Arnon Milchan's Life Has Always Been More Exciting Than Any of His Movies

A combination of Israeli patriot and billionaire businessman, Milchan is a Hollywood producer who remains a secret collaborator in the shadowy world of Israel’s security and intelligence agencies

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Barbra Streisand and Arnon Milchan walk together in 1984.
Barbra Streisand and Arnon Milchan walk together in 1984.Credit: Yosi Aloni, Israel Press and Photo Agency / Wikipedia
Yossi Melman head
Yossi Melman
Yossi Melman head
Yossi Melman

Once again, at the trial of former Prime Minister Benjamin Netanyahu, the testimony of Arnon Milchan’s aide Hadas Klein has strengthened the portrayal of her billionaire boss as a controversial personality.

A combination of Israeli patriot and super-wealthy businessman, Milchan is a Hollywood producer who likes to rub shoulders with Israeli leaders, giving them advice and making himself feel important and influential. On the other hand, he remains a secret collaborator in the shadowy world of Israel’s security and intelligence agencies.

Brad Pitt, left, speaks as he and the cast and crew of 12 Years a Slave (including co-producer Arnon Milchan, center) accept the award for the best picture during the Oscars in 2014.Credit: John Shearer/Invision/AP

It has been five years since Milchan last visited Israel (even missing his mother’s funeral), and he is now due to give his testimony in September when the trial resumes in Case 1,000, in which Netanyahu is accused of improper receipt of expensive goods in exchange for favors.

It is still unclear whether Milchan will actually appear in court or whether his testimony will be delivered by video conference. Yet what is certain is that we will have a rare opportunity to understand how he sees his own controversial character and how he would have liked to be perceived in public opinion.

Arnon Milchan and his first wife Brigitte Genmaire on the cover of Israeli weekly 'Haolam Haze.'Credit: Haolam Haze

Born in 1944 in Rehovot, Milchan grew up in an affluent family that made its fortune representing international chemical companies. At the age of 21, when his father died, he inherited the Milchan Brothers Company and began to expand its operations. Alongside his business dealings, Milchan made quite a name for himself as a playboy. In the latter half of the 1960s, he starred in the gossip columns of the Haolam Hazeh weekly, drove fancy sports cars and was frequently seen with the likes of Moshe Dayan and Shimon Peres.

Milchan was always wealthy. Yet his rise to the league of billionaires was the result of his connections with Israeli politicians and security officials, who paved his way to arms deals and other dubious businesses including with the apartheid regime in South Africa. The large profits he raked in also enabled him to establish his position in the American film industry. During the 1970s and ‘80s, Milchan also provided significant assitance to Israel’s nuclear program – a contribution that benefited him both directly and indirectly.

The nuclear reactor near Dimona.Credit: AFP

Milchan has always had a political bug. His assistant, Klein, stated in her testimony that it was he who advised Netanyahu to appoint Yossi Cohen as head of the Mossad. The former premier denied these claims. Cohen has said that he first met the Hollywood producer when he was sent by then-Mossad chief Meir Dagan to interest him in producing a film that would glorify the achievements of the Israeli espionage agency.

In addition to Netanyahu, Milchan also befriended Isaac Herzog, now president of Israel, and then foreign minister Tzipi Livni and tried, among other things, to mediate between the three so that they would establish a governing coalition.

But the most significant political figure in Milchan’s life was undoubtedly Shimon Peres; indeed, the producer even named one of his children after him. Peres, by virtue of his position as deputy minister of defense and later as minister of defense, was the one who forged the connection between Milchan and the intelligence community and specifically with Lakam (the Hebrew acronym for the Defense Ministry's Scientific Liaison Bureau).

Lakam was initiated and established in 1957 by Peres to serve as an intelligence body that would provide physical and information security to defend Israel's nuclear reactor (built by France) and protect its secrets. Some years later, Isser Harel, then head of the Mossad, told me that in establishing Lakam, Peres had actually worked secretly behind his back. According to Harel, Peres wanted to ensure maximum control over the nuclear program, which he regarded as his own precious initiative until the day he died.

Benjamin Blumberg Vered served as the head of Lakam from its inception until he was dismissed in 1980 by then-Defense Minister Ezer Weizman.Credit: Wikipedia

As time went by, Lakam became Israel’s fifth intelligence agency (after the Mossad, the Shin Bet security service, IDF Military Intelligence and Nativ, in the Prime Minister's Office) and its operations focused on scientific and technological espionage.

It appointed the scientific attachés in Israeli embassies, hired businessmen as advisers and agents and expanded its diverse procurement and smuggling operations to include other defense entities such as Rafael, Military Industry (Ta'as) and Israel Aerospace Industries,. Lakam was also the agency that handled convicted Israeli spy Jonathan Pollard. After he was captured, and under much American pressure, it was disbanded.

Benjamin Blumberg Vered served as the head of Lakam from its inception until he was dismissed in 1980 by then-Defense Minister Ezer Weizman. Vered was accused of being involved in the transfer of funds to Mapai, a forerunner of the Labor Party, whereupon Rafi Eitan was appointed to lead the agency. During his tenure, Vered was assisted by two businessmen who oversaw global operations aimed at providing the necessary equipment for the nuclear reactor in Dimona: Arnon Milchan and Eliahu Sacharoff.

Much Like Milchan, Sacharoff was also a wealthy businessman who was involved in importing chemicals to Israel – materials that were essential for the development of the nuclear program. As I have previously written, in 1968 Sacharoff helped Lakam smuggle into the reactor 200 tons of natural uranium originating in the Congo, via a Belgian company. Sacharoff who died about four years ago at the age of 104, once told me how a network of German businessmen, some of whom with a Nazi background, had assisted him in the operation. He insisted that his actions were completely voluntary and that he refused even to receive reimbursement for his many expenses.

Eliahu Sacharoff.Credit: Alon Ron

At front, and in the middle

Returning to Milchan – both Blumberg and Eitan used his services by means of companies he represented to purchase materials and equipment for the Dimona reactor and the Israeli Atomic Energy Commission. Some of these companies were front organizations used by Israel’s nuclear project. In this context, two important covert operations attributed to Milchan deserve special mention:

The first occurred in 1972, when Milchan was involved in smuggling in diagrams and drawings URENCO, a European consortium that manufactures centrifuges designated for enriching uranium, from Germany. Blumberg transferred hundreds of thousands of Deutschmarks to Milchan, who used them to pay a German engineer.

Extensive details about this operation were published in 2011 in a book titled “Confidential: The Life of Secret Agent Turned Hollywood Tycoon – Arnon Milchan” by Meir Doron and Joseph Gelman. The book was written in collaboration with Milchan, who later tried to deny its content but has since backed off. It is worth adding that two years after the operation, with no connection to Israel, Blumberg or Milchan, the Pakistani scientist Dr. Abdul Qadeer Khan also got his hands on URENCO’s centrifuge diagrams and used them to put his country on the path to nuclear weapons.

Leonardo DiCaprio, Arnon Milchan and Steven Spielberg take a selfie at the 88th Annual Academy Awards.Credit: AFP

By the way, more than a decade ago it was announced that centrifuges installed in the Dimona reactor were used, among other things, by the Mossad and the U.S. Central Intelligence Agency to study the most effective way to inject Stuxnet malware into the systems at Iran’s uranium-enrichment facility in Natanz.

During the second operation involving Milchan, which began in the late 1970s, he helped Lakam smuggle in equipment essential to Israel’s nuclear project. A company called Milco was established in Los Angeles, managed by engineer Richard Smyth a former colonel in the U.S. Air Force. From 1979 to 1983, the company smuggled hundreds of tubes filled with gas that could be used as switches for nuclear bombs An FBI investigation was launched the following year, during which Smyth was arrested but refused to incriminate Milchan.

After paying very high bail, Smyth was released and fled to Europe. In 2001 he was lured by the FBI to a meeting in Spain and was arrested. He was sentenced to 40 years in prison, but due to his advanced age (72, at the time), he was pardoned. Doron and Gelman write in their book that Smyth felt betrayed by Milchan, even though the Ministry of Defense continued to transfer several thousand dollars every month to Smyth via Milchan’s office as compensation and hush money.

At the height of Milchan’s activity as an agent-assistant under Lakam's auspices, and due to his close ties with Israel’s political and security elites, he enjoyed hefty commissions and profitable contracts for arms deals that Israel initiated or was involved in.

Among others, Israel Aerospace Industries, under the management of Al Schwimmer, helped Milchan mediate between American defense companies and Iran during the era of the shah. These companies set up listening operations near the border with the Soviet Union. Connections in Israel also contributed to Milchan’s business interests in Taiwan – at a time when that country aspired to develop its own nuclear program and thus became an ally of Israel and purchased weapons from it.

Connie Mulder.Credit: Wikipedia

Other dubious relations that Milchan would perhaps like to forget are those he had with the apartheid regime in South Africa, which was also an ally and security partner of Israel. Milchan joined forces with Eschel Rhoodie, director general of South Africa’s Ministry of Information, and served as a mediator in the affair nicknamed Muldergate (after Minister of Information Connie Mulder).

Rhoodie, Mulder and the infamous South African Intelligence Service (BOSS) ran propaganda and smearing campaigns and psychological warfare operations to spend tens of millions of dollars on films television stations and press articles designed to exalt the apartheid regime and blacken its opponents.

Thanks to his innumerable political connections in Israel, his many businesses in Hollywood, his wealth and his charm, Milchan managed to escape all the scandals associated with him. Peres even intervened on his behalf so that he would not be prosecuted for his part in smuggling in the nuclear switches.

According to the recent testimony of Hadas Klein, Netanyahu also tried to help Milchan by appealing to then-Secretary of State John Kerry to revise Milchan's visa so that he could remain in the United States for 10 years.

At his core, Milchan is a good-hearted person who truly and sincerely loves Israel and wants it to prosper. Yet it is important to note that, unlike the humble Sacharoff, Milchan never operates without an ulterior motive. His enormous fortune and the assistance he has received to avoid paying taxes all over the world testify to this.

All my attempts to get Milchan’s response to this column remain unanswered.



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