SUMMARY: The revelations on Prime Minister Benjamin Netanyahu’s tax haven account are overshadowed by a bribe scandal involving top police officers, Rabbi Pinto and an American politician.
Israel could easily be an outstanding exporter of scandals. Not a week goes by here without some new scandal. In the past two days alone, two new ones landed on our doorstep, one juicier than the next. True, it’s nothing like a president caught slipping out of his mistress’s apartment, wearing a black motorcycle helmet, but I think that we’re getting there. Besides, let’s not forget that Moshe Katzav, the former President of Israel, is now serving out his sentence in an Israeli prison after being convicted of rape and other severe sexual offenses. When that scandal was revealed, Katzav was the serving president.
Let’s start with Prime Minister Benjamin Netanyahu. This week, on Jan. 15, the newspaper Globes revealed that the prime minister had a bank account on the Isle of Jersey in the Channel Islands. Jersey is considered a reliable, safe, and quiet tax haven. Netanyahu had his account there from 1999 to 2003, during which time he held no public position in Israel. According to the prime minister’s office, all activity in that account stopped in 2002, when Netanyahu returned to the political arena and was appointed a minister in [Ariel] Sharon’s Cabinet. The account remained in existence for some time after that, but it just had a few pounds in it to cover bank fees and nothing else. The bottom line is that it was all legal. There was no problem with Netanyahu’s activity. What do you want from the man?
Plenty of journalists know the story of that bank account. The information first made the rounds among Israeli journalists several years ago (full disclosure: I was also given the documents). Since all the activity turned out to be legal, we saw no need to make a big deal out of it. Netanyahu already faces enough harsh criticism in the press from those parts of the media that he has not yet managed to take over, so there was no reason to try and force an issue on him. On the other hand, after reconsidering it, I now think that Globes was right for publishing it anyway.
First of all, there is the issue of public appearances. Last decade, when he served as Finance Minister, Netanyahu was the one who imposed the harshest economic measures on the Israeli public. He is considered to be the Israeli Margaret Thatcher. Set against this background, his own financial activities, his lavish lifestyle, and his exaggerated expense accounts at the prime minister’s residences and during his trips abroad are all clearly in the public interest. Let the public hear about it and judge for itself.
But there is more to the story than just public appearances. The story also raises certain issues that demand answers. What was the financial activity that Netanyahu conducted out of that bank account? Was it used to make payments to suppliers or staff? If so, were the authorities informed of this, and were the required taxes paid? When exactly was the account opened, and when was it closed? Was all the activity that took place in it disclosed to the authorities, as required by law? What about the sums in it and the income it generated, which must also be reported by law? Was an annual report submitted? Was the account included in Netanyahu’s financial statement? And there are many other questions.
Yesterday it was learned that Netanyahu used that account to make several payments to people working for him. Did he, indeed, set aside the necessary fees for the Israeli authorities? At this stage there are no clear answers. The prime minister’s office has emphasized that all of the activity was legal. The account was reported as required by law, and in the years that the account existed, there was no need for tax shelters according to Israeli law. But that answer is hardly satisfactory. Over the next few days we will learn whether the state comptroller will be asked to investigate the issue (it is unclear whether he has the authority to do so, since Netanyahu was not a public figure when the account was active), or whether it will be the police. Or will it end like every other case involving Netanyahu: with nothing?
The second scandal is much juicier and very dramatic, shady and complicated. It has everything: wealth, power, rabbis, money, lots of money, politicians, senior police officers, an American politician and apparently an Israeli minister, recordings, testimonies, and friction at the highest echelons of power, all the things that Israeli politics provides in abundance to its participants, and to its onlookers too.
We’re talking about Rabbi Yoshiyahu Pinto, the young Israeli leader of a religious sect, who has managed to become a millionaire, as has become the custom for the leaders of religious sects here. He has a huge following, mainly of secular Jews. He is based in New York and in the Israeli southern town of Ashdod, and has rabbinical colleges, foundations, and charitable organizations. All in all, he has established an empire worth tens of millions of dollars. He lives like a billionaire, flying first class, and spreading around money and gifts. He is also considered one of the most influential people in Israeli politics and society. People who call on him include senior politicians, business and economic leaders, journalists, and public relations specialists. He is charismatic and odd, with some of his mannerisms bordering on the bizarre. Once a year he organizes a private jet to fly hundreds of his followers to visit the tomb of a Jewish saint in Bulgaria (Rabbi Eliezer Papo, known as the “Pele Yoetz,” which means the advisor of wonders), where he conducts all sorts of rituals and ceremonies.
Rabbi Pinto is suspected of regularly having bribed senior officers in the Israeli police force. It didn’t look like bribery though. It was more like a favor here, a few shekels there. He showers them with love and insights into the Torah, but also with benefits, particularly to those who he considered as destined for greatness. Recently, Pinto was incriminated by one of his followers, a senior police officer named Brigadier General Efraim Bracha. Today Bracha is the commander of the Police Investigations and Intelligence Department, which is considered to be an elite unit. According to the charges, Pinto’s wife transferred hundreds of thousands of dollars to Bracha’s wife in exchange for the case file of an investigation being conducted against the rabbi himself.
Pinto claimed that it was not a bribe, and that he had been helping the Bracha family for years. Bracha denied this. The two men were made to confront one another, and the conclusion that the police made was that Bracha was telling the truth despite claims from Pinto that he passed a lie detector test. An indictment against Pinto was prepared, but he responded to it by offering up new information including an admission of distributing favors to an even higher ranking police officer, Major General Menashe Arbiv, who now serves as head of the police’s Lahav 433 division. Lahav 433 is the flagship unit in the Israel Police, responsible for intelligence and all of the most important investigations in Israel. Yesterday Arbiv took leave, though of course, he claimed that he was innocent. An investigation has been launched.
There is also an American angle to this scandal. His name is Michael Grimm, and he is a Member of Congress. Grimm is a devout Catholic, who somehow found himself connected with Rabbi Pinto’s followers and the rabbi himself in New York. Pinto is suspected of having instructed his followers to contribute to Grimm in order to ensure his reelection. Grimm, who has a reputation as one of Israel’s most vocal supporters on Capitol Hill, needed lots of money to get reelected, and Pinto happened to have connections to lots of money. It was a successful match. Meanwhile, federal authorities in the US have launched an investigation, with Pinto aiding the investigation and turning the state’s evidence against Grimm. Now that this investigation is underway, there are claims that various figures in Israel have attempted to interfere with it. The relationship between the Israeli Police and the FBI are strained as a result. Among other things, the name of a former government minister has been mentioned as being the person who tried to help Grimm, and who tried to convince Pinto or his followers not to testify against him.
Yes, it’s complicated. A ban on publishing information about the incident was only lifted in Israel yesterday on Jan. 15. Meanwhile, Rabbi Pinto himself arrived in the country yesterday, along with one of the key witnesses, with considerable information. The question is: Where will this all lead? Israel wants to clean out the stables, but it is not yet clear which stables are more contaminated: that of the rabbi or those of the police. Over the past few years, several senior officers with the rank of Major General have resigned from the police force due to a series of scandals, including particularly embarrassing sex scandals. One of those to resign was slated to be appointed the next police commissioner.
In contrast, the American investigation is focused on Congressman Grimm. Can these two investigations coexist, or will they soon clash with one another? We will have to wait and see. Meanwhile, there is growing criticism in Israel of the culture of rabbinical figures who set up court, a phenomenon which is developing and branching out here, right under our noses. This criticism extends to the religious leaders who become multimillionaires, people of wealth and power who mix with religious men, only to cause a huge commotion when intervening in matters that have nothing to do with them.