In the weeks ahead, barring unforeseen developments, the attorney general will file an indictment against Foreign Minister Avigdor Lieberman. This will launch a new chapter in one of the most talked-about white-collar-crime investigations in recent years, about which Attorney General Yehuda Weinstein delayed making a decision for two and a half years.
In two previous cases concerning Lieberman, eight years passed between the start of the police investigations (2000 ) and the decision not to indict (2008 ). The present investigation started in 2006. In 2009, the police sent the file with their findings to the economic unit of the State Prosecutor's Office, with a recommendation to indict Lieberman and put him on trial. The attorney general at the time, Menachem Mazuz, had only a few months to go in his term. He decided in principle to try Lieberman on some of the secondary alleged offenses. However, because the state prosecution did not submit its final opinion on the same cases to Mazuz before he left office, he did not file an indictment.
On the eve of his retirement Mazuz said in private conversations that the suspicions against Lieberman were no less serious than those for which former finance minister Avraham Hirchson was tried - and convicted - in 2009.
Weinstein took over as attorney general in early 2010. After spending months familiarizing himself with the file, he convened a team of more than 20 attorneys on several occasions for marathon sessions in hotels, in order to pick through the details. Finally, in April 2011, Weinstein sent a draft indictment to Lieberman's lawyers, Yaron Kostelitz and Giora Aderet. "If Lieberman were to forgo a preliminary hearing, I would submit this indictment to the court without hesitation," Weinstein told senior state prosecutors.
Lieberman, who used to squabble with the state prosecution but lately has adopted the strategy of former cabinet minister Tzachi Hanegbi (i.e., zero attacks, anesthetize the public arena ), gambled on a pre-indictment hearing. It was considered unprecedented in terms of its scope: Three meetings were required, and even then, in another unprecedented development, Lieberman's lawyers exchanged letters with Weinstein to complete the process.
By comparison, the police investigation into the labyrinthine Holyland apartment complex scandal began in late 2009. By 2011 the suspects were invited to hearings, and indictments against 16 individuals and companies were filed earlier this year. (Weinstein was disqualified from dealing with this affair, because he had formerly represented one of the suspects: former Prime Minister Ehud Olmert. )
According to one speculative theory, Weinstein had intended to close the Lieberman case for lack of evidence. According to another, a plea bargain is being worked out between Weinstein and Lieberman's lawyers that would pave the way for Lieberman's return to the center of the political stage following a brief hiatus - again, along the lines of Hanegbi's anticipated return to the arena.
But the attorney general and his staff vehemently rejected such speculation. There was no intention to close the case, and no one talked to Lieberman's lawyers about a plea bargain, they said. Furthermore, that option had not even been raised in internal discussions at the State Prosecutor's Office. "There is not a scrap of truth in those reports," Weinstein told his staff.
The attorney general is convinced that the narrative he outlined in the draft indictment is correct: The foreign minister is suspected of running an international business enterprise while holding public office, all the while "committing systematic, prolonged acts of fraud against the public and the state's institutions."
Path to the East
In late 1997, Lieberman resigned as director general of the Prime Minister's Office and founded an international company, based in Israel, called Nativ el Hamizrach (Path to the East ), which was intended to operate in Eastern Europe, primarily in the lumber industry. A company bearing the same name was also founded in Cyprus. Within a short time, the man who had run Benjamin Netanyahu's office early in his first term as prime minister, had become an economic success story: Lieberman made about $3 million in one foreign currency deal.
"It's like gambling on metals in the stock market," Lieberman told this reporter in 2003. "Some people specialize in the yen and others in Swiss francs. You check to see whether it's going up or down, and you do all kinds of financial transactions."
The modest Moldavian-born man from the West Bank settlement of Nokdim bought a fancy new Volvo S90, began smoking cigars and opened a spacious, expensively designed office, complete with a bar, in Jerusalem's Givat Shaul industrial zone.
In the spring of 2001, shortly after being appointed minister of national infrastructure (in the government of Ariel Sharon ), Lieberman informed the State Comptroller's Office that he had sold his holdings in his businesses to his good friend Joseph Schuldiner, head of the Jewish community in Antwerp. Schuldiner (who died in 2006 ) appointed Lieberman's close associate and former driver, Igor Schneider, as the authorized signatory in the Cyprus-based company. On the day after Lieberman's appointment, another of his confidants, attorney Yoav Many, informed a Cyprus-based law firm that had managed Lieberman's companies when he was a private individual that another firm, called MV, which had been established in the British Virgin Islands for Lieberman, was also being transferred to the control of Schneider, the former driver.
A few weeks later, according to the draft indictment, Many and Lieberman founded another company in the Virgin Islands, which was eventually named Mayflower Capital Premier. To conceal Lieberman's absolute control over the company, prosecutors say, it was registered as being held in trust for another firm also controlled by Schneider.
From 2002 to 2008, a period during most of which Lieberman held public positions, the various companies registered revenues of millions of dollars. During the brief period - April 2003 to June 2004 - in which Lieberman was minister of transportation in the Sharon government, Mayflower had an income of $4 million. Most of the money went to recipients who are not known to the state prosecution.
Eleven depositions taken in eight countries (including Cyprus, Russia and the Virgin Islands ) did not help the State Prosecutor's Office find the answers to a number of key questions that arise from the evidence. For example, the prosecution is unable to explain from whom and why $3.5 million was transferred in the summer of 2003 (the money was described as remuneration for another transaction ) to the account of one of the foreign companies.
In the interrogations, Lieberman's confidants, notably Schneider, stated that part of that sum went to foreign companies in return for consulting on, mediating or initiating transactions in wine, trucks and sugar.
The prosecution, which was very skeptical about the ability of Lieberman's driver to execute transactions on this scale, suspected that some of the deals were fictive. However, the prosecutors did not accuse Lieberman of bribery, even though two of the individuals behind the money transfers were businessmen with salient interests in Israel: Martin Schlaff, one of whose companies transferred $650,000 to the Cyprus-based company, and Lieberman's good friend, the industrialist Michael Chernoy.
A 'crime' of success
In May 2001, $500,000 from a company controlled by Chernoy was paid to the Cyprus-based MV company, which the prosecution suspects is controlled by Lieberman. A few weeks before that transfer, an undercover investigation that the police had been conducting against Chernoy hit the headlines. The investigation, which centered on suspicion of fraud in the purchase of shares in the giant Bezeq Telecommunications company, produced an indictment (the trial is still under way ).
Lieberman came to Chernoy's aid, arguing that "his only crime was that he succeeded in life." He declared that he had greater trust in Chernoy "than in the integrity of all the heads of the [police] investigation branches together."
Lieberman also assisted Chernoy in other personal affairs, such as in his efforts to get back his Israeli passport. In 1999, the Interior Ministry had revoked Chernoy's passport on the grounds that he did not spend enough time in Israel to merit one. The ministry also informed Chernoy that a police check was under way to determine whether he had obtained the passport fraudulently, by failing to report his alleged involvement in criminal activity.
It was not until 2004 that the Interior Ministry informed Chernoy's lawyers that it was considering stripping him of his citizenship, which had ostensibly been obtained by fraudulent means. "The Israel Police have information to the effect that you are responsible for acts of murder, attempted murder, violence and threats, which were committed at your order or were contracted by you, against the backdrop of the aluminum wars," the ministry wrote to Chernoy's lawyers (referring to the battle for control of the aluminum industry in Russia after the breakup of the Soviet Union ).
The police possess wire-tap transcripts of conversations between the real-estate developer David Appel and Lieberman that suggest that the two tried to solve Chernoy's passport problem. The prosecution made do with a relatively "soft" interpretation of the relations between Lieberman and Chernoy: a sharp conflict of interest, involving fraud and breach of trust.
Most of the money that is suspected of flowing from Chernoy to MV made its way to the Cyprus bank account of Gershon Trestman, a poet and Lieberman's neighbor in the settlement of Nokdim. Trestman told the police that the money was for a deal to purchase trucks that he had devised along with Igor Schneider, Lieberman's former driver. When he was interrogated, however, Trestman had a hard time answering simple questions about his bank account in Cyprus, thus bolstering the suspicion that he too was a marionette in Lieberman's puppet theater.
Lieberman's lawyers arrived at the pre-indictment hearing armed with stacks of documents, which in their opinion contained an alternative to the narrative posited by Weinstein and the state prosecution. The essence of their argument was that Lieberman had disconnected himself completely from the foreign companies, and had no knowledge regarding how and for which services the millions of dollars were injected into the companies controlled by his driver overseas. Moreover, they argued, the fact that both those who transferred the funds and those who received them are his close friends is sheer coincidence.
The investigation of Lieberman turned up evidence that gives rise to the suspicion that the foreign minister made critical decisions about the companies and benefited from the large amounts of money deposited in them by high-rolling businessmen who also happen to be his confidants. For example, the investigation found that in the summer of 2002, tens of thousands of dollars entered Lieberman's private account via a way station: the companies management account of the Cypriot law firm.
Daniella Mourtzi, the head of the companies management department in the law firm, told police interrogators that she had been instructed by attorney Yoav Many not to mention Lieberman in correspondence between them, and not to send material to Israel. Mourtzi described Lieberman as "our mutual client." The documents she sent to Many included not only financial reports of the companies controlled by the driver but also statements of Lieberman's private accounts in Cyprus banks.
It also emerged that the companies also occasionally underwrote personal services for Lieberman. At the end of 1998, Lior Tenenbaum, an Israeli who divides his time between affluent Kfar Shmaryahu, north of Tel Aviv, and business trips to republics of the former Soviet Union, was hired by Lieberman's Path to the East company to set up a lumber industry enterprise in Ukraine. In the summer of 2001, two months after Lieberman, according to his account, divested himself of his various businesses and sold them, $85,000 was transferred from one of the Cyprus companies to Tenenbaum's wife.
Schneider claimed in his interrogation that Tenenbaum had received the money as an advance for a future transaction. Tenenbaum said the money was part of a financial accounting between him and Path to the East. He added that it was transferred after he spoke to Lieberman about the matter.
In the summer of 2001, Andy Boiangiu, a dentist by profession who in the past managed Lieberman's companies, received tens of thousands of dollars from one of the companies controlled by Lieberman's driver. Boaingiu stated in his interrogation that the money was transferred to him after he spoke to Lieberman about this. According to the evidence compiled by the police, Lieberman - years after ostensibly dissociating himself from these enterprises - took part in a meeting about the dissolution of the two Cyprus-based companies and the transfer of their activity to a new entity.
Between July 2004 and April 2006, Lieberman again took a break from public life and returned to business. During this period his daughter Michal established a company called M.L.1. She and Lieberman's personal adviser, Sharon Shalom, opened an account at a Jerusalem branch of Bank Leumi; both of them were listed as its authorized signatories. They also signed documents declaring that the company was the account's sole beneficiary and that they held the controlling interest in the firm. In reality, prosecutors say, Avigdor Lieberman owned the company and benefited from the millions of shekels that entered its account and were disbursed to cover various expenses such as a secretary and driver, security guards, travel, accommodations at hotels in Israel and political outlays. Lieberman, his daughter and Shalom are suspected of money laundering in connection with this matter.
One of the more intriguing sources of income of M.L.1. was a regular payment of $65,000 from a company controlled by a childhood friend of Lieberman's from Moldova, Daniel Gittenstein. That retainer continued to enter the account of Michal Lieberman even after her father was appointed a cabinet minister in the government of Ehud Olmert.
In one of his interrogations, Gittenstein claimed that the payment was earmarked for Lieberman's adviser - Shalom. However, according to sources who were involved in the Lieberman investigation, Shalom does not know Russian, his qualifications are unsuited to Gittenstein's needs and during much of the period in which the money flowed in, Shalom was working in the diamond industry in Africa.
All told, Michal Lieberman's company was the beneficiary of $2.8 million, of which $1.2 million entered the shared account while Avigdor Lieberman held public positions. Lieberman, for his part, maintains that the money that entered his daughter's account after his appointment as a minister consisted of payments owed him from the period in which he was a private businessman - payments that stretched out over years. At the hearing Lieberman's attorneys presented written contracts which, they say, contradict the prosecution's allegations.
Cat and mouse
In 2003, when he was minister of transportation, Lieberman told this reporter that in the past he had received from diverse sources - among them senior police officers - many details about the rash of investigations against him. Here too, the man who often made calls from other people's phones, who made his close friends uptight by informing them that "the police are on your case," who warned one of his lawyers that people were poking around in his garbage, is suspected of playing cat-and-mouse with the people in blue.
"Part of the time he knows what we know," says a source who is knowledgeable about the details of the case. "Our advantage in the investigation was attained in places where he didn't know exactly how far we got, and then his answers were not as good."
In the spring of 2007, after his first interrogation by the police, Lieberman asked his secretary at Path to the East to set up a meeting between her and one of the key witnesses in the case, the former CEO of the companies, Andy Boiangiu. The meeting was duly scheduled, but instead of the secretary, Lieberman showed up and questioned Boiangiu about his police interrogation.
In this matter the prosecution is attributing to Lieberman subornation of a witness with the aim of "preventing exposure of the truth." For his part Lieberman claims that Boiangiu was not on the list of people whom the police forbade him to talk to after his first interrogation; accordingly, there is not even a hint of any wrongdoing in the meeting.
In October 2008, while he was Olmert's minister of strategic affairs, Lieberman flew to Belarus, where he met with the Israeli ambassador to that country, Ze'ev Ben Aryeh. Not long beforehand, Israel Police had asked the Belarus authorities for permission to investigate various matters related to the Lieberman case. Ben Aryeh saw the request in his capacity as ambassador, and immediately wrote down the name of the company and the number of the bank account in which the law enforcement authorities were interested. In the meeting with Lieberman he told the foreign minister about the request and gave him the note with the information. Lieberman looked at it and put it in his pocket.
In March 2009, when Lieberman became foreign minister in the Netanyahu government, he appointed Ben Aryeh an adviser on his political staff. Later, he encouraged Ben Aryeh to submit his candidacy for the post of Israeli ambassador to Latvia. Lieberman is suspected in this context of committing fraud and breach of trust.
Recently, the prosecution signed a plea bargain with Ben Aryeh in which the former ambassador was convicted of obstruction of justice, on the basis of his confession. He will serve a sentence of a few months, which can be converted into community-service work. Weinstein authorized the deal and agreed to the relatively light sentence mainly because of the timing: The attorney general views Ben Aryeh's conviction as a "linchpin" of the central case against Lieberman.
Talented driver
No one who has been involved with the Lieberman file in the police or the state prosecution believes that the foreign minister genuinely divested himself of his worldwide business interests. Nor has anyone been found who accepts the account of the talented driver who was able to turn over millions and get huge payments from tycoons. The hesitations and agonizing of the prosecutors, and above all of Attorney General Weinstein, stem from the fear that they will find it difficult to translate the evidence they possess into a conviction.
During the investigation, more than 1,000 documents were seized in the office of attorney Yoav Many, dozens of them from suppliers. According to the prosecution, the documents furnish proof that Lieberman controlled the foreign companies, and are testimony to his sophisticated method of committing fraud. Many was silent in his police interrogations and is not expected to testify about the content of the documents in court.
Some of the most significant documents that were seized in Many's office are correspondence between him and Daniella Mourtzi, from the Cyprus law firm. The state prosecution views Mourtzi as a significant witness in the case, who might be able to connect Lieberman to the foreign companies. Now, years after she delivered her testimony to investigators, the prosecution is apprehensive that Mourtzi will not want to take the stand against her high-ranking client.
In the weeks ahead, the State Prosecutor's Office will hold a few more meetings, after which a final decision will be made about the Lieberman case. As of now, Weinstein intends to indict the minister immediately after the courts' summer recess, perhaps after cutting out some bits and pieces from the overall story.
Responses
Avigdor Lieberman’s lawyers declined to comment about this article.
Attorney Micha Fetman, who represents Michal Lieberman, stated: “I am awaiting the attorney general’s decision, following the hearing.”
The lawyer for former driver Igor Schneider, Alon Ron, stated that “Mr. Schneider is not a front man but a businessman who has been engaged in matters abroad for many years. It should be noted that Mr. Schneider is not suspected today in the affair.”
Businessman Michael Chernoy claimed in the past that the money that was transferred from his company to Lieberman’s Cyprus-based company was the product of a business initiative between his partner, attorney Todor Batkov and Igor Schneider, and that he himself had nothing to do with the transaction.
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