Israeli Tycoon Hired Spy Firm to Get Dirt on Finance Minister, Report Says

Idan Ofer hired Black Cube in 2014 to dig dirt on then-Finance Minister Yair Lapid and other officials, in bid to influence tax policy, investigative TV show reports

From right to left: Israeli billionaire Idan Ofer, Israel's former Finance Minister Yair Lapid and former treasury’s accountant general Michal Abadi-Boiangiu
Chaim Tzach / GPO, Gil Eliyahu, Denis Balibouse / Reuters

Billionaire Idan Ofer, one of the richest people in Israel and owner of the Israel Corporation and Kenon Holdings, hired the local business intelligence firm Black Cube to dig up personal information on government officials involved in determining tax policy, in order to influence arbitration and prevent tax hikes that could affect his companies’ profits.

Expanding on these claims, the “Uvda” (“Fact”) investigative program on Channel 12 will report on Thursday that the officials spied on included then-Finance Minister Yair Lapid, the treasury’s accountant general Michal Abadi-Boiangiu and deputy attorney general Avi Licht.

>> Read more: $6 billion of Iranian money: Why Israeli firm Black cube really went after Obama's teamDid Israeli spy firm Black Cube meddle in Hungary's election? A consultant and IDF general answers

Idan Ofer, Director of the Israel Corporation and Batia Ofer attend the presentation of the new Qoros 3 Sedan car at the Palexpo Arena in Geneva March 5, 2013.
Denis Balibouse / REUTERS

Ofer’s objective, according to the TV report, was to influence the Sheshinski II committee – which was examining taxation of companies exploiting Israel’s natural resources – and also the arbitration process involving the royalties to be paid to the state by Israel Chemicals, a subsidiary of the Israel Corporation. Specifically, Ofer reportedly sought to unearth defamatory information about both the members of the committee and of the arbitration panel.

In 2014 the Sheshinski panel recommended a tax hike on the profits of company’s exploiting Israel’s natural resources, including those of Israel Chemicals. The latter’s subsidiaries, including the Dead Sea Works, produce potash, phosphates, magnesium and bromine.

“Uvda” claims that as part of the negotiations between Ofer and Black Cube, there was a suggestion to “build a case” against some of those involved in setting up the Sheshinski committee, named after its chairman, emeritus economics professor Eytan Sheshinski, to undermine its work and recommendations.

In 2014 Ofer met with top executives at Black Cube and decided to hire the firm. Their joint project was given the code name: “Salt of the Earth.” Black Cube promised exceptional secrecy regarding their client’s identity – that any potentially sensitive printed information would not include Ofer’s name or any details that could reveal his identity and that every reasonable precaution would be taken to preserve total confidentiality.

Former Obama aides Colin Kahl, Ben Rhodes and Caroline Tess - all targeted by Israeli spy firm Black Cube.
Chip Somodevilla/Getty Images, Reuters

The members of the arbitration panel who were spied on, according to the TV investigation, included its chairwoman, retired Supreme Court Justice Tova Strasberg-Cohen, and attorney Alex Hartman, a government appointee. The third arbitrator, attorney Ram Caspi, was appointed by and voted in favor of Israel Chemicals; the other two ruled in favor of the state.

To help their client, Black Cube sought to come up with proof that Hartman and Strasberg-Cohen had met a number of times before being appointed to the arbitration panel. To that end employees at the business intel firm, according to “Uvda,” collected personal and confidential information, including about Hartman’s annual income in 2011-12, a violation of his privacy; they also came up with a file on his wife and family.

It is not clear what methods the firm used to gather this information or whether it was actually passed on to Ofer, but Black Cube did ensure that if its investigators produced concrete results – relating to either the Sheshinski panel or the arbitrators – the firm would receive a substantial bonus.

Dan Zorella, co-founder of Black Cube.
Eyal Taug

On Monday, Black Cube denied all allegations made by “Uvda,” stating, “Idan Ofer (or anyone on his behalf) was never a customer of the firm … The events described never happened.”

A spokesman for the company added that if the program’s investigators have any evidence “proving” their allegations, it is not related to Black Cube “which never initiated any of the operations described and certainly did not carry them out. The company’s activities are strictly in keeping with the law, because the purpose of its work is to win in court and in arbitration – where only legal and concrete evidence is admissible.”

Ofer’s spokesman told “Uvda”: “There is nothing wrong about locating information as part of competitive business activities, as long as the information is legally obtained. Black Cube, as it states in its own materials, also provides services in order to expose conflicts of interest, and as a result offered its services.”

The company suggested its services, the spokesman said, in the wake of certain actions and policies taken against companies belonging to Ofer’s business group at the time, which some thought exceeded reasonable and proportionate limits.

“As a result,” Ofer’s spokesman added, “an examination of possible conflicts of interest was conducted. We would like to emphasize that the agreement with the firm related to collection and analysis of information that came from public sources only – and the information received indeed reflected this. We must also emphasize that in the end, the information gathered from public sources and examined by the analysts at Black Cube was not significant and no use was made of it. In addition, the relationship with the company was terminated after a short period.”

Black Cube has been the subject of much media attention in recent years because of its reported involvement in a number of high-profile international scandals. For example, in October 2018, Haaretz exposed the fact that the business intel company was hired to conduct a private investigation into members of the Obama administration. The goal: to locate Iranian assets and funds that could be seized in the event of U.S. court rulings against Iran in cases involving the families of terror victims.

In May 2018, the Observer newspaper and New Yorker magazine published articles on the espionage operation against senior Obama administration officials, chiefly Deputy National Security Adviser for Strategic Communications Ben Rhodes and national security adviser to the vice president, Colin Kahl. Black Cube had contacted both using different cover stories to discuss Iran. The operation failed and was exposed.

More recently, as reported in late 2017 by the New Yorker, Black Cube also allegedly used a fake company to spy on individuals who had complained of sexual harassment by Hollywood producer Harvey Weinstein, which caused great outrage against the firm – leading to its announcement a few months later that it had stopped working on Weinstein’s behalf.

Black Cube was 2010 by Dr. Avi Yanus and Dan Zorella, and most of its employees come from the country’s spy community: Military Intelligence, Mossad and the Shin Bet security service. Former workers confirm that the company operates like a secret espionage organization, whether on purpose or to project a certain image. Former Mossad director Meir Dagan served as the honorary president of the company and was considered to be close to its founders. It has offices in London and Paris.

In February 2018, the company moved to new offices – an entire floor of the luxurious Bank Discount Tower in Tel Aviv. Visitors are confronted with a plain black entrance with no name on it. Office doors open only by means of fingerprint authentication.