State: Criminal Probe of Israeli Minister Suspected in Graft Affair Nearly Done

Haim Katz, long-time IAI union strongman, suspected of insider trading, forcing employees to join Likud

Yasmin Gueta
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Social Affairs Minister Haim Katz.
Social Affairs Minister Haim Katz.Credit: Emil Salman
Yasmin Gueta

The criminal investigation of Welfare Minister Haim Katz is nearly completed and will be passed on to the state prosecution soon, a representative of the Israel Securities Authority said in court on Tuesday.

Katz is suspected of insider trading.

He is also under investigation for corruption at the Israel Aerospace Industry, where he was union chair. Katz and other suspects, including his son, are suspected of forcing IAI members to register for his Likud party and vote for specific candidates in the party’s primary elections.

In the insider trading case, Katz allegedly bought shares of Nitzba shortly before it announced a merger with Airport City. Katz was allegedly informed that the merger would take place by the financial adviser to the two companies, Mordechai Ben Ari. Katz and Ben Ari are suspected of bribery and use of insider information.

Tuesday’s hearing dealt with a request by the securities authority to extend the period under which Ben Ari is out on bail.

During the hearing, Judge Yaron Gat asked why the investigation had not been completed. The securities authority’s representative, attorney Eran Shaham-Shavit, explained that the state prosecution and senior Justice Ministry officials, including the attorney general, were tracking the case, and that all action needed high-ranking approval and consultation.

Nitzba announced the merger with Airport City, its controlling shareholder, on July 5, 2015. As part of the merger, Airport City would buy the public’s share in Nitzba at a 23% premium. The report sent Nitzba shares up 17.5%.

The securities authority alleges that Katz bought shares in Nitzba shortly before the announcement, while he was serving as a government minister. As a result, he and Ben Ari allegedly took in 290,000 shekels ($83,000) in illicit profits.

Shaham-Shavit said yesterday that Ben Ari bought shares from Katz, which amounted to a bribe.

Both Nitzba and Airport City are controlled by Haim Tzuf.

An associate of Katz’s responded that Katz is fully cooperating with the authorities and cannot respond regarding the affair.