NGOs Run by ex-Likud Officials Accused of Defrauding Teachers

Haaretz investigation uncovers fraud worth millions of shekels.

Nonprofit groups run by former senior Likud officials allegedly defrauded teachers in the schools they ran of millions of shekels and used the money instead for legally questionable payments, all with the knowledge of the education, finance and justice ministries, a Haaretz investigation has found.

The money - derived from the Education Ministry, deductions from teachers' wages and fund-raising drives abroad - has apparently disappeared.

Johanna Jabotinsky Youth Village  - Alon Ron - Oct. 29, 2010
Alon Ron

Teachers at the Johanna Jabotinsky Youth Village in central Israel were shocked to receive letters from their pension funds in April and May this year telling them their employer had not deposited the pension allocations and other sums needed to maintain their pensions and other benefits since the beginning of 2009. As a result, they were no longer eligible for disability payments and life insurance, on top of the infringement of their pension rights.

Yet throughout this period, which lasted more than a year, their pay slips showed hundreds of shekels being deducted monthly for their pension and continuing education funds (keren hishtalmut ).

"Nobody imagined his employer was cheating him," one teacher said, asking not to be identified. "When we started getting the warning letters from the pension funds we found they had deducted the money from our wages, but did not deposit it in the pension funds. We went to the principal, who told us the matter was being dealt with and we would get everything we were owed."

At about the same time, teachers at the Rabin high school in Mazkeret Batya were in for a similar surprise. They too found that the school they worked for had taken their money without depositing it in their pension funds.

"After several months I found the money deducted from my wages wasn't being deposited in the pension and continuing education funds," one teacher said. "If you don't make continuous deposits, you lose your rights."

These two schools belong to the same network, which is supervised by the Education Ministry but has been operated for decades by various nonprofit organizations, including the Johanna Jabotinsky organization and Aleh (Association for Science Development ). The latter is in charge of two other high schools - Aleh Lod and Aleh Herzliya.

The groups were founded by Ptahia Shamir. The umbrella organization that manages all these groups consists of former senior Likud activists, and its main office is located at 38 King George St. in Tel Aviv - which is Likud party headquarters.

Haaretz's investigation shows the organizations identified with Likud received tens of millions of shekels a year from the Education Ministry - i.e., from the Israeli taxpayer - for educational activity. They have also raised millions of dollars since 2000 via fund drives in the United States conducted by American nonprofit organizations. Most of these dollars were funneled to Israel through another organization called Youth Towns.

Despite this, the school system is now on the verge of financial collapse. It owes service providers, the tax authorities and others some NIS 30 million. These debts include the pension deductions that were never deposited from some 300 staff members.

About a month ago, 30 teachers from Mazkeret Batya filed a suit to disband Aleh. Attorney Maxim Arbel of Ra'anana, who represents the group, said the organization owes the teachers in Mazkeret Batya some NIS 1.5 million. Teachers at Johanna Jabotinsky estimate the group's debts to them at NIS 5 million.

Haaretz also found that about two weeks ago, Haim Saguy, the umbrella organization's relatively new managing director, was fired by its executive committee. An activist in the group said Saguy was fired "because he brought up too many things that had been concealed for many years."

Some of these things had already emerged during a probe of Johanna Jabotinsky and Aleh that the Registrar of Nonprofit Organizations conducted in recent years. The registrar's reports raised suspicions of improper conduct, including dubious money transfers that had been going on for years. The main concern was transfers made to Youth Towns that were billed as "management fees."

The education and finance ministries and the Registrar of Nonprofit Organizations have known of these goings-on since at least the middle of the decade, but did nothing about it: They continued authorizing public fund transfers to the nonprofit organizations year after year.

At the end of 2009, the organization's leaders met Education Minister Gideon Sa'ar. Since then, they have been holding talks with senior ministry officials.