AG announces he’ll indict welfare minister for fraud and breach of trust

AG announces he’ll indict welfare minister for fraud and breach of trust

Haim Katz denies wrongdoing in pushing legislation on corporate bond repayments that benefited a friend; in accordance with High Court ruling, he must resign from government post

Welfare Minister Haim Katz attends a Finance Committee meeting discussing raising the age of retirement for women at the Knesset on November 13, 2017. (Hadas Parush/Flash90)
Welfare Minister Haim Katz attends a Finance Committee meeting discussing raising the age of retirement for women at the Knesset on November 13, 2017. (Hadas Parush/Flash90)

Attorney General Avichai Mandelblit notified Welfare Minister Haim Katz on Wednesday that he has decided to indict him on charges of fraud and breach of trust for allegedly advancing decisions benefiting a financial consultant to major Israeli firms.

The indictment won’t include the most serious charge for which Katz had been investigated: allegedly receiving bribes in his dealings with friend and businessman Mordechai Ben Ari while serving as chairman of the Knesset Labor and Welfare Committee from 2005 to 2006 and again from 2009 to 2013.

The indictment centers on allegations that Katz advanced Amendment 44 to the Securities Law at Ben Ari’s request, which stipulates that companies must repay bond debt to small bond holders before it repays controlling owners. Ben Ari’s business represents groups of bond holders in multiple companies.

The veteran Likud MK had also been a criminal suspect in a second separate corruption investigation relating to his time as head of the Israel Aerospace Industries (IAI) workers’ union, but Mandelblit notified Katz’s legal team that he has decided to close that case against the minister.

Katz has denied wrongdoing, defending his work on Amendment 44 as key to protecting small investors. In a statement responding to Mandelblit’s decision, Katz’s attorneys said that once no quid pro quo could be established — that is, no bribery was found in connection with his legislative work — it is a “fundamental error” in legal judgment to use the “generic crime of ‘breach of trust’” to indict a lawmaker for their legislation.

Once the indictment is filed in the coming weeks, Katz will have to either resign from his ministerial post or be fired by Prime Minister Benjamin Netanyahu. This in accordance with a 1993 Supreme Court ruling which required Aryeh Deri to step down from his post as interior minister after he was served an indictment. He was later convicted.

Because the Knesset won’t be back in session until after the September elections, Katz, in the meantime, is unable to request immunity from the House Committee.

Prime Minister Benjamin Netanyahu, left, with Welfare Minister Haim Katz at a press conference announcing the raising of disability allowances, January 3, 2018. (Yonatan Sindel/Flash90)

In February this year, police recommended that Katz be indicted on bribery, fraud, extortion and breach of trust charges over suspicions that he used his position as head of the IAI union to advance his own interests, including promising lucrative employment both inside and outside the company to board members who cooperated with him. Katz was head of the powerful union for two decades before becoming a Likud minister in 2015.

The investigation was part of an ongoing probe into corruption suspicions at IAI with other dubious links to Katz. His son, Yair Katz, who serves in the senior management of the IAI and has been a member of the workers’ union for four years, was arrested last year on suspicion of coercing employees into joining the Likud party. Police said they were looking into allegations that employees at IAI who refused to register as members of the Likud party may have been systematically denied promotions or raises in salary, and in some cases were even fired.

The labor union at IAI, which employs some 16,000 people and is Israel’s largest state-owned company, is known as a Likud stronghold.

Katz is one of four ministers known to be facing possible criminal charges, together with Netanyahu, Deputy Health Minister Yaakov Litzman and Interior Minister Aryeh Deri. Likud MK David Bitan is also being investigated on possible bribery charges.

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