AG moves to indict Haim Katz for fraud; Drops IAI charges

The Attorney-General's announcement was made after a letter of suspicion against Minister Katz was signed by State Attorney Shai Nitzan and Tel Aviv District Attorney Liat Ben Ari.

Haim Katz
Attorney-General Avichai Mandelblit announced on Wednesday that he has moved to indict Social Services Minister Haim Katz (Likud) for fraud and breach of trust.
According to the announcement, Katz violated conflict of interest principles on several occasions in his economic dealings with Equital Ltd.’s Motti Ben-Ari, and covered it up to obtain illegal economic gains for the two of them.
Mandelblit informed Katz that he should resign, and that if Katz would try to maintain immunity from prosecution as a member of Knesset, the attorney-general would ask the Knesset to remove the immunity.
Katz’s defense lawyer Navit Negev responded to the decision, saying that Katz is weighing seeking immunity in light of their argument that the alleged violations flew in the face of ongoing changes to Knesset laws on the issues in dispute.
In the meantime, a Justice Ministry spokesman said that regardless of whether Katz might be able to drag out remaining in the Knesset until a new Knesset is sworn in post-election, he must still resign as a minister immediately.
Also in Mandelblit’s decision, Katz was cleared of charges in the Israel Aerospace Industries (IAI) case, and was cleared of all bribery charges recommended by police, being indicted only for fraud and breach of trust.
According to the announcement, Katz loudly supported a 2010 reform to the country’s insolvency laws, which was specifically targeted at helping Ben-Ari and his company, in which Katz himself also had heavy investments. This would mean that Katz helped advance legislation to personally benefit himself and his primary financial adviser and close friend.
Katz also acquired shares based on insider information that he received from Ben-Ari – sometimes in multiple visits per week – in a manner that violates standards for Knesset members, accumulating unlawful wealth.
In addition, it was alleged that Katz did not meet the duty of disclosure regarding his connections with Ben-Ari, both in formal disclosures to authorities and in a hearing he held as a minister, in which Ben-Ari was called to testify.
Sources close to Katz said he would seek immunity from prosecution in the Knesset, but the sources said he would be willing to reach a deal with the prosecution, in which he would give up his immunity effort in return for an expedited trial.
If Katz quits, candidates to replace him are expected to include Deputy Foreign Minister Tzipi Hotovely and MKs David Bitan and Nir Barkat.
The attorney-general’s announcement was made based on recommendations by State Attorney Shai Nitzan and Tel Aviv District Attorney Liat Ben-Ari (not related to Motti Ben-Ari).
In February 2018, the police made recommendations against Katz for corruption allegations relating to his union work at IAI. The police said that they found enough evidence to indict Katz and other senior IAI officials on charges of bribery, fraud, breach of trust and forceful extortion.
The police statement had said that Katz, along with the senior officials, were taking advantage of their positions to use other workers for their own benefit. It also said that in return for assistance, the minister provided paid jobs for “his people” in and out of the IAI, and that during his time as chairman, Katz used thousands of shekels worth of IAI resources and labor for his own personal use.
In response to the police recommendations, Katz had said: “I did not expect otherwise from the police, because they would never admit that the massive amount of resources that they put into this investigation was for nothing.”
“Every person with common sense knows what this investigation is about and understands that it entails nothing, and the allegations [against me] are baseless,” he said. “I am certain that the State’s Prosecution people have integrity and honesty, and they will decide not to indict me in this case.”
Those charges have now been dropped. The IAI investigation had looked into the period of time in which Katz served as the company’s chairman of the National Workers Union.
Reports last Wednesday indicated, correctly, that the bribery charge would be dropped as a result of arguments made by Katz’s lawyers during the pre-indictment hearing. Pre-indictment hearings are generally granted only to ministers, and in some cases the minister’s lawyers use the opportunity to convince the prosecution to reduce or drop the charges.
In May 2018, Mandelblit informed Katz that, absent a major change, he planned to file an indictment against him.
In October 2018, Mandelblit held a pre-indictment hearing with Katz as a last chance to back off from indicting him for bribery, fraud and breach of trust.
Negev, of the Sheinman-Negev-Niv law office, said on Wednesday that Katz and Ben-Ari have been close friends for years and acted properly. She added that presenting the relationship between them as based on bribes is wrong and absurd.
Furthermore, she said that in all his activities as a member of the Knesset and as a minister, Katz acted in a matter-of-fact manner and in the public interest; matters will be clarified and proven.
Finally, addressing the charges of a conflict of interest in Katz supporting the insolvency law, she said, “This was a law that was enacted in 2010... and was intended to correct an injustice,” she added. “The law protects the interests of small investors, protecting them from manipulations that may be initiated by controlling shareholders in companies.”
Ben-Ari will also be indicted for fraud and for insider trading.