, as opposed to 2.5 million). Thus, says the comptroller, this plane’s flights will increase state expenditures by 40.5 million shekels on average, a statement that may give the coup de grace to any intentions of making the plane operational.

Insufficient insurance costs

In compliance with the conditions of the contract for the plane, Israel’s Aerospace Industries purchased a fairly aged and large Boeing 767, made in 2000 and used by Australia’s Qantas airline until its purchase. The purchase of an old and relatively cheap aircraft, with short-term budgetary considerations in mind, turned out to be a mistake. The costs of refurbishing and maintaining an older plane turned out to be much higher than anticipated.

Prime Minister Naftali Bennett at Ben-Gurion International Airport, about to depart for Washington on an El Al plane, in August.Credit: Avi Ohayon/GPO

If that weren’t enough, by the time the plane landed in Israel in 2016, the 767 model was being taken out of service by airlines. El Al also stopped using that model in 2018. This meant that pilots flying the prime minister’s plane would need to get their training on designated simulators, in addition to rising costs of maintenance and spare parts.

According to updated estimates by the treasury, the running operational costs of a plane will stand at 43 million shekels a year, which is 10 million shekels higher than chartering planes, like the country’s leaders do today.

The refurbishing of the plane and its preparation took three years longer than planned. The reasons for this, according to the comptroller’s report, are the following: decoration-related whims (of unknown origin) and the delays dictated by the Prime Minister’s Office (we will apparently never know by which person in that office); delays caused by Aerospace Industries, partly due to an unreasonable timetable it originally proposed (apparently for the purpose of winning the contract while satisfying everyone); the belated incorporation of security measures; and the impact of the pandemic.

As a result, the costs of the project will exceed by 7.7 million shekels the inflated budget approved by the government, which was 590 million shekels. This is before weighing in operational and maintenance costs, as well as a suit the Aerospace Industries may file due to the freezing of the entire project (for reasons having to do with the negative public image of the project) and pandemic-related delays.

Furthermore, insurance coverage of the plane does not cover the costs of the project. This coverage is for 204 million shekels, whereas the costs of installing various systems were 382 million. The comptroller made do with a very feeble bottom line: “It is recommended, given the flaws presented in this report, that the PMO, the Shin Bet and the Defense Ministry draw the required lessons in order to improve their operations.”

“When decisions of a national-security nature involving high costs are brought to the security cabinet for approval, it would be appropriate for cabinet members to make their decisions based on thorough investigation of complete information and data that are presented to them,” added the comptroller.

‘Despite the criticism, make it operational’

“The comptroller’s report highlights different aspects of the decision-making process in this project, a process that needs to be corrected and made more efficient. These issues will be studied thoroughly, with lessons drawn accordingly,” was the response given by the PMO and the NSC, both of which emphasized that the criticism relates to decisions taken by previous governments and by people no longer serving in their roles.

“The Wing of Zion has just completed its licensing process, after unique systems with varying degrees of classification were installed on it, adapted to command-and-control centers used by prime ministers and presidents. The PMO is also examining all aspects of this project, taking into account the comptroller’s report,” said these agencies.

The Defense Ministry said in response to the report that “the ministry served as a contractor for the Prime Minister’s Office, according to its specifications and the budget that was allocated for this project. The role of the [Israel Defense Forces] was also determined in accordance with the demands of the PMO.”

Meanwhile, the Movement for Quality Government in Israel has appealed to Prime Minister Naftali Bennett and Foreign Minister Yair Lapid, calling on them to make the plane operational after all: “It’s possible that the project was managed ineffectively, including the catering to irrelevant demands, but at this point, with the completion of the project, a decision to abstain from using the plane could also be perceived as politically-motivated. Every day that passes without making the plane operational constitutes a huge waste of public money.”

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