Analysis

The Real Crime of the Netanyahu-media Mogul Affair

The evidence so far from the talks between the PM and Yedioth Ahronoth publisher Arnon Mozes doesn't prove bribery, but it does point to antitrust violations, which are just as serious.

Prime Minister Benjamin Netanyahu and Yedioth Ahronoth publisher Noni Mozes.
Prime Minister Benjamin Netanyahu and Yedioth Ahronoth publisher Arnon (Noni) Mozes. Atef Safadi/AP and Moti Kimche

The airings, by Israel Channel 2 News, of transcripts of conversations between Prime Minister Benjamin Netanyahu and Yedioth Ahronoth publisher Arnon Mozes have sent many Israeli political and media folks into the figurative bunkers. People who are generally eager to hold forth on the issues of the day are suddenly mute. There’s no better indication that this investigation affects one of Israel’s key centers of political and economic power.

Both the Netanyahu and the Mozes camps are investing great efforts in damage control, using a two-pronged approach: 1) playing down the importance of the conversations (“You don’t issue an indictment for talk,” Defense Minister Avigdor Lieberman said this week), and 2). intimidating anyone who speaks out on the matter, accusing them of hypocrisy and ulterior motives.

When Nahum Barnea, Yedioth Ahronoth’s top columnist, writes an opinion piece under the headline “Everyone is a suspect,” it feels like an apt description of the mood at the newspaper: We’re all in the same boat. It could refer to politicians from across the spectrum who engage in quid pro quo with journalists and media outlets, or to competing publishers and outlets, who need to look in the mirror and recognize that they’re no saints themselves.

In fact, this week I received a phone call from a senior figure in the Yedioth Ahronoth group who asserted that my publisher had done the same sort of thing that Mozes had. I suggested that if so, he should report these things in his newspaper. He has yet to do so.

Considering the magnitude of the suspicions and the magnitude of the suspects, things are likely going to get messy. The notion of “Don’t touch us, and we won’t touch you” is hovering in the air. Material is busily being gathered.

Whether or not Armageddon erupts, with the disclosure of shady ties and dubious deals within the politicians-business-media triangle of power, depends on the dimensions of the investigation.

If it fades away with a whimper, the public probably won’t get what all the fuss was about. That would be a great shame. It doesn’t take an indictment to realize that the talks between Mozes and Netanyahu were improper — that they stink to high heaven, no matter how you look at it.

The full recordings of the talks have not been made public, and here’s hoping that they will be. But what we’ve heard so far is troubling enough. Leaving aside the question of bribery — “sympathetic coverage in return for hurting a business rival,” which looks more complicated, let us focus for a moment on the attempted to form a cartel that was made here.

Compare it to the Super-Sol affair

Think back to another recent episode, involving former Super-Sol CEO Effie Rosenhaus. In December 2013, Rosenhaus was convicted of two counts of noncompliance with conditions of the supermarket chain’s merger with Clubmarket chain and four counts of attempting to engage in a restrictive arrangement. “Attempting to engage in a restrictive arrangement,” meaning that he didn’t succeed.

What did Rosenhaus do? He wanted suppliers such as Coca Cola, Osem and Strauss to halt their discount deals with the rival Mega supermarket chain. The court ruled that “the managers of the suppliers felt that Rosnehaus demanded they take real action in relation to Mega to halt the sales of their brands at such low prices, either by halting the supply or halting the discounts, or at least by taking steps in regard to Mega to prevent a repetition of such sales in the future.”

But rather than comply with Rosenhaus’ demands, the suppliers reported him to the Israel Antitrust Authority, which opened an investigation that ultimately led to his conviction and a two-month prison sentence. Shufersal controlling shareholder Nochi Dankner offered to pay the Antitrust Authority tens of millions of shekels to let Rosenhaus off the hook, but Ronit Kan, the head of the authority at the time, turned him down.

The recordings made public so far aren’t sufficient to prove the alleged bribery deal between Mozes and Netanyahu (the full transcript is needed to determine this), but they certainly point to attempted collusion, also a criminal offense. For what does Mozes tell Netanyahu? He asks him to take action to reduce the number of issues printed by Israel Hayom, a Hebrew daily that is owned by U.S. casino magnate Sheldon Adelson and distributed for free, and the two go into detail on this. Here is an excerpt from Guy Peleg’s report on Channel 2 News:

Mozes: “Let’s think about the details of the law for a moment. It begins [with] two-thirds.”

Netanyahu: “Sheldon has to be told.”

Mozes: “You have to say the number [of copies of Israel Hayom], not ‘two-thirds.’”

Netanyahu: “I have to explain what the number is. Not to reduce it completely. Not to reduce by three-thirds. To reduce to two-thirds.”

Mozes: “When we spoke about numbers it was 275,000 copies and today it’s 325,000 copies. You see why it’s a problem the more time that goes by? We’re getting back to a situation where we’re delaying more, and it gets harder to solve. I’m trying to think, on Friday it’s 400,000 copies. I’m trying to think about a formula for how many ad pages.”

Netanyahu: “You can limit him with ads?”

Mozes: “Is there a problem? What’s the problem? You’ve got government ads here. 30, 50, 70% , it’s the government giving them money. It’s improper. I’m telling you this as an aside, but you can’t have all of this together.”

In case, you’re not quite sure what they were talking about here: Mozes, worried about his paper’s profits since the emergence of Israel Hayom, with its massive Friday distribution, is asking Netanyahu to do something to curb Israel Hayom by drastically reducing the number of copies it prints. He won’t agree to a reduction of “a third” because he knows that could be open to interpretation. He wants the number to be clearly defined. Netanyahu understands the request, but makes clear that Israel Hayom will continue to come out in significant numbers, when he says that you could take it distribution down by a third but not by “three-thirds.”

Ad advantage?

And then comes the matter of the ads. Mozes is not pleased with the number of ads the government places with the competition, and implies that Netanyahu is allocating state resources to bolster Israel Hayom’s revenue. Yedioth Ahronoth also takes such ads, but Mozes appears to feel that his paper is at a disadvantage here compared to Israel Hayom.

This conversation is reminiscent of Rosenhaus’ failed attempts to restrict his company’s competition. Rosenhaus asked suppliers to prevent his competition from offering price reductions. Here Mozes asks Netanyahu, whom he sees as the person closest to Sheldon Adelson, to reduce the number of papers distributed by Israel Hayom. It’s not clear whether Netanyahu took any action to do so. But even if he didn’t, there was a clear attempt here by Mozes to form a cartel that would reduce the competition.

Normally, a conversation like this would lead to Mozes being immediately summoned for questioning by the Antitrust Authority. But since a police investigation is currently ongoing into potentially bigger crimes than a violation of the antitrust laws, the Antitrust Authority has yet to enter the picture, though it may soon do so. Antitrust Authority head Michal Halperin deserves to be given the benefit of the doubt that the delay is for the reason cited above. If Attorney General Avichai Mendelblit ultimately decides not to issue for bribery or breach of trust, the case will end up at Halperin’s door.

This rare glimpse into the way things really work shows just how personal and motivated by self-interest everything is. One cares only about his popularity, and the other only about his paper’s profits. Forget any lofty talk about the fate of the nation, about big economic or social or security ideas. All that matters is power and profit.