The Cheap Indian Cars That Could Drive Netanyahu to Jail

How a Hollywood producer, an Indian carmaker and the Israeli PM pushed a plan to produce vehicles for the Arab world, according to police

Prime Minister Benjamin Netanyahu speaks at the Jerusalem Post Diplomatic Conference in Jerusalem December 6, 2017.
\ RONEN ZVULUN/ REUTERS

A plan to manufacture cheap Indian cars in a free-trade zone straddling the borders of Israel, Jordan and the Palestinian Authority is the basis of some of the bribery allegations against Prime Minister Benjamin Netanyahu.

Police believe that Netanyahu agreed to promote a plan to produce low-cost Tata-brand cars as a favor to Hollwood mogul Arnon Milchan, in exchange for lavish gifts.

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According to the police, Milchan and his Indian business partner, Ratan Tata, set up a joint company for the purpose of establishing the Tata-producing plant in the Middle East.

Channel 10 journalist Raviv Drucker first reported last September that police suspected Netanyahu of trying to help Milchan and Tata promote the plant.

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In late 2009, according to a number of sources, Milchan met with Netanyahu and outlined the plan at length. The free-trade zone would employ Palestinians, Israelis and Jordanians, all making cheap cars that would be sold mainly to the Arab world.

Tata was prepared to invest hundreds of millions of dollars in the venture, Milchan said. Netanyahu liked the idea.

Police allege that Netanyahu set up a team, headed by his bureau director-general at the time, Eyal Gabbay, to push the project. In return, he received presents, mainly cigars for himself and Champagne for his wife, Sara Netanyahu.

A customer sits in front of a red Tata Motors Ltd. automobile on display at a dealership in Mumbai, India.
Dhiraj Singh/Bloomberg

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Gabbay reportedly curbed Netanyahu’s enthusiasm. One adviser in the Prime Minister’s Office pointed out that any such endeavor would require a bidding process: There was no particular reason to allow Milchan and Tata to set up a free trade zone, he said. Another expressed concern that the zone would be portrayed as employing Palestinians under slave labor conditions. Though Netanyahu insisted that Gabbay look into the feasibility of the plan, nothing came of it.

The police report says Netanyahu “pushed the deal even though officials in the Defense Ministry and the Prime Minister’s Office opposed the project.” It fell through only because of the opposition of security officials and advisors in the Prime Minister’s Office, and due to the Arab Spring.

Haaretz has learned, however, that in contrast to the police’s allegations, no team was set up to examine the plan, and the initiative was never pushed.

A senior defense official at the time, when the venture was still a concept, noted that potential ramifications for security were never looked at, since the plan never went anywhere. Nor was anyone from the Foreign Ministry involved. Jordan was a theoretical partner.

In early 2010, Tata representatives in Israel asked to meet with officials in the Prime Minister’s Office and with Gabbay himself. The police have the minutes of that meeting, during which the Tata people complained about the failure to appoint a team to study the feasibility of the project.

At that meeting, it was agreed that an inter-ministerial feasibility team would be set up. It never was.

Milchan told the police that the idea was part of his vision for “economic peace.” “For years I suggested initiatives designed to promote peace in the region. The plan wasn’t in exchange for any gift,” he told police.

Tata himself claims to have no business ties with Milchan, but the police say the two have a joint venture.

When Tata was in Israel for a conference last November, police investigators visited his hotel to question him. Tata told them that he had indeed discussed building an automobile manufacturing plant as part of a “peace initiative.”

In a statement issued later, Tata said that Netanyahu was not supposed to make any personal gain from the project. He told police that his ties with Milchan were confined to security consulting services supplied to Tata’s Taj hotels after the Mumbai terror attack. The Taj is where Netanyahu stayed after visiting India last month.

A year ago Haaretz reported on business ties between the Indian industrialist with Netanyahu, Milchan and the Australian businessman James Packer.

The security company that supplied services to the Taj chain was Blue Sky International, which Milchan founded in 2008. The Australian press reported that some years later, Packer invested $15 million in it. Most of Blue Sky’s staff were former Israeli officers. One employee was Dan Dagan, son of Meir Dagan, who headed the Mossad at the time.

According to the police report, the plan to build the Tata factory is one of five ways that Netanyahu is alleged to have performed favors for Milchan in return for gifts.