The Skeleton in Lieberman’s Closet

People say he's a man of principle, someone who's teaching Netanyahu a lesson. But a Justice Ministry document about the ex-foreign minister's activities in recent years knocks us back to our senses.

Emil Salman

Not only regulators and academics affect culture, norms, values and ideas. Sometimes journalists, editors, TV anchors and media owners have much more influence. We received a live example of the contribution of the Israeli media to norms on May 4, when Avigdor Lieberman decided not to join the government.

A visitor from another planet who read the news of his resignation would have thought this man was the contemporary incarnation of Theodor Herzl, Winston Churchill, David Ben-Gurion or Teddy Roosevelt. Some people said he taught Benjamin Netanyahu a lesson, and others even called him the only man with principles in Israeli politics.

I naively thought that Lieberman is a cynical politician, a corrupt opportunist who disdains no means, including racial agitation, to get headlines and to pave his way to power. But perhaps my views and my liberal political bent prevented me from seeing the greatness of this powerful leader.

So I set out to seek a certain document that describes the work of Lieberman, irrespective of the peace process, the occupation, the conflict with the Palestinians or Israel’s Arabs. Anybody can find this document on the Justice Ministry website, laying out the reasons for Attorney-General Yehuda Weinstein's decision in December 2012 to close the case allegedly involving various crimes of corruption against Lieberman without charging him.

Following are some quotes from the document in question, which won little attention at the time, let alone earlier this month, and which represents this shining beacon who served as our foreign minister for five years:

“After his resignation as director general of the Prime Minister’s Office in 1997, Lieberman began business and financial activity in Israel and overseas, through two companies that he founded in Israel and Cyprus (hereinafter Netiv Yisrael and Netiv Kafrisin), which had business relations (together the two will sometimes henceforth be referred to as Netiv el Hamizrach) Since his [1997] resignation, Lieberman has forged ties with businesspeople in Israel and overseas.

“In the course of developing ties, these companies and an Israeli company registered in the Virgin Islands on his daughter’s name, received huge amounts of money, inter alia, whose substance and reason for transfer were unrelated to the areas of activity of those corporations, and did not, allegedly, reflect payment for their activity...

“Lieberman is also suspected of having acted, after his retirement from public service in 2004, to establish another company, and despite the fact that he was in practice its controlling shareholder and the main beneficiary of money entering its bank account, his daughter, Michal Lieberman-Galon, was registered as the shareholder. To conceal his control over the company and the fact of his being its main beneficiary, Lieberman arranged for a false report to be made to a bank, in violation of the provisions of the anti-money laundering law. Allegedly, establishing the company with this structure enabled Lieberman or someone on his behalf to continue to receive monies, of a significant scope, even after he resumed public activity in 2006.

“While not serving in a public capacity, Lieberman used most of the company’s revenues directly for his various personal needs. Out of that sum, more than $1.5 million arrived while he was fulfilling various public capacities Allegedly, by his conduct, Lieberman placed himself in a possible situation of dependency on those businesspeople, or unfortunately, in one of conflict of interest between his public activity and his obligations to those entities...

“Throughout the entire relevant period, and at times when serving as an elected public servant, Lieberman is suspected of continuing to benefit fully or partially, directly or indirectly, from the activity of the corporations and the revenues as said. This occurred far from the public eye, in violation of the duties of disclosure under law, with the activity deliberately concealed from the public – all by way of deceit and in a manner that precluded any possibility of supervision over potential conflicts of interest in his conduct

“The analysis of all the evidence in the investigation file and the assessment revolves mainly around the activities of the five companies... These entities maintained financial ties – whose nature is not clearly apparent from the investigative materials collected – with a small circle of businessmen close to Lieberman. Among other things, these companies had financial ties with the businessmen Mikhail Chernoy, Martin Schlaff, Robert Nowikovsky, Daniel Gitenstein and Dan Gertler ...

“Allegedly, beyond maintaining his association with Netiv Kafrisin, Lieberman maintained two other business frameworks which he controlled while also fulfilling public duties. The rights in the two companies were registered on the name of Igor Schneider, Lieberman’s former chauffeur and right-hand man:

“1. MV: The company was established as a subsidiary of Netiv Kafrisin, and registered in the Virgin Islands The main sum received in the bank account of this company was $500,000, from a company controlled by businessman Michael Chernoy, during Lieberman’s term as minister of national infrastructures.

“2. Mayflower1 and its parent company... The two companies registered in the Virgin Islands From its establishment until early 2008, Mayflower maintained business ties with elements including the above-mentioned businessmen associated with Lieberman, with whom they had relations of trust. The extent of activity of the company amounted to about $12,490,000...

“Throughout ML1’s period of activity, its sole occupation, it is claimed, was to advise the Russian company MVF Megatis, held by Danny Gitenstein, a childhood friend of Lieberman’s, and another person named Igor Weinberg, who has passed on in exchange for the consulting services, Megatis paid ML1 each month the sum of $405,000. Altogether ML1 received about $3 million ...

“However, regarding this company too, I reached the conclusion that no real, clear and significant association could be proved between Lieberman and the company during his years of public service, at a level constituting a criminal offense.”

The deal of his life

“On May 17, 2001, while Lieberman was serving as minister of national infrastructures, a sum of $500,000 was transferred from MCG Holdings, controlled by Michael Chernoy, to the account of MV. The money was associated with a deal involving wine and this was the main activity carried out by MV ... It was agreed that the consultant (MV) would provide advice on production of and conducting business in wine in Russia and other countries. The consultant also undertook to help establish new vineyards in Bulgaria ...

“Ostensibly, the story of the signing of the wine deal seems to raise questions. Schneider, who says that he does not know English, said in his statement that he signed an agreement in English ... with no lawyer involved on his behalf ... Reading the witnesses’ statements shows contradictions regarding payment Chernoy and Batkov stated that the payment was for advice provided by Schneider; Gitenstein and Schneider, however, say it was for mediation ...

“Another payment of $250,000 was transferred on January 18, 2001 to a Cypriot account held by Gershon Trestman for a ‘trucks deal.’ Trestman was Lieberman’s neighbor and associate. Trestman and Schneider claim it was a joint deal, involving both of them, to establish a trucking company in Belarus, which had nothing whatsoever to do with Lieberman

“Mayflower was founded as an offshore company in the Virgin Islands. The company was established and managed by a Cypriot lawyer under the instructions of advocate Yoav Meni. In its first incarnation as Maxima Timber, the company did not conduct any activity. On February 24, 2012, about a month after Lieberman stopped being a minister, its name was changed and within months it embarked upon broad commercial/financial activity amounting to $12,490,000, from July 2003 to March 2008 ...

“Under questioning, Lieberman categorically denies any connection to Mayflower, claiming he never heard of it. But, allegedly, it is a company run by a front straw man, Igor Schneider, acting on behalf of Lieberman. This suspicion is based on connections found between Lieberman and this company. Mayflower is believed to have been among the companies, including Netiv el Hamizrach and MV, as part of a comprehensive action plan designed to allow Lieberman to continue to engage in financial activity while serving in public roles. In reports to the state comptroller Lieberman did not mention Mayflower although, allegedly, he owned a controlling interest in it during his tenure as minister...

“A key person who could attest to who owned the rights in Mayflower is attorney Meni, who handled its affairs. He was asked specifically about the identity of the client whom he represents at Mayflower, but refused to answer this question, like most of the questions, at the advice of his lawyer, he said ...

“Arousing suspicion of a connection between Lieberman and the company is the fact that there was apparently a connection found between Mayflower and ML1, which was registered in Michal Lieberman’s name. ML1’s sole activity was to provide service, purportedly consultation, to Megatis, which was controlled by Danny Gitenstein, Lieberman’s friend ...

“Evidence indicated that from July 2004 to January 2008, Gittenstein paid almost $65,000 every month to ML1 (except for five months in 2006). But from February 2008, Gitenstein stopped paying money to ML1, apparently due to financial difficulties. Megatis’ place was taken by a company called Levingstone, also controlled by Danny Gitenstein. This entity made two payments to ML1 of $45,000 each, in July-August 2008, and $90,000 in December 2008 ...

“Although the evidence arouses questions and suspicion of concealment and deception, it does not show a categorical picture – with the requisite certainty for launching a criminal trial – that Lieberman had an ownership affiliation or other prohibited relationship with Mayflower. In addition, not only are there not sufficient documents to establish the suspicion; no witness has testified that Lieberman was the company’s controlling shareholder ...

“There is no dispute that Michal Lieberman, the company’s owner, did not give any advice to Gitenstein’s companies, not in the first nor the second period in question. She says the deal was a ‘macro’ one, not a ‘micro’ one, and her role was to recruit the best employees and give advice. Two main things arise from her testimony: First, she has no concrete knowledge about the nature of the counseling given [and] second, Michal was not aware of the change in the identity of the paying company in 2008 Moreover, according to the law, Michal cannot testify against her father in court

“Sharon Shalom was questioned at length about the advisory service he is claimed to have provided to Megatis, but his knowledge of the area was quite poor, and he answered many questions by saying he did not remember. Unlike Lieberman, Shalom does not speak Russian and his contacts in Eastern Europe are certainly not like Lieberman’s, so it is hard to assume that advice he gave was as good as what Lieberman could give.

“Igor Weinberg, Gitenstein’s partner, who testified that he did not know about advice received from ML1, died in 2008 Lieberman’s ‘retirement agreement’ from ML1 explicitly states that the compensation the company will pay him reflects future profits the company receives pursuant to his activity until that time

“The purchase of the residential apartment, which had nothing whatsoever to do with the company’s business, could bolster the suspicion elaborated above. Or it could be claimed that buying the apartment for Michal using ML1 money, with her share bought using an owner’s loan, strengthens the defense’s claim that the company was owned by Michal and the money accrued therein served for her needs.

“At the intuitive level, the story arising from this affair implicated Lieberman. But when trying to establish real evidence to flesh out the intuition that would convince the court of criminal activity – we stand on quite shaky ground. Not only are were no witnesses found to tell the incriminating story: The statements by Michal and Igor Weinberg cannot be used as they constitute part of the basis for that intuitive ‘layer’ The suspicions in this case arose only at a very late stage. Completing the investigation would have required judicial inquiries in different countries, but a decision was taken on the matter, to wind up the investigation instead of probing deeper

“Another difficulty is that Yosef Schuldiner, a key figure in the affair and the man who allegedly bought Netiv el Hamizrach, died in 2006 so his version is absent Another witness, a resident of Moldova died in 2008 and yet another, a Russian resident who could shed much light on the affair, has not been located ... Considerable questions and queries remain in light of the evidence seemingly indicating Lieberman’s involvement in the companies and his improper connection with them. Needless to say, closing a criminal case for lack of evidence does not constitute a certificate of vindication and does not eliminate these doubts.”

Thus declared the attorney general, who decided to close the case against Lieberman due to lack of evidence.