The reform advanced by Benjamin Netanyahu in the Plants Production and Marketing Board provided attorney David Shimron with a monthly salary of $18, 000. His hiring, however, did not pay off, as criminal proceedings relating to his appointment caused the board’s CEO, Michael Ayalon, to be convicted of fraud and breach of trust.
The trial revealed the exploitation of Shimron’s political ties in the Likud and how he had worked for the appointment of the convicted CEO, Michael Ayalon, until he enjoyed the fruit himself.
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“If we were to take the Israel Police’s undercover unit and follow him, ” began defense attorney when questioning Adv. Avigail Zarbiv, the legal adviser of the Government Companies Authority (GCA). “We would not be surprised to see him going to the offices of the Plants Production and Marketing Board in the morning and walking around there and talking to people, right?”
“Right, ” the legal adviser replied, describing how Shimron explained the “urgency” to her so that she would accept the appointment of the CEO who would later be convicted of criminal offenses, because of the salary he arranged for Shimron when he decided to appoint him of all people as the Board’s legal adviser, without a bid.
“I’ll tell it very simply, ” Zarbiv testified. “I was approached by… attorney Shimron and I think Ayalon, as well, who basically clarified the necessity and how important it was for Ayalon to continue to lead the reform. I was convinced that the issue was somewhat urgent.”
In the trial, which ended in 2014, one could learn quite a lot about the private lawyer of Prime Minister Benjamin Netanyahu, who had still served as finance minister at the time of the affair. For example, that he was unmoved when he learned that an investigation had been launched into his appointment as the Plants Production and Marketing Board’s legal adviser, and that although Netanyahu defined him last week “as straight as a ruler” who is particularly careful to honor the law and procedures, he was appointed to that position by taking advantage of his political ties, and did not even bother checking whether it was proper and legal. “I don’t think it’s something I have to check, ” Shimron said in court.
“Don’t you have to check the appointment?” the defense attorney wondered.
“I don’t think it’s my job to check my appointment, ” replied Shimron, who was a legal adviser of a public body at the time. “I try to be accurate… Did I not wake up in the morning, get dressed, wash myself and go check if I was legally appointed?”
Naturally, the unusual salary didn’t bother him, either. “What did you think about it at the time, when you were alone in a dark room?” the defense attorney askedm, referring to his $18, 000 salary. “Didn’t you address that?”
“Show me someone who said I had taken $18, 000 unlawfully, ” Shimron answered. “No one said that to me. I can’t understand your surprise. What, do I have to hide it? I’m not ashamed of it for one second. I also don’t think it’s not right, I don’t think it’s immoral, I don’t think it’s inappropriate.”
But the court convicted the CEO—who paid Shimron an inflated salary without a tender, and even forged documents before rewarding him and a few other political associates—of fraud and breach of trust. The most important thing we should learn from this affair about Shimron, though, is that he does not work for free, that he knows how to demand full compensation and high pay for every single action.
In recent years, alongside his private business, Shimron has been serving as a personal legal adviser to the Netanyahu family on different affairs, including employees’ lawsuits against Sara Netanyahu, “Bibi Tours, ” etc. At the same time, he is a member of the coalition negotiation team on behalf of Netanyahu and has also advised the Likud movement on various matters.
After all these years, however, it is pretty clear that despite conflict of interest agreements and the many formal prohibitions, something in this business is not working. Because somehow, the private public worlds—which are supposed to be managed in parallel without touching one another—are being mixed and connected in a way that makes one wonder, with Shimron on one side and Netanyahu on the other.
After seeing that Shimron does not work for free, we asked him how much he was being paid by the Netanyahu family for the services he has been providing them with all these years. We asked the Prime Minister’s Office the same question. With the submarine affair and the possibility that Netanyahu somehow helped Shimron, that is the main question. Shimron provides Netanyahu with a whole lot of services, and if he works for a meager sum, it would be reasonable to ponder the possibility that it is in Netanyahu’s interest to pay him in other ways. Netanyahu’s office declined comment, and Shimron clarified that he had no intention of providing details on the sum he receives from the Netanyahu family.
The secret appendix
The Shimron, Molcho, Persky & Co. law firm keeps its list of business clients as confidential as the State of Israel’s atom secrets. In 2010, when Shimron’s partner, attorney Yitzhak Molcho, signed a conflict of interest agreement following his appointment as the prime minister’s special envoy, a secret appendix of clients that had never been published was added to the agreement. With the attorney general’s consent, the client list was kept out of public record due to weighty arguments of “commercial confidentiality” and “violation of the Israel Bar Association’s rules of ethics.”
This list, which was concealed from the public, is interesting not just because of Shimron, but mainly because of Netanyahu. Because according to an opinion written by former attorney general Yehuda Weinstein, Netanyahu is not allowed to deal with issues that involve clients handled by Shimron’s law firm. If, for example, Shimron submits a request on behalf of a certain company to a ministry that Netanyahu is in charge of, the prime minister must not deal with issues related to that request.
In 2015, Weinstein ruled that Netanyahu’s position as communications minister raised concerns of a conflict of interest due to his ties with the Shimron-Molcho law firm, which represents some of the biggest communications organizations in Israel.
“The concerns are raised due to your relationship with attorney Shimron, who serves as your representative, as well as in light of attorney Molcho’s appointment as your special envoy on diplomatic affairs, ” Weinstein wrote in the opinion he sent to Netanyahu. “It should also be mentioned that attorney Shimron and attorney Molcho are related to you.” (Shimron and Netanyahu are second cousins, and Molcho is Shimron’s brother-in-law).
According to the agreement from 2015, the law firm must disclose its client list every three months, but Weinstein agreed to keep the list confidential and to “hand it over to no one but the legal adviser of the Prime Minister’s Office and the legal adviser of the Communications Ministry.”
So how can the public know if Netanyahu has dealt with or has not dealt with affairs involving clients handled by the Shimron-Molcho law firm? It cannot. The law firm won’t publish the list, as under the rules of ethics it is prohibited to publish a client’s name without their consent. So the lists that the law firm submitted to the attorney general remain confidential.
By searching through public archives—including court rulings, the Registrar of Companies and more —we tried to shed some light on part of the Shimron-Molcho law firm’s client list. We compiled a list of more than 40 clients the firm’s lawyers have handled since 2009, the year Netanyahu began his second term as prime minister, to this very day.
It’s a very diverse list from many areas of commerce. The communications field does capture a big part of it, with clients such as Pelephone, Cellcom, Channel 9, CNN, Jerusalem Capital Studios and more. Another major field handled by the law firm is real estate. The firm is involved in the liquidation of the Heftsiba group of companies and represents Catholic orders, religious institutes and foreign companies in the real estate field.
In one case, Shimron’s partner Molcho served as a special manager on behalf of the liquidator of the Karta governmental company. And so, he found himself signing a document approving the transfer of rights from Africa Israel to a company belonging to Robert Rechnitz, the son of a prominent family of donors from the United States who is associated with Netanyahu.
Alongside the clients from the real estate field, one can also find clients from the infrastructure field, such as Dorad, Makhteshim-Agan, as well as textile companies like Triumph. Some of the clients on the list were not handled vis-à-vis government ministries but were only represented in legal proceedings, so there is no fear of a conflict of interest in their cases. Nevertheless, it’s interesting to see the variety of clients and areas the law firm deals with.
Particularly intriguing is a company named Nemesysco, which claims to be able to interpret a person’s emotions and feeling through “voice analysis” and offers its products to security bodies around the world.
A letter issued by the Defense Ministry’s security assistance department in 2011 states that Nemesysco is an authorized company in the field of security that is subject to the law and regulation in Israel. But the most interesting sentence in the document reveals that “Nemesysco’s products are used by different authorities in Israel” and that “these authorities are satisfied with the products they have received.” Which “authorities” exactly is the document referring to? When we called the company’s offices last week as potential clients, a representative agreed to tell us that “wherever your imagination takes you, even security bodies, that’s where we reach.”
Shimron’s connection to the company was raised in a lawsuit filed by one of its former employees. “In April 2006, I was fired from the Nemesysco company, which I co-founded, ” the plaintiff said in court. “I was planning to file a lawsuit against the company, and negotiations began. I arrived at a meeting with the company managers, who were represented by attorney David Shimron. The entire legal negotiations and the letters were vis-à-vis attorney Shimron himself.”
Shimron did not only represent Nemesysco in the negotiations with the disgruntled employee. Documents obtained from the Registrar of Companies reveal that his law firm regularly handles the company’s affairs to this very day. When an investigative report questioning the technology developed by the company was published abroad, the Shimron-Molcho law firm sent the report’s writers a libel suit threat. But most importantly, Shimron himself holds 15% of the company’s shares. In other words, he has a financial interest in its success.
Going against the Treasury’s position
When it comes to real estate, it’s now clear that Shimron knows how to collect clients with demands and appetites that are difficult to satisfy, and who repeatedly get caught in conflicts against the state and planning authorities. Another episode in one of those business dramas between Shimron’s clients and the state was finalized only recently, in a procedure involving Netanyahu, as well.
One and a half years ago, the Jerusalem District Appeals Committee reached a decision rejecting claims made by Shimron and his client, entrepreneur and Likud member Ilan Rajuan. Fifteen years ago, Rajuan purchased Frumin House in Jerusalem, a building that had served Israel’s Knesset until 1966 and where the state’s founders had delivered ardent speeches. In light of its historic value, the Council for the Conversion of Heritage Sites in Israel was against turning it into a real estate project, and the Knesset adopted a law reducing the entrepreneur’s ability to develop the property according to his plans. The damage caused to the entrepreneur is the subject of a conflict that has been going on for years between Shimron and state authorities.
The three-story building is located on a small plot in the heart of Jerusalem. According to the plans, three more floors could be added. A plan to build 16 floors was presented during the purchase, but it was never approved. When the Knesset restricted the development and the entrepreneur demanded compensation, the Finance Ministry was reluctant to pay. But Netanyahu, who served as finance minister at the time, announced at a certain stage that he had withdrawn his ministry’s objection, paving the way to negotiations held between Shimron—acting as Rajuan’s representative—and the state.
The state’s representatives were then surprised to learn that Shimron was demanding compensation according to 32 floors—a skyscraper. If one were to do the math, after the entrepreneur purchased the plot for NIS 10 million (roughly $2.6 million), Shimron demanded NIS 437 million ($114 million) in compensation on his behalf.
At a certain stage, the state agreed to hold negotiations on a huge sum representing a building plan based around 24 floors. But the Treasury’s legal advisers, who had already signed the draft agreement, soon realized that they had made a serious mistake. They withdrew their consent, explaining that “the state comptroller would have beheaded us, and rightfully so, ” as one of them told Yedioth Ahronoth when we first came forth with the case.
In 2010, the Treasury used the services of an assessor and agreed to pay Rajuan NIS 45 million (about $12 million) in compensation, about 10% of the sum he had claimed. The entrepreneur and his lawyer did not settle for that amount, and the dispute reached the district appeals committee.
In May 2015, the committee ruled that the NIS 45 million (about $12 million)that had already been paid in 2010 were more than enough. As the committee put it, the appraisement would reflect “a significantly lower compensation than what was actually paid.” The appeals committee firmly rejected the claims for compensation according to 32 floors and ruled, regarding 24 floors, that “There is no planning or legal feasibility, nor is there any room for compensation.”
The state announced that it would not require the entrepreneur to return the extra money he had received, but that has not stopped Shimron and his client from continuing to sue the state in court and demanding NIS 150 million ($39 million) in compensation.
That is not the only case in which Shimron has represented an entrepreneur who presented the state with exaggerated demands, and in which it somehow turned out that Netanyahu was also involved. The same thing happened in a compound in Jerusalem’s German Colony neighborhood, where Shimron represented two entrepreneurs interested in building hotels in Israel.
The first entrepreneur, an American man named Morad Zamir, who was interested in advancing the construction of a hotel named Colony, had helped Netanyahu raise donations in the past. For years, Shimron waged an insistent battle against the state authorities, presenting impossible demands for additional floors and areas, while residents of the quiet neighborhood filed complaints and signed petitions against the huge hotel, which was supposed to be established on the “Templar community center, ” a historical building for preservation, just like the old Knesset building. Shimron and his client, by the way, suggested that the historical property would be preserved in the hotel lobby.
In light of the residents’ objection, the planning authorities refused to approve the addition. The American entrepreneur, who had spoken about the importance of investing in Israel for Zionist purposes and love of the land, recently sold the property at a huge profit: After purchasing it for NIS 16 million ($4.16 million), he told it to another entrepreneur for NIS 127 million ($33 million).
Shimron’s second client in the same compound, the Four Seasons Hotel, presented groundless demands which the authorities refused to approve. The project reached the court, where it was curbed. The demands Shimron had presented on behalf of the entrepreneur were defined in the ruling as “absurd” and as causing “serious damage to the rule of law.”
But even before the court’s intervention, when the authorities were still trying to curb the move, Netanyahu tried to help. He did some work at the Knesset, spoke to the chairman of the Lobby for Jerusalem, and harshly attacked the planning authorities for delaying the hotel’s construction, without mentioning that the entrepreneur was a major client of Shimron. Netanyahu claimed that he was intervening for an entirely different reason: Because bureaucracy had stopped the hotel’s construction and “prevented the creation of thousands of workplaces for Israel’s citizens.”
And after all that, the Jerusalem residents who opposed the plans were surprised to learn that Netanyahu had chosen Shimron of all people to come up with, promote and initiate one of the biggest reforms ever advanced by the Israeli government in the construction and real estate field. The reforms in the planning committees and the Israel Land Authority were born after Shimron was appointed to handle the real estate area as part of Netanyahu’s “100-day team” when he became prime minister again in 2009. Netanyahu explained at the time that “Shimron was appointed to the ‘100-day team’ thanks to his specific knowledge of the bureaucratic obstacles in the planning and construction procedures.”
The reform created by Shimron slowly matured until its approval in 2014, giving extra power to the local planning committees controlled by the local authorities and councils. It took some time to realize the extent of the real estate power added to the local authorities’ representatives, who are already breaking all records of corruption, became clear.
In any event, when Shimron’s involvement was revealed several years ago, a number of Knesset members urgently summoned then-State Comptroller Micha Lindenstrauss to a special discussion, at the end of which he promised to investigate the reform in the planning committee. “One of the starting points was the ‘100-day team’ document, ” the comptroller said in a statement.
This was, however, at the end of Lindenstrauss’ term. He was replaced by Judge Yosef Shapira, following a strange selection process in which Shimron himself was involved. Surprisingly, perhaps coincidentally, the new comptroller shelved the investigation into the reform.
“The State Comptroller’s Office has basically completed the inspection work, ” the outgoing comptroller stated shortly before Shapira took office. “Drafts have been sent to the inspected bodies and they have responded to them.” The comptroller added that “the plan is to complete the work within a few weeks and issue the report.” Even after Shapira took office, the State Comptroller’s Office issued statements saying that the comptroller had “ordered the office to speed up its work on this issue. Responses for the drafts have been received from all the relevant inspected bodies.” Since then, however, not a single report has been published on the issue.
Attorney David Shimron’s office offered the following response: “It is unfortunate that Yedioth Ahronoth repeatedly chooses to present its readers with a false image of reality. You are recycling old stories and reports that are being presented once again in a false manner. Attorney Shimron has never been indicted in the Plants Board affair or in any other affair. Our law firm is one of the oldest in Israel. It was founded in the early 1950s by State Attorney Erwin S. Shimron, may his memory be blessed, and has represented hundreds of clients throughout the years, including the late Rabin’s government, in extremely complex legal cases in the commerce and administrative fields. We are working and will continue to work for all our clients devotedly, professionally and fearlessly. Our firm has always operated and will continue to operated lawfully, according to the rules of ethics and according to the conflict of interest agreement.”
Attorney Moshe Balter, Robert Rechnitz’s representative, offered the following response: “Molcho’s signature on the assignment of rights document is completely technical and has nothing to do with the deal. There is no matter of discretion here on Molcho’s part, as he is formally signed in the agreement as a person with a role in the company’s liquidation.”
The Nemesysco company offered the following response: “Attorney Shimron has served as the company’s legal adviser and chairman of its board of directors since the day it was established and continuously for 17 years now. The company’s products are used by security bodies in the country and are frequently examined by additional different elements. Unfortunately, the volume of our activity in Israel is significantly smaller and unfelt compared to our activity in other advanced countries.
“Attorney Shimron has never acted on behalf of the company in any sales or marketing context in Israel or in the world, with not a single governmental ministry, and any attempt to create such a display would be seen as a joke. Attorney Shimron’s acquaintances are very familiar with his integrity and professional decency, as well as with his sharpness and professional abilities.”
By Shachar Ginosar, Tsach Shpitsen , Ynet News