Knesset Panel Approves Immunity Bid by Senior Likud Lawmaker Accused of Fraud

Former minister Haim Katz's request for immunity will go to a final vote

Haim Katz during a Knesset House Committee hearing for his immunity, February 4, 2020
Ohad Zwigenberg

The Knesset House Committee on Tuesday voted to approve MK Haim Katz’s request for parliamentary immunity from prosecution, and the request will now go to the full Knesset for a vote.

The Likud MK is accused of fraud and breach of trust for promoting a 2010 bill that would have benefitted him, and because he allegedly misled both the Knesset Labor, Welfare and Health Committee, which he chaired at the time, as well as the Ethics Committee about his possible conflict of interest.

Sixteen committee members voted in favor of immunity, among them MK Zvi Hauser of Kahol Lavan. Ten members voted against, and four abstained. MK Gideon Sa’ar, number 5 on the Likud slate, left the room for the vote and was replaced.

The bill that Katz sought to pass, Amendment 44 to the Securities Law, gives priority for repayment to those holding bonds in an insolvent company over the controlling shareholders in the company. Katz, his financial adviser Moti Ben Ari, and the Equitel Group, which Ben Ari advised, held bonds in several companies experiencing difficulties. Passing the bill would have given all three parties a considerable advantage over the controlling shareholders in these companies. According to the draft indictment, Katz promoted the bill at Ben Ari’s request, and even brought him to a Labor, Welfare and Health Committee hearing on the bill as an independent expert, without revealing their relationship.

Israeli AG Avichai Mendelblit and Haim Katz during a Knesset House Committee hearing for Katz's immunity, February 4, 2020
Ohad Zwigenberg

Attorney General Avichai Mendelblit told the House Committee that, “The conflict of interest in the indictment wasn’t far from a bribery violation. The actions according to the indictment are not just the legislation of a law, but a variety of acts and false presentations that included deliberate concealment. This is fraud and breach of trust at the highest level.”

He added, “While the law could also help an unspecified public,” it was born out of the mutual economic interests of two very good friends.

Mendelblit last week had called on the committee to reject the immunity request, saying that the four grounds for granting immunity to MKs as stated in the Immunity Law did not apply to Katz.

Katz lashed out at Mendelblit for listing names of companies whose bonds Katz and Ben Ari ostensibly held, saying it was a lie. “You’ve created an imaginary story,” he said. “‘A Thousand and One Nights’ is nothing compared to what you’ve built here. You’ve taken my health away. I’m a person, nothing more. An honest person. I’ve never lied in my life. My word is my word.”

Katz told the committee he was asking for immunity “because the process is the punishment.” He pleaded: “I’m 72 and I want to continue contributing to the system. A trial will take three years and there’s no reason to give me this punishment.”

Katz added that his conscience was clear regarding passage of the amendment. “The law was initiated by me,” he said. “There was no intention to have it apply retroactively.” Nevertheless, he apologized for his reporting on the issue to the Ethics Committee. “I am sorry that I erred and didn’t tell the committee that Moti is my friend.”

According to Katz, he hadn’t dealt at all with the capital markets since being appointed a minister. “I went to the questioning without a lawyer,” he said. “At the beginning of the interrogation I didn’t even remember what Amendment 44 was.” He stressed, “Moti Ben Ari didn’t earn a shekel, didn’t give me a shekel and I didn’t earn a shekel … They questioned me about Amendment 44 less than an hour max.”

The House Committee’s legal adviser, Arbel Astrachan, explained last week that the test used to help gauge conflict of interest is the size of the group that could benefit from the legislation. “If an MK makes a decision that will influence a very large group of people, residents of the north for example, it wouldn’t be considered a conflict of interest [even if he also benefits]. The smaller the group, the more it tends toward conflict of interest.”

Haim Katz in front of the Knesset House Committee, February 4, 2020
Emil Salman

Katz’s lawyer, Navit Negev, raised this point to the committee Tuesday. “The test of the size of the group has been totally ignored,” she said. “It’s a test that was established by the Knesset and it was not taken into account in the decision to prosecute here. Even the attorney general said it’s a law that benefits society and isn’t personal.”

Negev said MKs constantly advance broad legislation. “Naturally, they may have some personal interest in the legislation,” she added. “MKs deal with taxes, which apply to each of us. The natural work environment of an MK is such that there are personal interests and conflicts of interest. That doesn’t stop them from doing the work of legislating.” She brought several examples, like the fact that MK Danny Danon had advanced a bill that benefitted military widows, when his mother was a military widow.

She argued that Katz didn’t profit at all from the legislation. “It’s no coincidence that the indictment reads that he ‘could have profited,’” she said. “It’s 10 years since the law was passed. Believe me the prosecution would have known how to quantify something like that.”

Negev noted that Katz had admitted his error in not reporting his friendship with Ben Ari, but that this was, “an aesthetic flaw that isn’t based on conflict of interest.” She added that MKs aren’t required to reveal who initiated bills they are advancing, such that nothing was violated by the lack of a revelation.