Rothschild Caesarea Foundation, which under an unusual arrangement owns the land occupied by the wealthy community of Caesarea, has refused for the past several years to publish an annual report.
However, the foundation’s 2016 report was obtained by Hatzlacha, which bills itself as a consumer movement for the promoting a more fair society and economy, under Israel’s freedom of information law from the Government Corporations Authority (GCA).
The fund is charged with developing the approximately 30 square kilometers of land it owns on Israel’s Mediterranean coast and use the profit to advance Israeli higher education. But the report for 2016 shows that the fund’s contributions had at that point not been enough to prevent its assets from growing sharply.
By the end of 2016, the report showed that the assets belonging to the fund, as well as two companies controlled by the fund, the Caesarea Development Corporation and Caesarea Assets Corporation, had reached just over 1 billion shekels ($280 million at the current exchange rate).
That compared with 934 million in 2015 and 498 million six years earlier.
The 2016 report obtained by Hatzlacha contained blacked out information, including fees paid to lawyer for legal proceedings, including one with the Israel Tax Authority. Moreover, the GCA, which has supervisory powers over the foundation, said it did not have a copy of the 2017 financial report.
Elad Man, Hatzlach’s legal adviser, said the foundation like other public bodies has an obligation to publish regulatory and timely reports of activities. “The GCA should expect this standard from all the bodies it supervises,” he said.
The foundation’s growing assets was a source of friction with the government for more than a decade until an agreement was reached last June. In 2011, the Government Corporations Authority said that the growing asset policy violated the mission of the fund. For its part, the fund contended that its land assets were a gift from the Rothschild family and the government interference in how it manages them contravened the agreement it has with the state.
Last June, the two sides finally resolved the dispute. Under terms agreed to with the treasury, the foundation agreed to accelerate donations to more than 1 billion shekels within three years. Of that, at least 750 million would be one-time grants.
That would mark a big increase from what was distributed by the foundation in 2016. The annual report showed that Rothschild Caesarea had donated just 45.8 million shekels and in 2015 just 13.2 million. In addition, the foundation had grant-related expenses of 7.7 million and 5.3 million for the two years, respectively.
However, the agreement has yet to be put into effect. The 750 million designated for “national undertakings” is supposed to be allocated in coordination with the treasury. The mechanism for distributing the grants was supposed to be worked out between the two sides within six months of reaching, but nearly a year later treasury officials say the process hasn’t been completed,
As a longer-term measure, the sides agreed that the foundation would raise the minimum amount of money it donates annually from $2 million annually. From 2021, the minimum is set by the amount of cash it holds – if it is less than 200 million shekels, its grants need not exceed 5% of the total; above that they should be 10% or more,
In 2018, the foundation told TheMarker it made grants totaling 85 million shekels.
The agreement also calls for the end to the Rothschild Caesarea Foundation to lose its unique exemption status from income and land-improvement taxes starting in 2032. In the meantime, it is disputing with the Israel Tax Authority over an assessment for 233 million shekels in back taxes for the years 2004-12. The authority claims the tax bill is on income not deemed exempt.
The foundation’s assets (not including those of the two companies) reached 937 million at the end of 2016 and lion’s share of them, some 770 million, was invested in securities. Another 101 million shekels was held in cash or cash equivalents.
As to income, the foundation and its two businesses generated 252 million shekels in 2016, of which 88 million came from the sale and lease of land and 87 million from providing municipal services.. Another 10.5 million came from the Caesarea golf course, the only one in Israel.
The Rothschild Caesarea Foundation commented: “As part of the agreement between the foundation and the government in June 2018, 250 million shekels were earmarked as donations for implementing the first stage of the deal. Some 500 million shekels in addition would be allocated as donations at dates set in the deal through mediation between the foundation, the government and the Rothschilds. The foundation increased the budget supporting communities in the area from 13 million shekels annually to 25 million shekels, and approved donations of 85 million shekels in 2018.”
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