Israeli Food Giant CEO Questioned for Alleged Bribes to ultra-Orthodox Charities

The executive is suspected of directing employees to donate to organizations affiliated with former health minister's Ger Hasidic sect to torpedo a reform on labeling food products by nutritional value

Ran Shimoni
Ran Shimoni
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Tnuva CEO Eyal Melis
Tnuva CEO Eyal MelisCredit: Ofer Vaknin
Ran Shimoni
Ran Shimoni

The CEO of Israeli food giant Tnuva, Eyal Melis, was questioned under caution on Tuesday on suspicion of giving bribes to torpedo a proposed reform on labeling food products that the company feared would harm its sales.

Melis allegedly instructed employees to donate to an array of organizations and charities affiliated with the Ger Hasidic sect and former Health Minister Yaakov Litzman’s close associate, Motty Babchik, aiming to postpone or moderate the red nutritional warning label on the company’s hard cheeses, and thereby boost their sales. Melis denied the allegations and claimed that the donations were routine company practice in the Haredi sector.

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Melis gave a statement on Sunday, and on Tuesday was summoned under caution. He testified that money was indeed handed to the various non-profits, but claimed that these were low sums donated to organizations Tnuva had been supporting for many years, just as it supports charities affiliated with other Hasidic sects.

The investigation revealed that Tnuva had given one of the charities in question 35,000 shekels (nearly $11,000), and donated sums of several thousand shekels to other non-profits being investigated in the case, as well as contributions of dairy products. Melis claimed that Tnuva didn’t know that the non-profit in question is associated with Babchik, and that the organization is associated with the owners of the Osher-Ad low-cost supermarket chain.

Melis is also suspected of buying ads for Tnuva in HaModia, a newspaper affiliated with Agudat Yisrael, in order to win favorable treatment with regard to product labeling requirements. But Melis claimed such ads were in line with the company’s general advertising activity. He denied having met Babchik, except for a single meeting held with Litzman.

Attorney Ilan Sofer, representing Melis, replied that “Tnuva acts strictly according to the law. I am convinced the authorities will see that as well,” he said, adding that Melis is cooperating fully with the investigators.

On Sunday, Haaretz reported that several former senior figures at Tnuva’s regulation and communications divisions have been questioned in the case, and stated that decisions on charitable spending were made by the CEO and other senior executives.

Yaakov Litzman and Moti Babchik in April Credit: Ohad Zwigenberg

Also on Sunday, executives at pharmaceutical company Roche and another pharma company were arrested on suspicion of bribing Litzman’s aides in exchange for promoting their interests at the Health Ministry. The detainees are suspected of donating money to charities associated with Babchik, and of buying advertising space in HaModia, which is associated with Litzman’s Agudat Israel party, in order to promote the inclusion of their drugs in the subsidized healthcare basket. Petah Tikva Magistrate’s Court Judge Erez Melamed said at the arraignment that “this case touches upon the inner sanctum. The picture painted is disturbing, to say the least.”

Babchick is suspected of receiving bribes, as well as fraud, and breach of trust. Roche CEO Avi Danziger is suspected of giving bribes. Erez Gilhar, CEO of lobbying firm Policy, who allegedly connected the newspaper with the investigated corporations, is also suspected of bribery charges. Menachem Gesheid, a Haredi journalist at HaModia and Litzman’s former aide at the Health Ministry, is suspected of receiving bribes. According to police, there is no intention at this stage to question Litzman under caution, but police will take his statement.

Litzman, who is now housing and construction minister, responded that there is nothing concrete in the allegations against Babchik, and praised his “integrity and diligence,” adding: “I suggest that everyone wait a little and will find out that all was done by law and due process. I am certain that the authorities will soon reach the same conclusion.”

Investigation into the case began in 2017. Authorities wiretapped the suspects, conducted searches and confiscated documents at the Health Ministry, Tnuva, the two pharmaceutical companies and a number of non-profit organizations.

Banchik’s attorney Amit Hadad called his client “a public servant of the first degree ... We are certain the case against him will end in nothing.” Attorneys Tal Shapira and Stav Schwartzberg, representing Gesheid, said that he “flatly rejects the charges against him.”

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