Special report: Netanyahus' spending habits violated ethics, raise criminal suspicions

State comptroller: "Costs were not commensurate with the bedrock principles of proportionality, reasonability, saving and efficiency.”

Binyamin and Sara Netanyahu leave for the US. (photo credit: AVI OHAYON - GPO)
Binyamin and Sara Netanyahu leave for the US.
(photo credit: AVI OHAYON - GPO)
“Bottlegate” and other issues that have surrounded the Netanyahu family’s use of state funds could raise criminal issues, and certainly violated higher ethical norms, State Comptroller Joseph Shapira said in a report published on Tuesday.
Bottlegate refers to allegations that Sara Netanyahu, the prime minister’s wife, and possibly others connected to her activities, may have improperly turned in deposit bottles in exchange for NIS 4,000 cash, though the bottles were bought with state funds.
The special report comes after much media speculation over the issue. It is still far from clear that Attorney-General Yehuda Weinstein will open a criminal investigation against Sara Netanyahu, and what, if any, legal repercussions such a probe would have for Prime Minister Benjamin Netanyahu.
Shapira’s main focus is the Netanyahus’ other expense-related issues, but the report’s confirmation of the details in the NIS 4,000 Bottlegate episode was the first official confirmation by the comptroller of rumors that have been swirling around the issue for weeks.
Misuse of state funds must be treated with full severity no matter how small the amount, the introduction to the report said.
On a similar note, Shapira discussed issues with purchasing furniture with state funds for the prime minister’s private residence in Caesarea.
Following news reports on the issue, the furniture was sent to his official residence in the capital to remain permanently as state property.
The comptroller added that all of his information, including on related issues not covered in this report, was transferred to Weinstein on February 2, since the evidence “raised prima facie suspicions of ethics violations which could even raise suspicions of criminal acts.”
After mentioning those hot-button issues in the introductory section, most of the report moves on to a range of high expenditures by the prime minister and his family in his various residences that the comptroller viewed as unreasonable and excessive.
Shapira did note that none of the spending violated explicit cost ceilings, as many cost categories do not have ceilings.
Still, Shapira said he would have expected more of the prime minister in terms of “acting as an example” for the public of upholding ethical norms.
The report discusses three residences of the prime minister.
The house on Smolenskin Street, at the corner of Balfour Street in Jerusalem, is the official residence, and the state has covered a wide range of state-function related costs of living there, with very little distinction between private and public needs, in accordance with the law for decades.
The basis for covering costs is that the prime minister has many meetings there, including hosting domestic and foreign dignitaries.
The Netanyahus’ home in Caesarea is a private residence that the prime minister also uses for work, and the Finance Ministry has decided to cover essentially similar state-related costs as with the Smolenskin residence, though there is supposed to be some more distinction between state-related and personal costs.
The Netanyahus also have a penthouse apartment on Aza Street in the capital, where the state covers security expenses only.
From July to December 2013, the comptroller checked a range of issues related to the state’s covering of costs at the prime minister’s residences during the years 2009 to 2013.
The comptroller’s report checked expenditures related to food, hosting, cleaning, gardening and general upkeep.
From 2009 to 2012, the Prime Minister’s Office did not do any planning or forecasting of the costs that were examined. In 2013, the PMO performed a forecast of these costs for the first time, something the comptroller complimented.
Regarding food and hosting related to state duties, expenses jumped from NIS 211,000 in 2009 to NIS 490,000 in 2011.
The PMO reduced these expenses somewhat in 2012, to NIS 458,000.
Following substantial bad press on the issue and the initiation of the comptroller’s review, costs were reduced significantly in 2013, to NIS 226,000.
The report also examines how much food the PMO ordered out for the Netanyahus despite employing a cook on staff.
In 2010, outside meals were ordered for the residences at a cost of NIS 71,851, making up more than one-quarter of the expenditures on food.
In 2011, outside meals were ordered for the residences at a cost of NIS 92,781.
“This conduct was not proper,” the comptroller said.
He continued, “In light of the noteworthy reduction in costs in 2013, it can be established that the expenditures of the prime minister, his family and their guests in the official residences, and especially during the years 2010-2011, and to a lesser extent even in 2012, were not commensurate with the bedrock principles of proportionality, reasonability, saving and efficiency.”
During 2009 to 2013, an average of NIS 75,400 per month was spent on cleaning, or just over NIS 900,000 per year.
Shapira called this total “very high.”
Included in this were the Caesarea-related cleaning costs of around NIS 8,200 per month over the 2010-2012 period, “even though Mr. Netanyahu and his family resided most of the year in the official residence” in the capital.
In that light and in light of the Netanyahus’ ability to cut cleaning expenses to around NIS 4,000 per month in 2013, the comptroller called this earlier spending “excessive by a significant measure.”
The report also criticizes the Prime Minister’s Office regarding water expenditures, in particular for trying to avoid paying part of the “drought tax.”
The “drought tax” – known officially as the “excessive consumption levy” – was a surcharge in force in 2009, according to the Water Authority, though the comptroller’s report makes reference to the tax also for 2010.
Today, consumers pay a “low tariff” on the first 3.5 cubic meters of water used by each person in a household – or a minimum of 7 cubic meters per residence – on a monthly basis and pay a “high tariff” on any water consumed above that amount.
But during a dry period in 2009, not only were the consumption amounts under the low and high tariffs defined differently, but a third, even larger amount of water use was subject to the drought tax.
The aim of the third, highest priced consumption category was to discourage water use even further, the Water Authority said.
Shapira said that the Netanyahus incurred NIS 1,322 of the water tax in 2009 and NIS 4,160 of it in 2010.
In August 2012, the deputy director-general of the Prime Minister’s Office told the director- general that “the prime minister explicitly requested not to pay the drought tax component.”
At another meeting it was decided to pay the tax according to relevant regulations, but to offset that amount by not paying the full amount for water use in the prime minister’s pool.
The comptroller said, “It would have been fitting if the prime minister paid the drought tax on his own,” and criticized the decision-making process, though the report said the prime minister claimed he only expressed an opinion and did not give an order.
Other portions of the report focused on the prime minister’s residence using an outside contractor for electrical problems in order to get around budget limits on the state budget covering his residence’s electricity costs.
The report goes so far as to say that hiring the private contractor, Avi Fahima, involved “misleading representations.”
Fahima had been disqualified from working on the Netanyahus’ electrical systems on the state’s dime because of his prior relationship with them, yet he ended up performing the work under the guise of working for a different contractor.
Shapira said that electricity use was so high at the prime minister’s residence, that over a certain three-month period, it cost 70 percent of the electricity budget for the year.
Next, the report said that the outside electrician was called for service nearly every weekend over a multi-month period, including on Yom Kippur.
Shapira said that since Sara Netanyahu or her staff had ordered the electrician to come directly, there was less paperwork on which to determine if the issues could have waited until the work week for regular staff to fix them, saving state funds.
Further, the report criticizes the practice of having Prime Minister’s Office staff having to pay for expenses with their own money, sometimes without getting reimbursed from a small fund meant for that purpose.
Next, the report discusses how the Netanyahus increased the budget for their expenses related to clothing, cosmetics, hair-styling and related issues by splitting their expenses between the Prime Minister’s Office operating budget and a separate budget for presentation at state functions.
Shapira criticized this splitting of expenses between two budgets.
Using the Prime Minister’s Office operating expenses budget in this way reduced the ability to oversee the expenses; the decision to do so was made with legal approval, but without budgetary approval by the Knesset Finance Committee, he said.
Shapira said that the official residence may no longer be fit, in terms of upkeep and general state, to serve the prime minister.
He noted that planning has been completed for a new residence that would also include the Prime Minister’s Office.
The new residence has not, however, received final approval and could take five years to construct, said the report.
Sharon Udasin contributed to this report.