Welfare Minister Haim Katz resigned from the government on Friday after Attorney General Avichai Mandelblit announced earlier in the week that he plans to indict him on fraud and breach of trust charges.
Katz handed his resignation to Prime Minister Benjamin Netanyahu, writing: “In all my actions, fulfilling my duties as a minister and as a Member of Knesset, I acted in an impartial way and in the public interest.”
Following Katz’s resignation, Likud MK Tzipi Hotovely, who currently serves as deputy foreign minister, said she expected to be appointed to the post. She added that she hoped Katz would be acquitted of any wrongdoing.
The attorney general informed Katz he would have to resign over the pending indictment, a practice established in the 1990s with the court-upheld resignations of indicted cabinet members Aryeh Deri and Raphael Pinhasi.
Katz, who will remain an MK, is expected to seek parliamentary immunity from the Knesset ahead of the September 17 election, but it’s not clear if he can succeed. The current 21st Knesset, elected on April 9, never staffed its committees, and so doesn’t have a standing House Committee to which Katz can appeal for immunity, as the law requires.
In his Wednesday notice, Mandelblit informed Katz he would bring charges against him for allegedly advancing legislation meant to benefit a financial consultant to major Israeli firms who was also a close friend and financial adviser to Katz himself.
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 relying on the “generic crime of ‘breach of trust,’” to indict him after no evidence of bribery could be established was a “fundamental error” in legal judgment.
State prosecutors believe that Katz’s relationship with Ben Ari was more than friendship, and say the minister earned large sums of money by investing according to Ben Ari’s advice and even through Ben Ari himself. That relationship created a significant conflict of interest in Katz’s advancing of the amendment as a committee chairman, prosecutors allege, even if no money directly changed hands.
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 IAI and has been a member of the labor 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 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 cabinet members 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.