To: U.S. Attorney General William Barr; Charles Rettig, U.S. Internal Revenue Service commissioner; Walter J. Clayton, chairman of the U.S. Securities and Exchange Commission; Christopher Wray, director of the Federal Bureau of Investigation
Cc: U.S. Ambassador to Israel David Friedman
Dear Sirs, I unfortunately have to bring before you a serious suspicion of a clear, blatant, and prolonged violation of the 1977 Foreign Corrupt Practices Act (FCPA) by a U.S. citizen by the name of Nathan Milikowsky. As you know, this is a federal law that forbids U.S. citizens and corporations from bribing foreign government officials to benefit their business interests. The State of Israel itself added similar legislation to its Penal Law in 2008, as part of its efforts to be accepted into the Organization for Economic Cooperation and Development (Article 291A, which prohibits the bribing of a foreign public official or an employee of an international public organization).
Milikowsky is a Jewish American businessman and industrialist. Aside from the U.S. companies that he owns and manages, he has also invested in various Israeli companies in the high tech and medical technology industries. A great deal of information has been published in recent years in Israel and the United States regarding ongoing financial support, estimated in the millions of dollars, that Milikowsky provided over the years to his cousin Benjamin Netanyahu, who has served as the Israeli prime minister consecutively since 2009, and also served as the country’s finance minister in the past.
This information was provided to the authorities in part by Netanyahu himself, both in the course of his investigations by the police regarding Case 1000 (the lavish gifts affair), for which he is now being prosecuted in an Israeli court, and in affidavits sent on his behalf to the Permits Committee in the State Comptroller’s Office.
In addition, a considerable amount of information about the financial support for Netanyahu was provided by Milikowsky when he was summoned to give testimony to the Israel Police. His testimony relates both to Case 1000 and Case 3000 (the submarine affair), for which Netanyahu has not been indicted to date, although it was decided to prosecute several of his confidants and acquaintances.
Based on what we know so far, Milikowsky regularly transferred envelopes containing thousands of dollars in cash to the Netanyahus as part of a regular allowance. Some of the envelopes were given to Netanyahu while others went to his wife Sara and his son Yair.
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Milikowsky told police investigators that he estimates the cumulative sum of the envelopes at $100,000. At Netanyahu’s request, Milikowsky also took out a mortgage to purchase an apartment for Noa Roth, Netanyahu’s daughter from a previous marriage, at a sum the prime minister estimated to be 300,000 shekels ($87,000) – but it’s likely far higher. Milikowsky also said he spent $4,000 to $5,000 on suits for Netanyahu and an undisclosed amount on jewelry for Sara.
He told the surprised investigators that he would give the money in cash rather than through a bank transfer, to conceal the transaction from his wife. At Netanyahu’s request he also gave $300,000 to the law firm of Jacob Weinroth & Co. in order to pay for Netanyahu’s legal defense and ostensibly also for that of his wife, who was also charged and found guilty of misusing state funds to pay for catering at the Netanyahus’ private residence.
Netanyahu also asked the Permits Committee for permission to continue receiving millions of dollars for his legal defense from Milikowsky and another U.S. citizen, Spencer Partridge. His request was denied based on the Israeli law that prohibits public officials and members of the government from receiving gifts.
Netanyahu is a very wealthy man. He owns a large number of real estate assets in Israel, including a spacious villa in Caesarea (a community that is home to many of Israel’s wealthy residents, similar to Beverly Hills or the Hamptons). Forbes estimated his wealth at 50 million shekels, even before the revelation of stocks deals (see below) through which Netanyahu acquired at least another 12 million shekels.
Milikowsky was unable to explain to the police investigators why Netanyahu was in need of charity, and said that his support was “a family tradition.” He also failed to report similar support for other cousins, such as the prime minister’s younger brother. For his part, Netanyahu has never explained why he was in need of financial assistance, and why he is unwilling to pay for his legal defense himself.
But all this philanthropy pales in comparison to what has become known since then as the steel shares affair. It revealed that Milikowsky and Netanyahu were not only relatives, but business partners as well: Both men concealed the partnership from the police investigators – and of course from the Israeli and American public. The affair has yet to reach the point of an overt and official police investigation; the media reported that the legal authorities in Israel encountered difficulties in their efforts to discern the affair with U.S. enforcement and administration entities. I would be grateful if you could assist in removing these obstacles.
At the heart of the affair is a transaction: Netanyahu purchased shares in SeaDrift Coke, a company that makes products for the steel industry, from Milikowsky, who owned it. This company was later bought in two installments by a public corporation called GrafTech International, for which Milikowsky became a shareholder and a director.
After the GrafTech purchase was completed, Netanyahu sold his shares, registering a profit of at least 12 million shekels. This is a seven-fold profit compared to the purchase price reported by Netanyahu’s attorney to the Israeli State Comptroller, at a time when SeaDrift was registering losses. The conclusion drawn from an analysis of the transaction is that Netanyahu received an expensive gift from Milikowsky worth millions of dollars.
GrafTech is not an ordinary company; it is also a supplier for the German conglomerate Thyssenkrupp, whose Marine Systems Division manufactures submarines and patrol boats for Israel. A year after Netanyahu completed his profitable shares transaction, attorney David Shimron, a cousin of Milikowsky and Netanyahu, was appointed Thyssenkrupp’s representative in Israel. Three years later Israel purchased three submarines and four patrol boats from Thyssenkrupp in a deal estimated at a minimum of $2 billion.
This deal was carried out due to heavy pressure from Netanyahu – despite the total opposition of the defense minister, the army chief of staff and the heads of the defense establishment – and while occasionally concealing sensitive security information from them. Shimron was interrogated about the transaction, and a decision was made to indict him: Netanyahu testified but was not questioned as a suspect in the case.
Everything described here indicates that over the years, U.S. citizen Nathan Milikowsky provided financial support to the tune of millions of dollars to Israel’s prime minister, Benjamin Netanyahu. Milikowsky has investments in Israel and clear economic interests in supplying equipment to the Israel Navy. Netanyahu used all his influence in order to complete the transactions with Thyssenkrupp, which was represented in Israel by his and Milikowsky’s cousin Shimron. There is a heavy suspicion here not only of a violation of the Israeli gifts law, but of the U.S. Federal Corrupt Practices Act as well. Honorable gentlemen, I would appreciate your examining and investigating this suspicion immediately, before it’s too late.