Lindenstrauss slams parties over real estate

In a highly critical report published Sunday, State Comptroller Micha Lindenstrauss revealed failures in the way several of the country’s major political parties have managed their real estate assets.

The report criticized the Labor Party, Likud, the National-Religious Party, Hadash and Meretz for several irregularities, including that they did not have agreements or other documents required to prove their rights to some of the assets to which they claimed ownership.

In another part of the report, Labor and the Communist Party come under fire for owing millions of shekels in property taxes to local authorities.

The Communist Party forms a part of the Jewish- Arab socialist front Hadash, which has four MKs. It owes NIS 2.07 million in unpaid taxes, the report revealed, due to years’ old debts.

Meanwhile, Labor owed NIS 1.45 million in unpaid property taxes, the report said.

The Communist Party also drew criticism for failing to officially register in its own name several of the 33 properties to which it claims rights.

The Communist Party, Labor, and the National-Religious Party had failed to provide an annual report listing their property assets, as required by law, Lindenstrauss found – whereas some of the reports given by the Communists, Likud, Labor, and the National-Religious Party were incorrect or missing data.

The National-Religious Party, known by its Hebrew acronym Mafdal, merged with Habayit Hayehudi in 2008.

Two party corporations – Labor’s Berl Katznelson Foundation and Likud’s Tel Hai Fund, had not made proper use of the properties they controlled, Lindenstrauss said.

Some properties leased by Labor’s Beit Arlozoroff corporation were supposed to be used for running party offices or clubs but were in fact put to other uses, the report found.

Likud, Labor and the National-Religious Party had failed to set a long-term policy for asset management and purchase, the report said.

Among other things, the report also found that Likud had not established its claim of rights to 10 properties affiliated to the Liberal Party (an ancestor of Likud, which ceased to exist in 1988 when Likud was unified).

With regard to left-wing party Meretz, the audit found that the party had no documents regarding its rights to a Tel Aviv building that it has used for years.

The report also takes Labor to task over a 2008 NIS 98.3 million real estate transaction between its Berl Katznelson Foundation and Beit Berl College, the Labor Party-run institution near Kfar Saba.

Labor had a vested interest in the transaction because it intended to use part of the proceeds to cover its debts, the report said, but the Berl Foundation’s board had not approved the transaction in accordance with the law.

Instead, Lindenstrauss said, the foundation’s thendirector had acted alone in his dealings with Beit Berl, instead of acting through and with the board.

The report said that in March 2006, the Berl Foundation signed a mediation agreement with Beit Berl College aimed at settling a dispute over an annual lease fee that the college had to pay.

During the mediation process the two sides agreed that the college would pay the fund NIS 98.3 million, part of which involved the college subletting 14 hectares of land on which were several buildings.

In practice, the report found, this had been essentially a sale transaction the foundation undertook to relinquish its primary leasing rights in favor of the college, receiving a sum of money in return for discounted land lease fees. Lindenstrauss noted that the assets had been valued at around NIS 178 million, considerably more than the transaction.

The audit revealed a litany of failures regarding the mediation agreement, including that the Berl Foundation’s board had not come to any formal decision confirming the appointment of a mediator. Neither had the board outlined any policy regarding the position it wanted to take in the mediation, the report said.

Lindenstrauss said the foundation’s actions indicated it had responded to the Labor Party’s request to use its assets to improve the party’s difficult economic situation, and therefore agreed to the lower-value deal.

Lindenstrauss called on the Berl Katznelson Foundation to review the land deal it made with Beit Berl College, taking into account the provisions of the law.

Lindenstrauss said all parties must establish policies and procedures for managing their assets, including registering them as well as sales and leasing.

Parties must move to clarify their property rights, he said, and must protect those rights to generate the maximum income from their assets and repay any debts.

In response to the report, a Labor spokesman said Sunday that the party “embraces the state comptroller’s report, and notes that the audit’s comments referred to past years.”

Labor said it was “acting and will act to learn the lessons, correct the shortcomings and implement the recommendations made in the report.”

“The issues discussed in the report occurred during the tenure of former officials, and the party’s current leadership and management believe it is of paramount importance to apply proper management procedures both to the party and to its subsidiary corporations,” the spokesman said.