Latest Dankner scandal revives controversy over salt deal

Petition addresses highly controversial agreement between Israel Lands Authority and Israel Salt Industry Companies.

April 23, 2010 04:27
4 minute read.
danny dankner 88 298

danny dankner 88 298. (photo credit: Courtesy)


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In the wake of the latest police investigation, so far involving businessman Danny Dankner and former director of the Israel Lands Authority Yaakov Efrati, the Movement for Quality Government on Thursday asked the High Court of Justice to begin hearing a petition it filed more than seven years ago.

The petition addressed a highly controversial agreement between the Israel Lands Authority and the Israel Salt Industry Companies, which is owned by the Dankner family. It called on the court to revoke the agreement.

In fact, the agreement has not gone into effect because it has not been approved by the finance minister. The court does not want to discuss the petition until it knows whether or not the petition is relevant; instead it has been waiting all these years for the finance minister to decide whether or not he intends to approve the agreement.

Every six months since then, the state has informed the court that the minister had not yet made up his mind.

Now, as a result of the events of the past 48 hours, with the arrest of Dankner and Efrati, the Movement for Quality Government has asked the court to wait no longer and rule on the petition.

In the meantime, the petition sheds a great deal of light on what the police are trying to find out in their interrogation of the two men.

The Lands Authority had leased 2,000 dunams of land in Eilat and Atlit to the Dankner family for salt production. The family held another 1,100 dunams for the same purpose by permit from the Lands Authority, including 225 dunams in Eilat.

On June 9, 1996, the Lands Authority – which was not headed by Efrati at that time – and the Salt Companies signed an agreement in principle aimed at changing the status of all the land in Eilat and Atlit, which until then could be used only for salt production. The two sides agreed to designate it for housing and tourism.

The very next day, the senior management of the Lands Authority endorsed the agreement and established a committee to work out the details of the contract with the Dankner family.

The agreement in principle and its terms were unprecedented in scope and the terms granted the salt companies were unusually generous.

The Dankner family was given 40 percent of the building rights on the land, which, the moment it became land for housing, increased in value by tens of millions of dollars, with estimates running from $23 million to $90 million. The Lands Authority also promised to lease other land to the Dankners to continue their salt production industry.

In 2000, while negotiations for a final agreement between the Lands Authority and the Dankner family were still underway, then state comptroller Eliezer Goldberg wrote a scathing report about the deal. He charged that there were no existing Lands Authority guidelines for the process of changing land use status, and that there was no precedent for a transaction involving so much money and land.

Goldberg called for a thorough examination of some of the issues involved in the deal, including whether the land was zoned as urban, agricultural or some other kind of land, and whether it was justifiable to allocate it for housing.

Following Goldberg’s report, Rubinstein demanded to see the draft of the final agreement before it was signed and that it be brought for approval to the Israel Lands Council.

In accordance with the attorney-general’s request, he was given the draft of the final agreement. On June 23, 2003, he presented his opinion to the council.

Rubinstein wrote that the original 1996 agreement in principle “granted the salt companies extraordinary and exaggerated benefits beyond any acceptable arrangement in other such deals… The agreement in principle deviated substantially from the policy of the Israel Lands Council and gave exaggerated benefits to the salt companies without any source of authority and in violation of proper administration. Our position is that the agreement in principle by itself is unacceptable and it is highly doubtful that it would stand the test of judicial review.”

In its petition, The Movement for Quality Government argued that “the final agreement is similar in substance to the agreement in principle and highlights the ‘umbilical cord’ connecting it to the original one.”

Although he was unsparingly critical of the agreement in principle, Rubinstein’s opinion on the final agreement was not unequivocal. He presented the various factors that he believed the Israel Lands Council should take into consideration when deciding whether or not to approve the final agreement. The only matter he was adamant about was that the deal should not include the land in Eilat that the Dankners had not leased but held only by permit from the Land Authority.

Ehud Olmert, who was chairman of the council, reportedly put a great deal of pressure on the members to vote in favor, and the agreement was easily approved on October 22, 2003.

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