In late 2016, rumors were rife that the police were conducting a secret investigation of Benjamin Netanyahu. The prime minister, his attorneys, and his advisers scratched their heads trying to figure out what it was all about. During that time, the Netanyahu and his wife, Sara, paid a visit to the tycoon Arnon Milchan at his home in Beit Yanai.
“A few days before you called me in for the first time, Bibi and Sara came to Arnon’s place,” Hadas Klein, Milchan’s right-hand woman, said in her statement to the police. “Arnon told me a few times that Sara had said to him, ‘Do you trust Hadas to never talk?’ and that he had replied, ‘Listen, Hadas has been with my banks for 30 years, my life is in her hands, you have nothing to worry about. But she was scared… a few days before you called us in, they asked if I couldn’t become a Shula Zaken” – a former aide to Ehud Olmert who testified against him in his trial – “one day. I’m not Shula Zaken, but I’m a citizen of the state of Israel… I came to cooperate, to reach the truth.”
In the days before Klein’s deposition, Attorney General Avichai Mendelblit didn’t believe that the investigation into the Netanyahu affair would necessarily lead to a criminal investigation. Neither he nor the police investigators, nor the attorneys working on the case believed that Klein, who had been summoned to give testimony on the relations between Netanyahu and his family and the Australian businessman James Packer, would lead to a breakthrough in the case.
But it quickly became clear that something dramatic was happening. “Did Arnon Milchan or James Packer give the couple any gifts?” one of the investigators asked Klein, and the floodgates opened. “Yes, Sara Netanyahu asked us to bring bottles of champagne and Bibi would ask us to bring him cigars,” Klein told police. “Sara pushed Arnon to buy her jewelry… I went to Sara’s house in Caesarea and gave her a ring and necklace… Arnon told me that Bibi had spoken to him and there was an okay to buy the jewelry.” In that same deposition, Klein shed light on another point: “We were never the ones to suggest giving something.”
After her first statement, Klein was warned not to say anything to Milchan about the investigation and promised she would keep quiet. When was going in for questioning, she would tell her boss that she had gone to the dentist. She sought to hire an attorney and friends recommended Boaz Ben Zur, a specialist in white-collar cases, who is currently representing Netanyahu in the corruption cases against him.
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Over a period of weeks, Klein told police about a torrent of demands made by the Netanyahus, about gifts hidden in black bags, about the use of code names, about Sara Netanyahu’s fits of rage when her requests were turned down, about the prime minister’s awareness that he was unlawfully receiving gifts, about the beneficial relationship with Packer and about Netanyahu’s attempts to recruit wealthy businessmen to use their money to establish media outlets providing favorable coverage. “Arnon couldn’t meet with the Netanyahus empty-handed, there was no such thing,” Klein testified. “They would be very disappointed, and that’s putting it mildly. We were disgusted by these demands, and I say very clearly, even if I have to take the witness stand, that everything was only at their express demand.”
The investigators, and Mendelblit as well, saw Klein as a credible and fearless witness. Only when asked about favors that Netanyahu allegedly gave Milchan did she show extra caution. It seemed she was afraid of getting her boss entangled in a bribery affair. “I’m scared of lying or not telling the truth,” Klein said, but it would later transpire that her confession was not complete.
A few weeks after Klein completed her deposition, Milchan was called in to testify on the affair and confirmed what she had said. “Our prime minister and his wife are hedonistic and they have no limits,” he said. “As strong as he seems, he is scared to death of her.” Milchin said Sara Netanyahu had called him a short time earlier and asked him, “‘Have they by any chance questioned Hadas?’ I said no, why would you ask that?”
Milchan stated that he acquiesced to the couple’s requests not in order to promote economic interests, but only diplomatic and political – the two-state solution and a unity government with Isaac Herzog. When asked what would happen if he didn’t shower the Netanyahu with expensive gifts, Milchan replied, “I would be a less welcome guest” at Netanyahu’s official residence.
When the interrogator sitting opposite him asked whether Netanyahu responded with gifts of his own, Milchan replied, “Do you know him? The answer is no.” Asked whether Sara Netanyahu gave him gifts, Milchan responded, “Do you want me to fall on the floor in fits of laughter?” and then clarified, “The answer is no.” The witness described Netanyahu as an impressive individual with broad horizons and great charm, but also as someone “messianic” who is persuaded that he alone is preventing a second Holocaust and that the “left, [newspaper publisher] Noni Mozes, and the forces of darkness” are conducting a witch hunt against him.
Milchan also hired Ben Zur’s services, and flew back to Los Angeles at the beginning of 2017. Police investigators turned up at his mansion in Malibu to complete their questioning. To their surprise, it turned out to them that Milchan had in the meantime had a change of heart. He now found it difficult to remember certain important details. “Is Netanyahu angry with me?” he suddenly asked the investigators. “Could you tell him perhaps that I still see him as a friend?” These questions made it clear just how deep his change of heart had been. In his first interview, when asked whether he saw himself as a friend of Netanyahu, he replied, “I don’t think Bibi really has friends.” This contradicted the prime minister’s line of defense. He claimed that it was only natural that Milchan, a friend who was as close as a brother, would give him the occasional gift.
The police officers, who had planned to spend two or three days questioning Milchan, cut short their questioning on orders from above and returned to Israel. “There was a conference call with senior people in the prosecution,” a source told Haaretz. “We understood that something was going down here.”
Klein was convinced that the change in her boss’s attitude didn’t come out of nowhere. “She suspected that a well-known wealthy businessperson who was devoted to Netanyahu had asked Milchan to tone down his statements,” a person who was in contact with Klein told Haaretz. “She confronted him with this and he didn’t deny it.”
Milchan’s flip-flop came as witnesses alleged to police that Netanyahu had promoted the interests of his benefactor. When Milchan wanted to extend his residency visa for the United States, Netanyahu used his connections in the senior echelons of U.S. government and promoted legislation exempting returning residents from taxation on their overseas income. All this led to the conclusion that the Hollywood producer would have to be questioned as a possible suspect.
Meanwhile, police investigators heard further witness statements that shed light on the relationship between the billionaire and the then-prime minister. One of them was from Yair Lapid. “I told him, ‘He will take advantage of you. You will become his attendant,’” said Lapid, recalling how he had warned Milchan about Netanyahu.
“Milchan led me to understand that from time to time he would make gestures for the Netanyahus,” testified Milchan’s partner in the Channel 10 television station, the late businessman Yossi Maiman. “The way I saw it, it wasn’t because of friendship… Milchan never gave anybody anything without a reason.”
Sheldon Adelson, the late owner of the Israel Hayom newspaper, said of Milchan, “He has deep pockets and short arms. He can’t reach into his pockets with his short arms.”
In the summer of 2017, Milchan was called in for further questioning. He chose to meet the police investigators at the Israeli embassy in London because the law in the United Kingdom allowed him to reply in the presence of an attorney. At the start of the interview, the investigators informed him that he was now being questioned under suspicion of giving a bribe. Milchan looked very upset. “That annoys me,” he said. “I’m furious. Where has Bibi brought me?” One of the investigators said to him, “Forget about it. Let’s continue.”
But the witness, who had become a suspect, protested. “I’m allowed to be human for a second.” “You are,” said Ben Zur, and turning to the investigator added, “Let him be, if he wants.” Milchan continued: “This man ruined my life… Suddenly I’m in the papers, my children have bodyguards. I’m scared to death.”
During questioning, Milchan went into great detail and told the investigators about his part in secret negotiations between Netanyahu and Yedioth Ahronoth publisher Arnon Mozes. Milchan was somebody they both confided in, as did Adelson, the third party in the affair. “Bibi always warned me that Noni was recording me,” Milchan testified. “He said to me, ‘Tell Noni he is playing with fire’ … Noni said to me, ‘Tell him [Adelson] that I will tone down my attacks on Bibi and Sara if […] he doesn’t increase circulation.”
Milchan was also in on the secret of the connections formed between the prime minister and his neighbor in Malibu, Larry Ellison, one of the world’s richest people. Netanyahu tried to persuade Ellison to buy Yedioth Ahronoth from his nemesis, Mozes. According to Milchan, Bibi said to him, “If you care about Israel and its defenders, get rid of the devil.”
Milchan’s distress was plain to see throughout the questioning. “Don’t throw me under the bus because of him,” he told his interrogators. “I don’t deserve it.” Nevertheless, the police recommended that Milchan be indicted. Ahead of the decision on his case, Ben Zur sent senior officials in the State Prosecutor’s Office a letter in which he explained why, in his opinion, his client had not done anything wrong.
In the letter, parts of which are published here for the first time, the defense attorney came up with a few justifications. One of the main lines of defense was friendship: “The background to the gifts of cigars and drinks was the long years of friendly relations between the prime minister and Milchan that had existed for over 20 years,” Ben Zur wrote. “These ties included meetings, visits to each other’s homes, many conversations and more.”
Ben Zur added: “Another aspect that must be taken into account is Mr. Milchan’s habits… he is a man of broad horizons, very wealthy, the owner of the largest independent studio in Hollywood. He was involved in political coalition processes, including the formation of the unity government, as well as in national security and diplomatic affairs of the State of Israel… He was very close to many leaders, in Israel and around the world… He gave substantial donations to a number of organizations and initiatives… He hosted many people from around the world and Israel. It is against this background that his connection with the prime minister and his wife should be seen.”
But Ben Zur also provided another explanation. “At a certain stage, the scale of the gifts that he gave grew. This was primarily in light of requests from the Netanyahus, and in particular, Mrs. Sara Netanyahu,” said Ben Zur. “It is an open secret that Mrs. Netanyahu’s complex personality led from time to time to excessive demands. These requests were met, in as much as they were met, because of the stated friendship and because it was uncomfortable to refuse them because the unpleasantness that would be inherent in doing so… It would seem that the evidence shows clearly that Mr. Milchan and his team wanted quiet for themselves and for the prime minister.”
Ben Zur rejected any claims that Milchan received any government benefits. He stated that “if there is a thread that connects between some of the affairs mentioned in the police document summing up the investigation, then it is based in the media motive of Mr. Netanyahu and not in any attempt to benefit Mr. Milchan.” He also said that his client and his entourage “gave full disclosure in good faith… unlike, according to reports, other businessman who claimed, ‘I cannot recall.’” Ben Zur concluded: “Mr. Milchan is furious, he feels cheated, and we would like to clarify at this stage that he is paying a significant personal price with respect to his image and his business affairs for being a suspect and even for the very fact of providing testimony.”
State Prosecutor Shai Nitzan believed that Netanyahu and Milchan should be charged with bribery, as did the prosecuting attorney responsible for the case, Liat Ben-Ari. Attorney General Avichai Mendelblit decided to close the case against the businessman and to charge the prime minister with fraud and breach of trust.
“In Case 1000, there is evidence for a two-way relationship – benefits that Netanyahu received from Milchan and government actions that Netanyahu took for the benefit of Milchan,” a person involved in discussions held on the case said. “Is it possible to say that Netanyahu was not aware that Milchan invested in him? His former chief of bureau, Ari Harow, described how Milchan came to Balfour to solve the issue of his visa, which had been denied, and said to Netanyahu, ‘I bought you cigars and champagne.’ It definitely would have been possible to file an indictment for bribery. On the other hand, it wasn’t an open-and-shut case because there were close ties between Milchan and Netanyahu and there is no evidence that Milchan told anyone that he was giving in order to get something. Mendelblit, as is his habit, was lenient here, but one cannot say that his decision was not reasonable.”
Ben Zur was supposed to represent Milchan and Klein throughout their court testimony, but in 2020, he took on the representation of Netanyahu in the other two cases in which he is on trial. He had wanted to do so earlier, but met resistance from Milchan. His client agreed only after Ellison approached him several times and pleaded with him to relinquish his attorney for the sake of the former prime minister. Klein was very upset by this development. “She called it treachery and was furious with Milchan for authorizing it,” a person who spoke to her about it said. “To this day, it continues to cast a heavy shadow over their relationship.”
A few months ago, in consultation with attorney Giora Adereth, Klein gave prosecutors more inofmration. She said that Milchan and Packer had purchased jewelry and other gifts with an accumulated additional value of hundreds of thousands of shekels for Sara Netanyahu. Receipts and other witness statements backed up her story. She explained that she had not mentioned this in her previous deposition because she had been instructed not to do so by Ben Zur, who told her to answer truthfully to direct questions but not to volunteer information at her own initiative. “The investigators are not your friends,” he told her, according to Klein. “They have a goal and that is to reach a round figure for gifts of a million shekels, and you don’t have to volunteer to help them reach that.” It is possible that the defense attorney feared that the accumulation of gifts would bring his client closer to the zone of bribery.
In the same additional deposition, Klein spoke about the relationship between her boss and the attorney who formerly represented both of them. “The story with Boaz [Ben Zur] made me sick,” she said. “There was a lot of tension between me and Arnon. He didn’t talk to me for a long time after that, even though I work with him.”
Klein’s court testimony, which began on Tuesday, is expected to paint the corruption cases as a saga in which the main stars in one affair play supporting roles in the others. She will tell the court about her meetings with prosecution witnesses Shlomo Filber and Nir Hefetz. Filber was sent by Netanyahu to assist Milchan in setting up a media outlet of his own, and Hefetz cooperated with the Hollywood producer in an attempt to mediate between Netanyahu and Mozes. While witness testimony will focus on the gifts given to the former prime minister and his wife, Mozes’ name will without a doubt appear more than once.
In December 2015, an unsubstantiated story was published according to which Milchan was hiding gifts Netanyahu had received in a storage room in his house. One time, when Netanyahu came over to visit Milchan in Beit Yanai, he showed him the report. “Bibi was hysterical,” Klein, who was there as well, said. “He came to me with the article and said to me, ‘What is this? What is this?’ I said to him, ‘Forget about it. It’s nonsense.’ He said to me, ‘What are all those police doing outside?’ I said, ‘What do you mean? It’s the border police who are there to guard you.’”
A few days later, Klein was approached by a journalist who asked for her response to the story. That was when a real storm was kicked up. “Suddenly there was a call from Bibi,” Klein said. “He was hysterical… he was going crazy… as if the Syrians were on the border… He said to me, ‘Listen carefully. Call [then-Attorney General Yehuda] Weinstein. Call him in to see for himself that there is no gift room in your house…’ It nded up as a whole series of crazy conversations…. ‘Tell Arnon not to fly tonight.’” Netanyahu instructed Klein to photograph Milchan’s private plane and his Jaguar from the inside to negate any claims of gift-smuggling.
Milchan called Mozes and told him about the whole commotion. The publisher asked Milchan to hand the phone over to Klein, who told investigators: “Noni told me, ‘Hadas, you have to document everything… write it down, put it in your safe… one day you will be summoned by the police.’ Arnon said, ‘Did you hear him? Do what Noni tells you.’”
Like others of Milchan’s friends, Mozes knew about the demands the Netanyahus made of him and that he had acquiesced to them. The Hollywood producer, who is not known to be a particularly discreet person, told several people about his strange relationship with the prime minister and his wife, and would impersonate them while doing so.
“The next morning, Noni called me and asked, ‘Did you do what I told you to?’” recalled Klein. “I hadn’t… but I told him, ‘yes, of course.’ [Mozes said] ‘I’m worried about you Hadas, I value you.’”
A few months later, Klein’s safe was broken into, which she reported to Milchan. “Within three minutes, I started receiving calls from Sara questioning me about the safe. Arnon called [former Mossad chief] Yossi Cohen, Isaac Herzog, Noni… he loved dramas… each of them got a scare…for a few days there were calls from Noni, Yossi, and Sara… everyone one their own interests. “
That is exactly what the state prosecutor will seek to prove through Klein’s testimony: That all the sides involved in the relationship between Milchan and Netanyahu had a clear interest. Netanyahu wanted the gifts, and at key moments Milchan needed the goodwill of the man at the top. Even though the former prime minister is not charged with bribery in the case, the prosecution will try to show he had a quid pro quo relationship with the billionaire. They believe that Klein is less anxious than she was when she gave her first deposition and will help them consolidate their thesis.
Defense attorney Amit Hadad, on the other hand, will try to undermine Klein’s credibility and persuade the court that she has personal and political motivations to hurt the Netanyahu family. He is expected to present the relationship between Milchan and the former prime minister as a true friendship, downplay the value of the crates of champagne and boxes of cigars given to the Netanyahus, claim that Netanyahu was unaware of the majority of the gifts received by his wife and reject the claim that the gifts were given because of his position.
Hadad will claim that Netanyahu’s attorneys – the late Jacob Weinroth and himself – had approved Netanyahu receiving gifts from close friends. In his deposition to police, Hadad said that he and Weinroth has told their client unequivocally that this was permissible and that “it was clear to us that these were not gifts he was receiving as a public servant.”
Hadad may also claim that Netanyahu was not the only politician to enjoy Milchan’s largesse. In questioning, the defendant described the businessman as a “mobile stand” for cigars, which he would give out to his friends, including Lapid before he entered politics. “Anybody who was in contact with him will tell you that,” claimed Netanyahu, specifically referencing Isaac Herzog and Tzipi Livni. “Who knows what he gave them all… He gave! That’s Arnon! That isn’t a bribe, it’s an expression of friendship.”
Sara Netanyahu said in questioning that the late President Shimon Peres would invite her to his home and say, “Make sure you bring Arnon’s pink bubbly.” Milchan said that Peres, when he was prime minister, spoke on his behalf with President Ronald Reagan and extracted him from the jaws of the U.S. authorities when he was suspected of smuggling the equipment necessary for developing nuclear weapons in Israel’s service. Later on, Milchan would donate large sums of money to the Peres Center for Peace & Innovation.
“The media and the prosecution have presented the darkest picture of Case 1000,” person knowledgeable about the work of the defense told Haaretz, “but after Klein’s cross-examination, it will transpire that at the very most, there are some shades of gray.”
Klein and Milchan were initially supposed to appear in court only at a later stage. Their appearances were brought forward out of concern that the Hollywood producer would not be able to stand up to outside pressure. Alongside the admission by the former prime minister that he spoke with the prosecution’s witness, recently there have been snippets of information that suggest Milchan is not enthused about taking the witness stand. “They don’t even need me,” he recently told an Israeli friend. Alongside a desire to avoid getting in trouble with Netanyahu, Milchan is still angry with the man who got him involved in a criminal case and then made him give up his attorney. “That really broke all the rules,” he said in a private conversation.
After his personal assistant, driver, chef and finance manager, it will be Milchan’s turn to testify. In a few months, he is due to meet the representatives of the prosecution for an interview in London. He hasn’t set foot in Israel for five years, even staying away from his mother’s funeral. The prosecution is already preparing itself for the possibility that will he will try once again to evade giving testimony. Should that occur, the prosecution plans to use all the tools in its arsenal to make sure he takes part. Since the affair blew up, Milchan hasn’t ceased to surprise. It’s difficult to guess how he will behave when the moment of truth arrives.