More money troubles in the Netanyahu family

“Looks like a formal criminal probe into the economic ties, interests and conflict of interests between Prime Minister Benjamin Netanyahu and his cousin Nathan Milikowsky is inevitable,” a senior Israeli law enforcement official told Al-Monitor, speaking on the condition of anonymity. “Such a decision is not possible before the [April 9] elections, but in light of the information gathered recently, a complex and troubling picture emerges that requires thorough examination,” the official added. “Authorities in the United States might also have to investigate the case from their angle,” he concluded.

Indeed, the Federal Securities and Exchange Commission might feel the need to launch a probe into Milikowsky and Netanyahu’s business dealings. “Right now, it is unclear how Netanyahu bought SeaDrift stocks, with whose money and from whom,” said the law enforcement source. “What was the role of his cousin, who was a majority stockholder in the company, and why did Netanyahu pay a significantly lower sum than other buyers …, an absurd value compared to its revenues that year?”

In order to understand this latest affair, the fifth in which Netanyahu has become embroiled over the past two years, one has to dive into Netanyahu’s family history. His grandfather Rabbi Nathan Milikowsky emigrated from Poland to Palestine after World War I. Life was hard, and seven of his nine children left well before Israel was established in 1948. Most of them did well, largely in the steel industry, becoming wealthy. Two sons stayed on in the Holy Land. One of them, Professor Benzion Milikowsky, who went by the pen name Netanyahu, is the father of Israel’s prime minister.

According to family tradition, the wealthy brothers who moved abroad and prospered would see to the needs of the two brothers who remained in the Land of Israel and pursued academic careers. The principle was clear: Those who did well in material terms would take care of those who chose a more spiritual path in life. Indeed, the Netanyahu family received regular help from their rich relatives abroad. The senior Netanyahu would sometimes live in the United States for long periods, holding down academic posts in New York and Philadelphia and enjoying the largesse of his relatives. His son Benjamin spent large chunks of his childhood and adult life in the “land of limitless possibilities,” including studying at the Massachusetts Institute of Technology.

The family tradition of sharing survives to this day, at least as far as Netanyahu and his multi-millionaire cousin Nathan Milikowsky are concerned. This give-and-take is now under public scrutiny, being peeled back like an onion, layer by layer.

Netanyahu had actually admitted to the police investigating suspicions of corruption in Case 1000 (involving favors from wealthy businessmen) that Milikowsky gave him regular cash handouts, paid for his suits and luxury items and helped him out financially. Later, it transpired that the two had been business partners, holding stock in a Texas steel company called SeaDrift Coke. Netanyahu had bought the shares in 2007, while head of the Knesset opposition, and sold them in 2010, almost two years after being elected prime minister. The affair is rapidly escalating, with Netanyahu caught being economical with the truth on an almost daily basis.

According to documents that recently came to light, Netanyahu bought the shares for $600,000. To date, it is unclear who sold them to him — at a 95% discount — and who paid for them. He sold his holdings to Milikowsky at a huge profit, $4.3 million to be exact, as the company experienced a sharp downturn. The deal was thus not commensurate with the state of the steel industry or with the firm’s financial health at that time.

If authorities undertake a probe, it will focus on suspicions of illegal money or gift laundering by the two men. In recent days, it has been learned that Milikowsky has stakes in a web of Israeli companies, including two in the biomedical industry — Art Medical and Permia Spine, where he sits on both boards of directors. Meanwhile, his cousin the prime minister serves also as Israel’s health minister. This relationship — with an investor in the medical industry secretly funding the minister in charge of the sector — could develop into a serious criminal investigation of both Milikowsky and Netanyahu. And that's not all.

Threads leading to the submarine scandal — involving suspected bribes in the sale of German submarines and patrol boats to Israel — refuse to disappear from the public eye and the current election campaign. Netanyahu apparently sold his SeaDrift stock to his cousin in 2010, just as it was about to merge with Graftech, a leading steel electrode maker in which Milikowsky became the majority shareholder and senior director. This is where it gets interesting: Graftech supplies steel parts, and one of its biggest strategic clients is Thyssenkrupp, the German conglomerate manufacturing the submarines and other naval craft for Israel.

Netanyahu, while prime minister, was aggressively promoting the acquisition of an additional submarine from Thyssenkrupp, against the navy’s wishes. He then promoted the purchase (subsequently dropped) of three additional subs, and the entire affair erupted into a criminal probe and a public storm. Netanyahu has not been identified by police as a suspect in the submarine investigation, but links between Netanyahu and his cousin, a major stakeholder in the firm involved with Thyssenkrupp, are likely to be of interest to investigators, as is the question of whether Netanyahu paid proper taxes on his SeaDrift profits along with other issues.

Netanyahu is trying to sideline these latest developments by slinging mud at his rivals, chief among them former Israel Defense Forces (IDF) Chief of Staff Lt. Gen. Benny Gantz, who heads the rival Blue and White party. The supposed Iranian hacking of Gantz’s cellphone, a state comptroller report about a company that Gantz chaired as a civilian and rumors about Gantz’s supposedly unfit mental state are helping Netanyahu divert fire into his rival’s court. Polls indicate that the race is tighter than ever at the top, with Netanyahu’s Likud and Gantz’s Blue and White neck-and-neck. The right-wing bloc of parties led by Netanyahu is still well ahead of the center and center-left bloc in the polls.

Meanwhile, an IDF division is deploying along the Gaza border ahead of a large, Hamas-organized anti-Israel protest, dubbed the March of a Million, planned for March 30. The explosions from an overnight attack on an Iranian weapons depot in Syria are also still reverberating across the region. Israel has not officially admitted to the raid, but Intelligence Affairs Minister Israel Katz appeared to eliminate any ambiguity when he broadly hinted on the morning after on March 28 that Israel had been behind it.

The major task now facing both Netanyahu and Gantz is to arrive at the April 9 finish line in one piece. Which of them will emerge the winner, no one knows.