Watchdog to Probe Claims of Nepotism Against Steinitz

State Comptroller Micha Lindenstrauss is considering opening a probe into allegations Finance Minister Yuval Steinitz used his position to benefit a company for which his brother-in-law, Gary Hakim, consulted.

Over the last two days, Channel 10 television has reported that Steinitz, in apparent violation of the rules governing potential conflicts of interest, worked to help Shapir Engineering, which had earlier won a contract to dig tunnels for a planned fast rail line between Tel Aviv and Jerusalem. Hakim serves as a consultant and lobbyist for the company.

Steinitz reportedly let the company bring in 630 foreign workers, in defiance of his own ministry's recommendation that it be allowed to bring in only 300 to 500 workers.

Yesterday, Lindenstrauss ordered his staff to begin a preliminary examination of the allegations. They are now collecting any material relevant to the topic. After examining it, the office will decide whether to open a full-fledged probe. That decision is expected in a matter of weeks.

In response, Steinitz's office noted that two months ago, the minister canceled a contract the company had been awarded for work on Route 531, which will connect the Trans-Israel Highway with the Ayalon Freeway.

"This is a contract valued at over NIS 2 billion," the statement said, yet Steinitz canceled it due to Shapir's "failure to meet the financial closing terms."

But it turns out that the Steinitz's ministry then confiscated only NIS 1 million of the NIS 35 million Shapir had deposited as a guarantee, thereby saving the firm NIS 34 million.

Treasury officials said the ministry wanted to terminate the contract swiftly, without a lengthy legal battle, so that a new company could get to work, and forgoing the NIS 34 million was necessary to get Shapir to agree not to contest the cancellation.

Steinitz also said in his statement that he approved the import of the foreign workers "after the arguments over this issue had delayed this important national project for years, and after the prime minister had spoken in various [internal] discussions and in public" about the delay, "and after a unit of the Interior Ministry requested that we urgently approve the import of 630 workers for the project. Minister Steinitz had no idea that his brother-in-law had any connection with Shapir until the Channel 10 report ... He certainly never discussed the matter with his brother-in-law or with any of his relatives."

Steinitz has now asked Justice Minister Yaakov Neeman to examine the decision to let Shapir bring in the workers, the statement added.

"The claim that Steinitz's brother-in-law is pulling strings at the ministry," the statement concluded, stems from "political actors who, working anonymously, are trying to damage Minister Steinitz's image and cast aspersions on his good name by spreading baseless rumors and smears."

Hakim, whose wife is a sister of Steinitz's wife, also denied that he had anything to do with Steinitz's decision on the foreign workers or that Steinitz knew of his connection to Shapir.

He stressed that he merely consults "occasionally" for Shapir, and is not a regular employee.

Three weeks ago, however, Haaretz reported that Jerusalem Magistrate's Court Judge Dov Pollock had said a more thorough investigation was needed into a different set of allegations relating to Steinitz: that Merhav, a company formerly owned by Hakim, had granted various benefits to senior officials, Steinitz among them, in exchange for their efforts to promote its interests.

A police officer who visited Merhav's offices together with the witnesses who made the allegations subsequently wrote in his report that the two had given him a company document showing that cleaners employed by Merhav had cleaned Steinitz's house in Jerusalem.

Steinitz vehemently denied having accepted any favors from Merhav, and also denied having done anything to help it. Hakim issued a similar denial.