Accusing leader of cronyism, ministry report urges century-old KKL be dismantled
With branches abroad already frustrated by Israel mothership, Justice Ministry investigator alleges mismanagement at top of legendary multi-billion dollar organization
Sue Surkes is The Times of Israel's environment reporter
A scathing draft report by an investigator operating on behalf of the Justice Ministry has alleged malfeasance within the leadership of the Jewish National Fund, and recommends weighing the dissolution of the 117-year-old organization.
The charges come as the Israeli body, Keren Kayemeth LeIsrael Jewish National Fund, faces mounting pressure from branches abroad, with donations down and costs up, raising questions about the future of the multi-billion dollar behemoth, famous for its widely distributed blue boxes that were once synonymous for many in the Diaspora with support for Israel.
The Justice Ministry document reportedly alleges, among other things, that Daniel Atar — head of the Israeli organization since 2015 — was involved in dozens of appointments of political cronies and other associates, as well as sponsorship deals said to run contrary to KKL rules, and mismanagement.
According to the Calcalist business newspaper, which broke the story last month, investigative accountant Izik Slovodiansky, who carried out the probe on behalf of the Registrar of Trusts, recommended that officials consider breaking the body apart. KKL, in a statement on Sunday night, called the notion delusional.
KKL, established in 1901 to buy and develop land for Jewish settlement and best known for the hundreds of millions of trees it has planted throughout Israel, serves as the Jewish people’s custodian for 13 percent of the land in the country, the management of which is carried out by the Israel Lands Authority.
A kind of NGO officially registered as a company for the benefit of the public, it works in the fields of forestry, water, education, community development, tourism, and research and development.
It was not immediately clear under which legal authority KKL could be broken up.
KKL Israel’s 37-member directorate is composed of appointees who reflect the division of power on the executive of the World Zionist Organization, its parent body. The rules allow KKL’s chairman to make four appointments of his choice.
According to the allegations, however, Atar, a Labor Party veteran who had promised to clean up the lumbering body, used organization appointments to hand out favors to many more. Among those said to have been given spots — some with high salaries and company cars — were associates from the Labor Party, friends from his army unit, and officials from the Gilboa Regional Council in northern Israel, which he used to lead.
About a year and a half ago, the Justice Ministry’s Registrar of Trusts appointed Slovodiansky – a former senior investigator in the criminal department of the Israeli Tax Authority — to conduct a special probe into allegations of cronyism and financial irregularities.
Several KKL insiders contacted by The Times of Israel refused to divulge details of the draft report, saying they did not want to “throw the baby out with the bathwater,” and overshadow all the good work the organization had done.
But one confirmed the allegations about Atar having made dozens of crony appointments.
In an official statement, KKL said all professional appointments were made according to the skills and personal abilities of each individual.
It lambasted the draft report, calling it “distorted” and alleging that the conclusions had been written in advance, “with the help of interested parties who wish to ‘settle accounts’ with the JNF.”
The proposal to break up KKL was “delusional and borders on madness,” the organization charged.
It demanded that the report not be distributed until its lawyers could properly respond.
“The JNF intends to prepare a detailed and orderly response to the draft report and we believe that it [the report] will change totally. For this reason, KKL has asked for the material on which the draft was based,” the statement said.
Last week, the organization submitted an administrative petition demanding that material.
Atar, meanwhile, has apparently sought to make sure the draft report is seen by as few people as possible.
The Registrar of Trusts reportedly agreed to Atar’s request that he be given only one paper copy of the roughly 70-page draft report, on condition that he distribute it to members of the directorate and the external audit committee, the latter headed by retired judge Uri Shtruzman.
Atar initially kept the report to himself. When its existence became public, he allowed the directorate to see it, but not to remove it from the building, before a meeting held to discuss it on December 31, at which lawyers and KKL officials presented a verbal report only.
External audit committee members were invited to see a copy at the offices of KKL’s law firm, Herzog, Fox, and Ne’eman.
A Justice Ministry spokesperson told Channel 10 news on Sunday that the investigation was carried out at the professional level, that the ministry had not yet given backing to the report and that Justice Minister Ayelet Shaked had not been directly involved.
Promise to clean up
Before the Justice Ministry ordered its audit, Atar had pledged to clean up the organization.
That followed a January 2017 report from State Comptroller Yosef Shapira which slammed KKL Israel, under its previous leadership, as bloated and lacking transparency.
In the stinging report, Shapira alleged that it may have mishandled funds and acted out of conflicts of interest.
Under the helm of the Labor Party’s Efi Stenzler and co-chairman Eli Aflalo (of the now defunct Kadima Party), the organization distributed around NIS 1 billion (more than $270 million) to some 500 projects between 2012 and 2014, without any criteria, transparency or documentation, the State Comptroller found.
Atar responded to the State Comptroller in May 2017 with a “Report on the rectifications of irregularities,” in which he wrote that he had inherited “an organization that operated without proper administrative methods, procedures, or regulations, as well as no criteria for allocating resources. This was an organization with a small professional staff, a tiny number of gatekeepers, and a subpar administrative culture; an organization that operated without transparency and had no clear separation between the activities of its elected political officials and its professional echelon.”
“What happened before will never be repeated,” Atar promised at the time.
Fundraising down, costs up
The Justice Ministry investigation and draft report comes at a time when KKL Israel’s fundraising is down and its fundraising costs are up.
The organization’s 2017 financial report (in Hebrew) — the most recent to be made public — shows that donations nosedived to NIS 83.2 million ($22.3 million) from nearly NIS 139 million ($37 million) the previous year.
Fundraising costs, however, nearly doubled, from NIS 44.5 million ($12 million) in 2016 to NIS 74.2 million ($20 million) in 2017.
Requests by The Times of Israel through formal channels to speak to a KKL official about the figures were turned down.
Instead, the organization issued a statement that did not directly address the higher fundraising costs, but an increase in costs in general, which it attributed to expanding its purview beyond projects in Israel to “increasing the safety of Jewish communities abroad and strengthening their ties to the State of Israel.”
“The reduced revenues and increased expenses are a result of the immense efforts by KKL-JNF envoys around the world in initiatives for encouraging aliyah [immigration], education, Israel advocacy, and the fight against BDS,” the statement read.
A senior KKL figure who asked not to be named told The Times of Israel that the drop in donations actually reflected a positive step toward greater transparency.
KKL had, over many years, allowed overseas donors to transfer money through it to non-KKL projects in Israel, and those sums were included in the published reports as monies raised.
In 2016, with Atar’s agreement, the committee dealing with such transfers was wound down because of fears that some individuals might be using it to launder money.
With that tap closed, the overall figure for donations went down significantly.
Tensions abroad and at home
Even the lower fundraising figures are somewhat misleading, however, with KKL Israel claiming credit for some of the monies raised by overseas branches that never even passed through the Israel office’s bank accounts.
Critics have been saying for some time that the KKL in Israel is overly bureaucratic and has failed to realize that today’s donors want far more input into how their money is spent.
Claims such as this have helped spur two overseas branches — in the US and the UK — to effectively split off from their mother organization in Jerusalem, create their own offices in the Israeli capital, and directly support projects run by KKL, as well as by other NGOs, as they see fit.
The American organization, known as Jewish National Fund (Keren Kayemeth LeIsrael) Inc., transferred $33.4 million to Israel in 2017, out of total net revenues of $116 million.
But only around $6.3 million of that was spent on initiatives that KKL Israel was also funding and not a penny of it actually passed through KKL Israel’s coffers — it was all transferred directly to the projects themselves.
Despite this, the $6.3 million is reported as part of KKL Israel’s total of $12.6 million raised from North America, with the rest having come from JNF Canada.
Oddly, and apparently due to different ways of accounting, JNF Canada — which still channels funds sent to Israel via KKL in Jerusalem — reported sending just US$4.25 million in 2017.
Both the Canadian and Australian branches are understood to be dissatisfied with the Jerusalem office, and to be in talks with KKL Israel to redefine their relationships.
And it is not only the overseas branches that are unhappy.
KKL Israel’s assets totaled NIS 12.3 billion ($3.3 billion) in 2017, and its net income in that year was NIS 509 million ($136.6 million).
The Israeli government wants some of this wealth to be directed towards its own national priority projects in an organized fashion.
In line with an agreement reached in November 2015, KKL transferred just over NIS 2 billion ($537 million) to the state in 2016 and 2017.
But relations soured after Atar verbally promised the treasury another NIS 2 billion, only to be scolded by the directorate and told to retract the offer.
The result was the passing of a law last year that will require the KKL to transfer 65% of its revenues to the Finance Ministry every year, or start paying 26% tax on its profits.
A source within the organization, who called the law “outrageous,” said KKL and government officials were meeting to discuss the tax, the organization’s legal status, and other issues.
