Peres' ties to groups 'controlling economy' in question

Shimon Peres

JERUSALEM – Top Kadima official and Knesset Member Shimon Peres is facing possible indictment for reportedly accepting hundreds of thousands of dollars in allegedly illegal campaign contributions from billionaires with strong ties to Israel's economy.

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Officials here described the investigation as "serious." If charged, Peres, a former prime minister who is widely expected to secure a top position in the current government, would be forced to resign his post. The reports have been calling into question Peres' relationships with several top donors, at least one of whom reportedly controls large portions of the Israeli financial market.

The state comptroller announced he has been investigating Peres regarding three donations totaling $320,000 he accepted while running in last January's Israeli Labor party primaries. Election laws here limit to about $8,000 the amount of money a candidate for party leadership can receive from a single donor.

Peres lost the Labor primaries to the party's current chairman, Amir Peretz, but he has been given top priority in Prime Minister Ehud Olmert's Kadima party.

Peres was asked last week to explain the donations within one week before the investigation is forwarded to Israel's Attorney General for possible indictment.

An associate close to Peres described the investigation to Israel's leading Yediot Aharonot as "serious and complicated."

"Peres is in a jam. I believe he will eventually be asked to resign if he does not want to see an indictment served against him," Yediot quoted the associate as saying.

For some, the investigation called into question Peres' relationships with business groups that reportedly have close ties to Israel's condensed economy.

The contributions being investigated include $100,000 each from American billionaire Haim Saban and Swiss billionaire Bruce Rappaport and $120,000 from American billionaire S. Daniel Abraham.

All three have invested large sums in Israeli projects. Both Abraham and Saban have been directly involved with brokering Israeli-Palestinian negotiations.

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Saban was mentioned in a recent Forbes article as running one of 12 business groups the magazine stated control more than 60 percent of Israel's economy, making it among the most concentrated in the world. Rappaport and Abraham have reportedly invested in companies owned by some of the groups.

Forbes maintained the 12 groups have a disproportionately large amount of control over Israel's economy and the country's media through ownership of many of Israel's top banks and holding organizations that own media, utility and other companies.

The magazine listed the groups, which include private citizens – Sami Ofer, Nochi Dankner, Shari Arison, the Cerberus-Gabriel consortium, Charles Bronfman, Yitzchak Tshuva, the Saban group, Lev Leviev, Matthew Bronfman, Tzadik Bino, the Borovich family and Eliezer Fishman.

Forbes contends the groups constructed their empires, which own about 60 percent of the aggregate market value of all Israeli public companies, using organizational methods that were abolished in the Western world in the 1930s.

The groups reportedly achieved tight economic ownership by structuring their companies in pyramid-style, putting top holding companies in charge of smaller companies that all are beholden ultimately to the 12 groups. The U.S. largely eliminated this style of privatized influence nearly 80 years ago through a series of restrictions on ownership and the implementation of double taxation of dividends paid by a company to its parent organization.

Each of the 12 groups have given campaign contributions to Olmert in his bid for prime minister in March, according to a list obtained by WND. They also provided donations to the Peres Center for Peace, a think tank chaired by Peres.

Longtime Likud Knesset Member Michael Eitan, who has led government anti-corruption campaigns here, last week slammed Peres for accepting the contributions.

Speaking on Israeli radio, Eitan described previous instances of what he called inappropriate conduct involving Peres and some of the donors involved in the current investigation:

"Bruce Rappaport, who is mentioned in [the] accusations as being one of the contributors to Peres, was involved in a giant [American oil pipeline project to be built between Aqaba and Iraq]. The builders wanted a promise that Israel wouldn't bomb it – and Rappaport said he could get the guarantee in two days. He went to Peres' home at night, and Peres – who was prime minister at the time – wrote him some kind of Israeli commitment that the line wouldn't be bombed. The U.S. couldn't believe that this was how things worked in Israel."

Rappaport stated at the time a portion of his own expected pipeline profits, which he listed at $700 million, would be donated to the Labor party under Peres, according to Eitan.

Eitan also raised questions about Saban:

"Haim Saban owes some explaining to the public as to why he keeps violating the campaign funding law time after time, contributing tremendous sums to politicians from all sorts of places – and he has just purchased 30% of Bezeq [Israel's phone company]."

Saban endowed the Saban Center for Middle East Policy at the Brookings Institute in Washington, D.C. The center, to which S. Daniel Abraham also contributed large sums, supported Israel's withdrawal from the Gaza Strip last summer.

According to a close associate of both billionaires, Saban and Abraham have expressed "very enthusiastic" support for Olmert's plan to withdraw from Judea and Samaria, which is within rocket firing range of Jerusalem, Tel Aviv and Israel's international airport.

"They are behind the withdrawal plan one-hundred percent," the associate told WND. "There is so much money being moved and business going on I suppose you do have to question whether it's just their politics or are they gaining financially from what happens in Israel?"

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