Why Did Soldiers' Charity Pay NIS 1 Million to Ex-lottery Chair?

Charity officials: Commission paid for help in drafting an agreement between ASI, Mifal Hapayis.

Yaakov Bardugo, the former director of Mifal Hapayis, the state lottery, last year received a commission of more than NIS 1 million from the Association for the Soldiers of Israel (ASI) in circumstances that are hard to explain.

ASI officials say the commission was paid for Bardugo's help in drafting an agreement between the ASI and Mifal Hapayis, in which ASI receives NIS 32 million over four years. But Mifal Hapayis officials say that there had not been any differences between the parties before the agreement was signed.

Bardugo's name has recently been mentioned in connection with the bribery allegations at Mifal Hapayis.

Bardugo served as Mifal Hapayis' managing director in 1999. That year, the state lottery decided to eliminate their smaller lottery rivals - the ASI and Magen David Adom (MDA), who also sold lottery tickets. In exchange for their stopping their raffles, Mifal Hapayis undertook to give them millions of shekels a year.

In 2004, after negotiations between Mifal Hapayis and the ASI, the two organizations decided to renew this agreement, but reduce the annual allocation from NIS 12 million to NIS 8 million for a three-year period.

In 2007 they signed a new four-year agreement, which ensured an annual NIS 8 million allocation to the ASI - altogether NIS 32 million.

Haaretz has learned that NIS 1.2 million of that sum was deducted a few months ago and given to Bardugo, who served as ASI's contribution adviser. Senior Mifal Hapayis officials criticized the payment to Bardugo, saying the agreement between the ASI and Mifal Hapayis was not problematic or fraught with controversy, which would explain the payment of a large commission to the middleman.

A senior Mifal Hapayis official said with surprise: "We didn't see Bardugo, he wasn't there at any discussion. I don't understand why they paid him."

Another said: "The only difference between this agreement and the former one is the date. That's all. We had no arguments, no bitter debates or entanglements. Mifal Hapayis never decided to cancel the agreement or to reduce the sum."

Mifal Hapayis managing director Shaul Sutnik told ASI director Arye Fishbein at the beginning of 2007 that he intended to renew the existing agreement. Sutnik asked Fishbein to wait until the lottery received the treasury's permit for future financial commitments. Finally they signed the exact same agreement, with a year's extension.

In 2007 Fishbein decided, in agreement with then ASI chairman Yitzhak Eitan, to hire Bardugo's services as a special adviser for raising contributions. Bardugo got in touch with Fishbein and offered his services to obtain a permit from the treasury for the ASI to hold raffles. These raffles were the ones that were canceled when Bardugo had served as Mifal Hapayis director.

Bardugo even asked Fishbein that he be allowed to run these raffles.

Then Bardugo was appointed ASI contributions adviser. His contract promised him, according to ASI, a commission of a few percent of every contribution he raised. However, a few months ago, Bardugo received more than NIS 1 million of the funds transferred from Mifal Hapayis to ASI.

Fishbein, who had hired Bardugo's services, had difficulty explaining to Haaretz what difficulties in reaching an agreement could justify employing a special adviser. "He received money for the agreement with the state lottery, that's what he did," Fishbein said.

"I don't know whom he spoke to or what he did. I had weekly contact with him. I wrote many letters to Mifal Hapayis at that time," he said.

He said he did not know where those letters were. "I felt we wouldn't get anything from Mifal Hapayis... Bardugo's job was to advise the ASI director how to act and what to do. Perhaps he did other things I don't know about."

Asked what things exactly, he said: "He said to me: speak to this one, speak to the other, write to that one. That's the advice he gave."

Asked if this advice helped to obtain the money, he said "One hundred percent. You know what? Fifty percent. I felt we wouldn't get anything."

But he admitted that ASI had held no negotiations with Mifal Hapayis before signing the agreement. "No negotiations. There were meetings. There was a feeling they had difficulty paying up."

Asked about the agreement being identical to the previous one, he said: "The principle is similar. This agreement was signed for four years and the previous one for three years. I think that was thanks to the advice I received. At the end Mifal Hapayis director Sutnik called me and said bring out the previous agreement and let's make the same agreement. I said to him fine."

Mifal Hapayis commented: "In the last agreement signed between Mifal Hapayis and the ASI there were no differences at all. The two companies' directors reached an agreement with no disagreements or intervention of outside bodies or brokers. The agreement was approved by the Payis directors... The agreement is based on a previous agreement reached between the sides in 2004."

Bardugo was unavailable for comment Thursday night.