Tangled ties between Israeli politicians and billionaires

Linked to Netanyahu probe, Lapid forced to explain his friendship with Milchan

Case 1000 has pitted the prime minister against his friend, a Hollywood producer and the one-time employer of another leading politician – who is also a witness in the case

Marissa Newman is The Times of Israel political correspondent.

Producer Arnon Milchan in 2016 (left) and Knesset member Yair Lapid in 2018 (composite photo: Evan Agostini/Invision/AP; Miriam Alster/Flash90)
Producer Arnon Milchan in 2016 (left) and Knesset member Yair Lapid in 2018 (composite photo: Evan Agostini/Invision/AP; Miriam Alster/Flash90)

Is Ehud Olmert “still a friend?” the quizzical investigative reporter inquired, after stepping out of a room lined floor-to-ceiling with photos and letters from a who’s who of Israeli politics.

“Olmert was always a friend,” Hollywood producer Arnon Milchan replied to Ilana Dayan in a tell-all interview with “Uvda.”

At the time, in 2013, the former premier was facing corruption charges that would ultimately lead to his incarceration.

“And would you define Bibi [Prime Minister Benjamin Netanyahu] as a friend?” Dayan pressed.

“Yes, certainly,” replied the Israeli-born billionaire, a former agent for Israeli intelligence services, who is now at the heart of one of the bribery cases against Netanyahu.

“And [former Likud minister] Silvan [Shalom]?”


“And Tzipi [Livni]?”

He paused. “Yes.”

“And Yvet [Defense Minister Avigdor Liberman]?”

“Yes,” answered the producer behind “Fight Club,” “Pretty Woman,” and “LA Confidential,” cracking a smile.

“And [former prime minister] Arik [Ariel] Sharon, in his time?”

“Very much.”

Prime Minister Ariel Sharon (left) shakes hands with Hollywood producer Arnon Milchan at a conference in the Galilee in June 2005. Finance minister Benjamin Netanyahu is pictured in the center (Moshe Milner/GPO archive)

“And Shimon Peres?” she asked of the former president and architect of Israel’s nuclear project, who told the program he had personally recruited Milchan for covert military activities.

“Very, very much.”

“And Yair [Lapid]?” she concluded, of the then-finance minister who, more recently, as a senior opposition figure, gave testimony in the Netanyahu graft probes, ostensibly to Milchan’s detriment.

“Very much.”


Last week, police recommended Netanyahu be indicted on bribery, fraud, and breach of trust charges over some NIS 1 million worth of gifts, including NIS 750,000 ($212,000) from Milchan.

Brad Pitt and Angelina Jolie flank Arnon Milchan, head of Regency Enterprises, at the premiere of “Mr. &; Mrs. Smith” in Los Angeles on June 7, 2005. (AP Photo/Chris Pizzello)

Investigators also recommended criminal charges against Milchan over his alleged bribes to the Netanyahus — including cigars, champagne and jewelry — while accusing the prime minister of pushing for legislative amendments on tax breaks that would have benefited Milchan, advancing his business interests, and aiding his visa arrangements.

Netanyahu has denied all wrongdoing in that case (as well as in another, in which he is also suspected of bribery), stressing that he and Milchan have been friends for decades and claiming that he has advanced initiatives that actively harmed the billionaire’s business interests.

The attorney general will make the final decision on indictments.

As the police recommendations, which carry public weight but are not legally binding, emerged last Tuesday evening, another bombshell dropped on Israeli prime-time television: Lapid, the prime minister’s former treasurer turned-political rival, was a “key witness” in the case, reports said.

Israelis have for several years now expected to witness, sooner or later, a face-off between Netanyahu and Yesh Atid leader Lapid. Only now it seemed that, rather than in an election campaign — or perhaps concurrently — the long-time prime minister and the finance minister he once fired could square off in court, with Netanyahu as defendant and Lapid as witness, and, wedged between them, the bigwig producer and power-broker both have called a dear friend.

Prime Minister Benjamin Netanyahu (left) embraces Yesh Atid leader Yair Lapid after addressing the Knesset ahead of the swearing-in of the new government, March 18, 2013. (Miriam Alster/FLASH90)

The revelations immediately sparked an acerbic reproach from Netanyahu and his Likud party, who accused Lapid of seeking to unseat him undemocratically — with a little help from police.

“This is the same Lapid who vowed to topple me at any cost,” railed the prime minister, who has long claimed the investigation is politically motivated. “He is a good friend of Milchan, which isn’t a sin, but he is; he was employed by him.”

While Lapid, as finance minister, was the one who met with Milchan regarding the so-called “Milchan Law,” which police suspect was designed to benefit the Hollywood mega-producer, “I get [indictment] recommendations,” Netanyahu protested wryly last week, “and Lapid gets applause.”

The police summary, and the ensuing war of words between Netanyahu and Lapid, also underlined the tangled relationship between Israeli politicians and billionaires, who are granted special access and perhaps also political favors.

Former finance minister Yair Lapid (left) and Prime Minister Benjamin Netanyahu, when the last government was in power, in Jerusalem on July 3, 2013. (Flash90)

Lapid is no exception to the dubious trend. His party has championed clean politics, and he conceded to police that he had met with Milchan as finance minister. Still, he insisted he had rejected pressure from both Milchan and Netanyahu to advance the law.

“I simply stated, ‘No way,’ and that was the end of it. It was not my job to help Milchan or any other tycoon, but rather to look after the country’s coffers,” Lapid said in a statement on Sunday.

He also dismissed the comparison drawn by Netanyahu.

“I’ve known Arnon Milchan for 25 years, I worked for him for a few months 22 years ago. I have met him many times. The thing is, the prime minister was accused — and this wasn’t even denied — of getting close to a million shekels in gifts. I don’t even understand that kind of friendship. What kind of friendship it is when you get a million shekels from somebody?” Lapid told American Jewish leaders on Monday.

Former boss, business deal broker?

Google Yair Lapid and Arnon Milchan and the first photograph to come up is a candid shot of a younger Lapid and the producer singing together in a Tel Aviv club, the billionaire’s arm slung around the future politician’s neck.

“I met Arnon Milchan in the 1990s. In 1995, he asked me to create a TV company for him. I went to Los Angeles for a few months, created it, and came back. That was the only time I worked for him. A few months, more than 20 years ago. We’ve stayed friendly during all those years. Arnon is an easy person to stay friendly with,” Lapid said in a statement this week, as his relationship with Milchan came under new scrutiny.

The former journalist and TV personality was tasked  with heading a department of Milchan’s New Regency in 1997, a position he left several months later to return to Israel.

Arnon Milchan and his wife (photo credit:Flash90)
Arnon Milchan (Flash90)

Twenty years on, Lapid was back in Los Angeles, this time giving a speech honoring Milchan, as the producer accepted a “From Vision to Reality” lifetime achievement award.

Arnon is “such a creative guy,” said Lapid in his 2008 address. “But there’s another side to his creativity that is not that flamboyant, that is dead serious, that has to stay secretive. And we all know how hard that is for Arnon.” Referring to Milchan’s clandestine activities on behalf of Israel’s nuclear program, he thanked him for the activities “we don’t know” about.

Lapid wasn’t the only high-profile Israeli toasting Milchan at that event: Netanyahu, Livni, Ehud Barak and Peres also honored him with video messages. Across the political aisle, left and right, Milchan appeared to have wooed them all.

Milchan the middleman

In his unofficial and definition-defying capacity as “associate” to the political elite, Milchan was also rumored to have mediated between Sharon and Peres, Netanyahu and Shalom, Netanyahu and Sharon, Netanyahu and opposition leader Isaac Herzog, and so on.

In a prescient article in 2005, Israeli reporter Ben Caspit described efforts by Milchan the middleman, seamlessly transitioning between dinners with Netanyahu and drinks with the Lapids and Peres.

“He also mediated between Sharon and Peres. It cost him a lot in intimate meals and headaches, but it was worth it,” Caspit wrote.

“And here is the place to explain that with Bibi, too, Milchan enjoys a very close relationship lasting many years. The two tend to dine one-on-one at luxury restaurants here and there. One of those meals, more than two years ago, at Mul Hayam cost NIS 8,000. Milchan paid. What was there for that sum? Probably cigars and excellent wine. It’s their right. Milchan worked hard for that money. He also sits with Bibi in his house in Caesarea.”

Arnon Milchan (left) and Benjamin Netanyahu at a press conference in the Knesset on March 28, 2005. (Flash90)

“Who else?” continued Caspit. “Who isn’t? Tommy Lapid, for example. They were introduced years ago, when Lapid was the head of the Cable Association, and Milchan weighed joining and even bought shares (which he later sold). Their acquaintance deepened later due to his son, Yair, a personal and old friend of Milchan (who also worked for him on West Coast).

“That’s why you could spot, not long ago, Lapid senior, Lapid junior, Milchan and Peres sitting together in a Tel Aviv pub as part of Milchan’s efforts to bring Peres and Lapid together, en route, perhaps, to a unity government with Shinui [Tommy Lapid’s party] and Labor,” he wrote.

In 2004, according to a report in the Haaretz daily, Lapid — then a columnist for Yedioth Ahronoth — attempted to broker a deal between Milchan and Yedioth’s owner, Arnon Mozes (who, coincidentally, is a key figure in the second case against Netanyahu and could also stand trial), to buy shares in the Reshet television concession.

The deal never went ahead, and Lapid denied having had a hand in the negotiations. But his denial offers a glimpse of the overlapping social circles of tiny Israel’s small group of power players.

“Arnon Milchan and the controlling shareholder of Yedioth Ahronoth, Arnon Mozes, have known each other for 20 years and don’t need my help to meet,” Lapid said in 2004 of the two men now accused by police, separately, of bribing the prime minister.

Milchan’s daughter, Elinor, is also a founding member of Lapid’s Yesh Atid party, which was created in 2012.

Missing diary entries and ‘no conflict of interest’

During his testimony, Lapid said Netanyahu had tried to push legislation to extend the period for which new immigrants and returning Israelis are exempt from declaring and paying tax on income earned overseas, a move that could have saved Milchan millions of dollars.

TV reports intimated that Lapid’s testimony was a decisive factor in the police recommendations to indict the prime minister in the case. The former finance minister, however, denied this, saying he had merely confirmed other accounts and was not a “key witness.”

“During the time I was in the Finance Ministry, I didn’t see Arnon Milchan often. In 2014, when he wanted to extend the Milchan Law, I clearly stated my opposition to it, and I blocked the law, along with the other members of the Finance Ministry,” said Lapid, adding that he had said “no way.”

“Regarding why I met with Milchan, the answer is simple: At the time, Milchan wasn’t suspected of any wrongdoing,” he said. “No one suspected that he had sent the prime minister gifts worth hundreds of thousands of shekels. The testimony I gave on the matter was short and simple. I am not a central or key witness, and the police know about the case from other sources. I was summoned to testify, I appeared, I told the truth and I went home after 45 minutes.”

Prime Minister Benjamin Netanyahu (right) shakes hands with Yair Lapid, leader of the Yesh Atid party, during a session at the Knesset, October 31, 2016. (AP Photo/Sebastian Scheiner)

He said he informed the Justice Ministry of his ties with Milchan while treasurer. “They decided there was no conflict of interest, and therefore no need to include Milchan in the [conflict of interest] agreement,” he said. “The fact that I worked for him for a few months during the 1990s simply doesn’t create a conflict of interests.”

The meetings with Milchan, however, were missing from Lapid’s official work schedule as released to a transparency watchdog in 2013, according to the head of the project.

“After looking through his schedule, I did not find meetings with Arnon Milchan; nor in the treasury,” journalist and transparency activist Tomer Avital told a radio station on Sunday. “I don’t know what checks the police made, but I think Lapid’s supporters need to ask themselves why he is hiding this information from the public and what else he isn’t telling them.”

Asked about the missing entries on Monday, Lapid shrugged it off, saying he was not in charge of penning in his meetings.

Asked why did he not publicly acknowledge his testimony to police in Case 1000 while, for months, insisting that Netanyahu would be questioned as a suspect in another probe on the multi-billion shekel purchase of military submarines, Lapid said police had asked him not to.

But as the specific contents of Lapid’s testimony remain under wraps, tucked in a file now held by state prosecutors, the question remains: If Lapid’s testimony proves key in incriminating Netanyahu, will the ex-finance minister, by extension, be responsible for the downfall of his friend, Arnon Milchan?

“What’s the biggest mistake people make about Arnon Milchan?” interviewer Dayan asked Alexandra Milchan, his daughter, in the 2013 TV report.

“The biggest mistake,” she replied, “is to think they’re very close to him.”

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