Israeli Police Recommend Charging Producer Arnon Milchan With Bribery

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Arnon Milchan

After a months-long investigation, authorities are recommending charges of bribery and tax avoidance against the famed Hollywood producer.

Israeli police are planning to recommend indicting Prime Minister Benjamin Netanyahu, along with Hollywood producer Arnon Milchan, on allegations of bribery.

Following an investigation that has lasted months, including repeated questioning of Netanyahu and testimony given by Milchan in London and associate billionaire James Packer in Australia, Israeli police on Tuesday announced it would recommend to the country's state attorney to prosecute Netanyahu and Milchan in what is referred to as "Case 1000." It relates to bribery and special tax exemption legislation to benefit Milchan in his homeland of Israel.

The proposed legislation dates back to 2013 and was an alleged ploy to extend Milchan’s status as a returning resident to allow him to take advantage of tax breaks. Police now say “representatives of the Finance Secretary received a personal request to precede the Milchan legislation, and their position was that it contradicted public interest with less taxes paid and that the legislation [was] not proportionate, sensible nor equitable."

Key testimony in the case has been revealed as having come from former Secretary of Finance Yair Lapid, whose own personal relationship with Milchan dates back decades, long before Lapid was hired to head New Regency's TV division in 1997. Lapid is a former TV personality and writer who went into politics, with Milchan’s daughter Elinor listed as one of his party’s founding members.

Lapid was also allegedly approached by Milchan in an effort to extend his tax exemption status. Additionally, in 2014 Netanyahu allegedly reached out three times to then U.S. Secretary of State John Kerry to intervene and arrange for a long-term visa for Milchan to stay in the U.S. at a time when the mega-producer was dealing with difficulties relating to his U.S. status.

Throughout the investigation, it has been primarily alleged that Netanyahu received cigars, expensive liquor and jewelry for his wife Sara, estimated at approximately a million shekels over the course of 10 years, which are being regarded as bribes and therefore illegal. Netanyahu's team hurried to rebuff the claims, arguing instead that this was an innocent gift exchange between lifelong friends. The police have concluded this was rather “a demand to receive goods in a systematic and covert manner."

Packer was allegedly brought along by Milchan to carry the financial weight of the gifts. According to the probe's findings, the gift-giving “escalated tremendously ever since Netanyahu was elected in 2009 in order to enhance Milchan’s affairs” and that in part “was done against the country’s general interest."

The police also pointed to Milchan’s partial ownership of Israel's Channel 10 and his desire to strengthen his holdings in Israeli media, promoting an idea to head up merged Channel 2 franchisers Reshet and Keshet Broadcasting, plus ensuring supportive news coverage for Netanyahu in the proposed new TV network.

Netanyahu responded late Tuesday outside his Jerusalem residence, saying he felt “deeply obligated to continue and lead Israel in a way to secure our future,” and adding “you all know I do everything with one thing in mind — the good of the country. Not for cigars from friends, not for journalistic coverage. … Ever since I was elected Prime Minister, never was a day without false allegations or slander against me, viciously attacking not just me but my wife and kids just to hurt me. … Because I know the truth I am telling you this too will amount to nothing."

The Israeli News Company also reported a response on behalf of Milchan's legal team: "The police's recommendation for an indictment for a bribery offense will not remain in place," it said. "The recommendation ignores fundamental facts on which there is no dispute, including: The connection between Mr. Milchan and Mr. Netanyahu began in the early 2000s even when Netanyahu did not hold a government position. This relationship was characterized by friendship between the two and their family members. In this framework, gifts were given from time to time by Mr. Milchan to the Netanyahu family, without any business interest."

The response continued: “Mr. Milchan was called upon to testify and he did so in perfect good faith, even without consulting with lawyers, out of a deep belief that his actions were flawed. The recommendations interpret in a distorted and artificial manner matters that have nothing to do with the gifts. We are confident that a substantive examination of the full range of data will lead to one obvious conclusion: it is not possible to file an indictment for a bribery offense. Insofar as such a preliminary and preliminary indictment is filed, the court is expected — any court — to reject it."