Many nonprofit organizations (NPOs) sought to advance Barak's
chances in the last elections. Last week, the State
Comptroller's Report -- nicknamed "the Barak Amutot
Report" -- was finally presented. It was extremely critical
of the One Israel campaign, and of Israeli prime minister
Ehud Barak, the victor in the last election and beneficiary
of the election campaign.
Calling the misdeeds described in the report, "a serious blow
to the rule of law" and "a scourge which must be uprooted,"
the Comptroller levied a fine of close to NIS 14 million
($3.5 million) on the Labor party. The Comptroller charged
that the prime minister, as the chairman of the election
campaign, must bear responsibility and cannot be said to have
discharged his duty by only giving an order to keep the
Prime minister Barak defended himself by saying that he made
it clear in no uncertain terms that he wanted the campaign to
remain within the limits of the law "with wide margins," that
is not to even come close to gray areas. "I couldn't get to
the bottom of the activities of the NPOs, due to the many
responsibilities I had to shoulder, and I trusted my staff,"
Nonetheless, the Comptroller charged, "The extensive
activities should have lit a red light in the mind of the
candidate [Ehud Barak]. He should have made certain that the
campaign for which he was responsible was conducted according
Fifteen minutes after the report was officially released,
Attorney-General Elyakim Rubinstein ordered a criminal
investigation into Prime Minister Ehud Barak's campaign
funding for last year's general elections. In fact the report
had been available the day before to the press and to the
Attorney General. Rubinstein listed the suspected violations
committed by One Israel as: accepting illegal campaign
contributions, keeping false corporate records, fraud and
breach of faith, and grand larceny under aggravated
circumstances. Rubinstein also ordered police to investigate
four other parties, including the Center Party, the Likud,
Yisrael Beiteinu, and United Torah Judaism.
The state comptroller's reports normally do not name names.
However, in this instance, Goldberg decided that the matter
was so grave that several names should be made public. First
and foremost was that of cabinet secretary Isaac Herzog who
acted as a funnel for foreign and domestic donations to
The law stipulates that no foreign donations whatsoever may
be accepted for an Israeli election campaign, while the
maximum cash donation from domestic sources is NIS 1,700 per
household or organization.
The allegations against Herzog and others, such as election
strategist Tal Zilberstein, are twofold: they transferred
money to nonprofit organizations (NPOs) which agreed to back
Barak and they acted as a go-between for other NPOs and
The report found that Herzog and Tal Zilberstein were
involved in raising money for the NPOs and that money donated
to NPOs that supported Barak was not disclosed on official
forms as required by law.
The transfer of these funds through the NPO filters disguised
the illegal donations. As a result, One Israel's campaign
budget disclosures to the comptroller were incomplete; they
did not reflect the extent of the activities undertaken by
the NPOs on behalf of Barak.
An Additional Route for Support
Immediately following his election as head of the Labor
party, Barak knew that he would be unable to defeat Netanyahu
by means of the corrupt Labor party system alone. Barak knew
his goal, and very much wanted to win. To that end, an
extensive network of NPOs were set up to bypass the party.
Barak basically neutralized the old Labor Party leadership,
pushing all the old leaders away from the centers of power in
the election campaign. Barak told the official party
leadership about his intention to found a new party named
"One Israel" to run for the Knesset. Its core would of course
be the Labor Party, but Barak persuaded members of his party
to go along by promising that he would get additional parties
to join. He later brought in Meimad and Gesher. They allowed
him to declare that One Israel was not just the old Labor
Party, but it was never clear if the provided any substantial
support or were nothing but window dressing. In any case so
far One Israel is only a faction composed of there parties.
Though Barak has tried, he has so far not been able to turn
the three parties into a new One.
Even in the new One Israel party, Barak kept most of the old
party stalwarts away from the action, relying on old army
associates and several key friends to run most things.
The Camellia Fund and the Anonymous Donor
A lot of the outside money for the One Israel election
campaign arrived from the estate of the late Octav Botner, an
English millionaire (or billionaire) who in his final years
resided in Switzerland and donated much money to many Israeli
social purposes, mainly in the areas of health, education and
welfare. Botner also supported the peace process in Israel,
regarding it as the main issue for Israel and its
The transfer of Botner's money was implemented by Yitzhak
Herzog, Botner's lawyer and close confidante. At first Herzog
managed Botner's interests in Israel. After Botner's death in
1998, Herzog gained control of much of his fortune as
executor of his estate, and the money streamed in through the
various funds and trusts which Botner had created throughout
the world in tax havens.
One of these funds was the Camellia Fund, established for the
expressed purpose of relieving poverty and distress in
Israel. The fund had accounts in a Swiss bank and in Israel
and millions of dollars streamed into them. Yitzhak Herzog
managed the Camellia Fund in Israel as a trustee. Starting
from the summer of '98, soon after Botner's death, he also
served as special advisor to Barak and a member of his close
Throughout the election campaign, through Herzog, sums from
the Botner funds were used for activities related to the
election campaign of Barak. Herzog testified that he acted
according to the general guidelines of the donor regarding
the use of the money, but that he had the discretion to
decide the specific implementation of these guidelines.
The transfer of the moneys by means of the funds, succeeded
in keeping the identity of Botner secret. This made it
difficult to determine the source of the money during the
investigation, and Herzog explained that he had acted
according to the wishes of the donor.
Seeing the way the NPOs operated, it is clear that they were
not innocently going about their business, but set up with
the intent of avoiding the campaign finance laws.
Everyone's Israel - Our One Israel was the name of an NPO
that operated until February 1999. It was registered at 14
Abba Hillel Street in Ramat Gan, the address of Attorney
Doron Cohen, Barak's brother-in-law and close associate.
Herzog paid the registration fees from the Camellia Fund.
This NPO ordered and paid for campaign billboards and signs,
such as "One Israel - Ehud Barak for All of Us," or
"Netanyahu - too much time, too many lies," and "Places of
Work before Settlements," and "Education before Settlements."
Zilberstein was the architect behind this NPO's
establishment. Other workers were Einav Ezriyah and Ronen
Yemeni, both of whom worked at One Israel campaign
headquarters. They acted in conjunction with Zilberstein.
The NPO's expenditures totaled NIS 121,000. This was financed
partly by sources totaling $20,000 that were funneled by
Herzog from the Camellia fund; Herzog relayed another $10,000
from another foreign donor, a man whose accounts were handled
According to its papers, the purpose of this organization was
"to bridge the social gaps between various populations in
Israel, to bring about unity and to raise the subject of
education to the top priority." Zilberstein claimed that the
NPO was supposed to garner broad support and eventually lead
to the founding of the One Israel party.
One NPO Leads to Another
After the first one was dismantled in February, another one
was founded at the same address and with some of the same key
Zilberstein was behind the group's establishment, and leading
members were Einav Ezriyah and Ronen Yemeni (also involved in
the NPO described above), along with Gil Holzman.
While negotiations were being conducted by One Israel leaders
concerning the possible inclusion of Shlomo Lahiani from Bat
Yam on the party's list, this NPO provided Lahiani with a
variety of services, such as media consultation and cars.
This NPO appointed one of its members to work as a source of
financial and organizational help to the another NPO called
the NPO for the Advancement of Taxi Drivers.
This NPO's expenditures came to NIS 314,860. The main source
of funding was the Camellia fund, with allocations directed
Zilberstein told the comptroller that "its purpose was to
advance social goals and it was only incidental to that did
it support the alternate candidate for prime minister with
the best election chances, Ehud Barak."
The comptroller said that it was clear that the organization
worked closely with the Barak campaign. One example was that
the woman sent by this NPO to help the taxi drivers
organization at first applied to the Labor Party for work,
but was referred by them to this NPO. Her duties included
ensuring that money which came to the cab drivers' NPO would
be used to promote Barak's election.
Also, she organized the protest rally and sent to NPO members
invitations to a One Israel convention; she also helped bring
pro-Barak taxi drivers to television studios, where they were
part of the audience on programs on which Barak appeared; and
she supplied pro-Barak bumper stickers to cab drivers.
The dissemination of the bumper stickers and campaign
materials was ultimately supervised by Zilberstein, with One
Israel footing the bill.
The NPO for the Advancement of Taxi Drivers in Israel had
expenditures of NIS 77,319. Herzog ordered two checks worth
NIS 80,000 transferred to the NPO. One check of NIS 40,000
came from the Canadian foundation, and the other NIS 40,000
was from the Camellia fund.
The comptroller said that this money was an illegal
Hope for Israel
The chairman of this NPO was Shmuel Levi who said that this
group's goal was to create a "neighborhood political party."
In their response to the comptroller, they added that another
purpose was to support public figures who were committed to
the goals of the NPO.
Levy said that Zilberstein consulted and encouraged him in
this endeavor. Zilberstein referred Levy to a variety of
donor organizations and individuals.
This organization was originally registered at the address of
Gil Holzman, who was also active in the We Haven't Lost Hope
NPO, and later worked directly for One Israel. Its address
was later changed to Levy's residence.
The NPO received NIS 2 million from abroad; NIS 1.42 million
came from Butnar. This is not illegal for a social
organization, but it is against the law for a campaign
The comptroller found that Levy also owns a business called
King Brothers, and that the Labor Party signed an agreement
with King Brothers to put up pro-Barak campaign materials.
Payment for the publicity work in the amount of NIS 234,000
is listed on One Israel's accounts. This covered the work of
20 publicity workers.
The comptroller found, however, that the "written agreement
does not even remotely reflect the actual basis of the
relationship," and that an examination of the Hope for Israel
group's documents and other evidence points to an entirely
different scope of work undertaken with the Hope for Israel
money for Barak's campaign. According to the comptroller, the
NPO paid a total of NIS 1.1 million to disseminate pro-Barak
In fact, Levy explained that his company employed 150
workers, who functioned as heads of teams which guarded
campaign workers while they put up posters and billboards
around Israel. The NPO also paid for hundreds of teams at NIS
700 a team.
The comptorller tried to verify information given in the
documents of the NPO, but he found: "Addresses written on
account records turned out to be nonexistent, or they
referred to businesses which ceased operations right after
the elections." One contractor engaged by this NPO was
tracked down and said that in exchange for the money received
by Hope for Israel, he put up placards for One Israel. This
was not one of the stated purposes of the NPO.
The comptroller found that NIS 1.4 million spent by this NPO
were an illegal contribution to One Israel. He did not go
into the issue of the foreign source of the contributions.
This NPO is an independent one that was founded several years
ago with the stated purpose of education youth to culture and
democracy through publicity, and support of the peace process
between Israel and its neighbors. It aims to transmit the
"heritage of Yitzhak Rabin."
This NPO conducted quite a bit of anti-Netanyahu publicity
work during the campaign. It also took out pro-Barak
advertisements in newspapers and posted placards thanking
"Yitzhak" (Mordechai) after Mordechai decided to withdraw
from the race for prime minister. In fact, the One Israel
campaign expected the Dor Shalom to support Barak, though it
never did officially.
A short time before the elections, Zilberstein asked
Generation of Peace Chair Doron Tamir to engage Shmuel Levy
to put up posters and billboards. Zilberstein said that he
wanted to help Levy earn a living, and that he asked him to
put up Generation of Peace materials only.
Doron Tamir of Dor Shalom said that Dor Shalom was to pay for
Levy hanging signs for One Israel. In fact Levy never put up
any signs for Dor Shalom, only for One Israel.
Tamir, however, refused to sign a contract with Levy
directly, since the latter was employed by One Israel.
In the end a work-order contract was signed instead with
"A.H. personnel and services," through which Levy was to hang
publicity materials supplied by Dor Shalom. The contract was
for $150,000, including value-added tax.
The comptroller found that the A.H. company was set up only
for this and a few other, similar transactions during the
campaign. The company was registered in the name of an
unidentified individual, who is a drug addict with a criminal
record, and who was clearly only a "straw man" used by the
persons who were really behind the deal. This individual was
brought to a bank solely for the purpose of receiving money
from a clerk for checks made out to A.H. He pocketed NIS
5,000 for doing so, and the rest of the money found its way
to the campaign.
The comptroller said that not only did Levy not put up
Generation of Peace materials, but also that such publicity
materials were never ordered or manufactured to begin
Tamir relates that money paid in this connection came from
the Camellia fund. Tamir adds, "I understood I was a
marionette on a string. During the whole campaign, I felt
that all of us were puppets in the end. But I thought of
myself as a puppet who knew how to take care of himself."
There were many other instances of funds that may have been
used and registered illegally. However, the comptroller said
that his inclination was to be lenient and only to declare
the cases where the crimes were clear, and beyond a shadow of
any doubt. We have not cited them all here.
Likud was also cited for violations of the campaign finance
law. On the surface the charges sound similar, however on
closer inspection they are not.
An NPO for the Development of Jewish Settlement in Judea,
Samaria and the Gaza Strip spent some NIS 136,800 on
advertisements attacking Center Party leader and prime
ministerial candidate Yitzhak Mordechai, thereby backing
Netanyahu. Australian millionaire Joseph Gutnick also spent
money in support of Netanyahu. Though the law requires that
the Likud record and report such expenditures as donations,
they were not made under the control of central figures in
the Likud campaign, and no attempt was made to really hide
them. The comptroller imposed a NIS 500,000 fine on the
The Center Party exceeded its allowed expenditures by a
whopping NIS 17.5 million. The comptroller said that such a
large amount indicated that the party was lacking in respect
for the law.