After Haaretz Report, Yair Lapid Defends Himself Over Milchan Law: 'I Never Got a Penny'

Haaretz article about seeking professional opinion on so-called Milchan Law proves he 'acted only according to professional recommendations', Lapid says

Yair Lapid at the Cyber Week in the Tel Aviv University, June 27, 2017.
Moti Milrod

Yair Lapid, the head of Israel's centrist Yesh Atid party and former finance minister, responded to reports in Haaretz according to which he asked his office to put together a white paper on legislation that would have benefited his friend and Hollywood producer Arnon Milchan.

"The report proves (again) that I acted only according to professional recommendations and I gave officials my full support in the face of pressure from above about the so-called Milchan Law," Lapid wrote on Twitter.

In his former role as the finance minister, Haaretz reported on Wednesday, Lapid had asked for a professional opinion from the treasury on a law that would have doubled tax breaks for wealthy expatriate Israelis returning home before scuttling it, rather than rejecting it outright, like he has claimed.

"I just want to remind everyone that the prime minister got a million shekels and pushed the Milchan Law and I never got a penny and I stopped the law," Lapid wrote in response.

The amendment to the law would have extended the duration of tax relief on gains made overseas for wealthy Israelis who came back to Israel after living abroad from 10 to 20 years. The original tax benefits legislation for returning Israelis is known as Milchan's Law.

Coalition whip MK David Amsalem (Likud) also responded to the report on Thursday, writing: “On the contrary! Instead of interrogating him as the main offender, they’re turning him into a witness for the prosecution.”

Culture and Sports Minister Miri Regev tweeted: “On Purim of all times his disguise as a man of ethics, religion and morality fell off. Yair, did you tell the Lahav 433 investigators that as finance minister you asked your advisors to draft an opinion on a law that would benefit your buddy and former boss Arnon Milchan? Maybe  your forgotFrom today stop telling us stories, in any case.”

After the police recommended charging Netanyahu with bribery in two corruption cases two weeks ago, Lapid claimed he had rejected Milchan’s and the prime minister’s attempts to push the bill through. “I simply said, ‘under no circumstances’ and that was the end of it,” Lapid wrote on Facebook at the time.

However, Haaretz has learned that the process was not quite that straightforward: Before rejecting the prime minister’s plea, Lapid requested that Finance Ministry officials deliver their professional opinion on the bill which would affect his friend.

In August 2013, the Finance Ministry’s budget division was asked to issue an opinion on the bill by Lapid’s economic adviser, Rotem Rolf. Budget division officials understood that the matter had arisen after Lapid held a meeting with someone. They assumed it was a rich Israeli living abroad, since the bill was expected to benefit tycoons.

Within several days, they produced a five-page opinion which elaborated criticism of the bill. Rolf then held a meeting with the officials to inquire about their opposition and possible alternatives.

The amendment has become part of the so-called Case 1000 investigation into suspicions that Netanyahu accepted gifts such as cigars and pink champagne from Milchan, in exchange for which the prime minister pushed for the amendment, among other things. Milchan stood to save tens of millions of shekels as a returning expatriate if the extension had passed.

According to investigators, Netanyahu contacted Lapid twice about advancing the bill while the latter held the finance portfolio. In his testimony to the police, Lapid attested that Milchan had first turned to him about the issue in 2013. Lapid said he refused the request. He said that two days after his refusal, Netanyahu asked him if he had spoken with Milchan and urged him to advance the amendment. Lapid testified that he also refused Netanyahu’s request. Lapid said he met Milchan again with Rolf, and once again declined to advance the legislation. He testified that Netanyahu then asked him a second time, and he also refused to help.

Milchan’s name is not listed in Lapid’s conflicts of interest disclosure.

In a television interview the day after his testimony was published, Lapid said that he could not elaborate on the matter because it was still undergoing legal proceedings. When asked why he would agree to meet with Milchan to discuss the issue, even though the two were friends, Lapid responded: “It’s a fact we did things properly with the Justice Ministry and in the presence of the Finance Ministry.” He added: “The bill didn’t pass. I didn’t agree to pass it.”

Some days later, Lapid wrote of his meeting with Milchan on Facebook: “When at the Finance Ministry, I met Arnon Milchan very little ... In 2014, when he wanted to extend the ‘Milchan Law,’ I notified him explicitly that I opposed it, and blocked it together with Finance Ministry officials. I will not delve right now into the prime minister’s involvement in the subject, because it’s under discussion in court, but I did my bit.”

The opinion of the budget department, obtained by Haaretz, argues that the amendment would not actually promote immigration to Israel. Furthermore, the tax breaks would create discrimination between veteran residents and new immigrants. Extending the length of the tax breaks would increase inequality, the opinion states, adding that the bill would motivate people to invest their money outside of Israel.

The officials summed up that they cannot recommend extending the duration of the law. If anything, they urged immediately abolishing the exemption from reporting overseas income given to new immigrants. They noted that depending on the efficacy of tax breaks, at a later stage the government could consider extending the tax breaks against a significant investment in Israel.