Money doesn't grow on trees

A fiery debate over funding threatens the world network of the Jewish National Fund.

By SAM SER
kkl 88 298 (photo credit: )
kkl 88 298
(photo credit: )
Yehiel Leket was in a good mood last week. Fresh from a lengthy fundraising trip to Australia, the world chairman of Keren Kayemeth LeIsrael settled into a chair in his Jerusalem office and unwound a tale about his meeting with Al Gore at a KKL dinner in Sydney, a few days before. Charmed by the self-deprecating humor of the man who very nearly became the president of the United States, Leket seized the moment and gave his own performance before the buzz of their kibitzing evaporated. "'Mr. Gore,' I said," Leket recounted with a smile, "everyone knows that you are both a great friend of Israel and a great friend of the environment. But if you are a great friend of Israel and a great friend of the environment, then you should also be a great friend of Keren Kayemeth!" KKL - and Leket in particular - could use some friends these days, especially of the English-speaking variety. That Leket would seek them Down Under, far away from the rest of the Jewish world, is not surprising either, considering that his organization is at the center of a worsening battle with the British branch of KKL, also known as the Jewish National Fund (see box, "What's in a name?"). It is a battle over millions of British pounds, thousands of dunams of land in Israel, the name of a century-old Zionist icon, and the smooth operation of a $40-million-a-year global fundraising network that maintains the attachment of Diaspora Jews to the Land of Israel. The lines of this battle have been drawn over the course of nearly a decade, but it was Leket who fired the first shot in anger. Just over a month ago, he sponsored large, color advertisements in Israel and in England, announcing an irrevocable severance of ties between KKL and JNF-UK - predicated, he said, by deception and mutiny on the part of the British organization and its president, Gail Seal. "JNF-UK, taking advantage of our name, continues to give money to worthy causes... but they are not the ones we are associated with... We are receiving less and less from JNF-UK to support the good work we carry out in Israel," Leket wrote in the ads. "It is with a heavy heart, then, that we are left with no alternative except to break KKL-JNF's remaining links with JNF-UK." Two weeks later, Seal fired back by filing suit in England's High Court of Justice, claiming that KKL was operating illegally in the UK and demanding an immediate injunction against the Israelis from using the acronyms JNF and KKL in their fundraising efforts. KKL, its spokesmen say, is now preparing to countersue for use of the names - and for receipt of millions in donations - that both sides claim as their own. The Israeli side is attacking JNF-UK for diverting funds raised in the name of the Jewish National Fund to projects other than KKL's forestation and water resource development activities. The British side, in response, is blasting KKL as a bloated and dishonest organization that can no longer be trusted with Zionists' money. THE VOLLEY of back-and-forth announcements has drawn other JNF affiliates to the fray - so far, many of them against Leket. A week after the first advertisements announcing the latest breakup appeared, Ronald Lauder, the president of JNF-America (also a billionaire businessman from the Lauder cosmetics empire, a philanthropist and the former chairman of the Conference of Presidents of Major American Jewish Organizations), wrote an openly critical letter to Leket. "Your strategy of open negative positioning in the press can very well hurt fundraising efforts in America and elsewhere," Lauder warned. "We have had to spend our time positioning ourselves, and have had to take time out of what we are supposed to do: raise funds for bettering the land of Israel for Jewish people everywhere." Lauder also challenged Leket for the costs of the advertising campaign on which Leket had embarked, and for taking up his quarrel with Seal on his own. "You state that more funds are needed by KKL than ever before. How can you make that statement and take this action?" Lauder wrote, adding, "If you are part of a worldwide movement, why wasn't the world brought in?" Lauder's letter was circulated to other JNF presidents; so was Leket's response, which largely avoids Lauder's questions and amounts to little more than an exchange of greetings. Even JNF-Australia president Michael Naphtali, whom Leket generally counts as a supporter, found cause for concern. "I am distraught," Naphtali wrote in an e-mail during Leket's trip to Australia. "Your comment to me this afternoon that 'I have no problems' only exacerbates my distress. If you do not agree to sit around a table with the US and UK representatives to try to set a basis for resolving these issues without litigation, the organization which you chair and which you claim to protect will suffer untold damage... Your decision not to pursue mediation and to publicize the dispute is totally wrong." The public quarrel has also shaken British Jews, who have written of their displeasure in the Jewish press. Seal said she fears wide-ranging consequences in the Diaspora. "This thing is not only affecting us, it's affecting the whole way Jews in Great Britain are raising money for Israel. I mean, what do they need it [the aggravation] for? It's hard enough to raise money for Israel as it is," she said. "Doesn't he [Leket] realize what he's doing? This could affect the whole Jewish fundraising world. It could spread to Keren Hayesod, it could spread to Magen David Adom... People could say, if JNF-UK is having arguments with KKL, then maybe the other organizations aren't doing things right. I think I'd be worried." Leket is worried, actually - worried that other organizations that have, historically, exclusively supported a particular Israeli charity or Zionist body could use the prestige of that body's name for broader purposes and "create chaos in the Jewish fundraising world." Leket believes that the money Seal has raised in England, and distributed mostly to British and Israeli charities other than KKL, belongs to his organization and its projects alone. His concern stems from the fact that, since Seal took office, JNF-UK's contributions to KKL have plummeted, at the same time that JNF-UK's income has increased greatly. In 1996, it sent nearly GBP3.7 million to KKL, after raising around GBP4.9 million. In 2004, its contributions to KKL amounted to some GBP440,000, although the charity raised more than GBP12m. JNF-UK has transferred to KKL in Jerusalem only some GBP110,000 so far this year - less than 5 percent of its estimated income after expenses and less than 3% of the funds it transferred 10 years ago. By comparison, JNF-Australia last year sent the equivalent of more than GBP2.2 million, or 84% of its income after expenses. The millions of British pounds that used to come to KKL's coffers have been distributed to projects, including a recent hospital construction in the Negev, that Leket neither knew about nor would have approved for KKL. In JNF-UK's 2004 annual report to England's Charity Commission, signed by Seal in September, the principal objectives and activities of JNF-UK are listed as "the relief of poverty and other charitable activities in the territory of the State of Israel." Environmental concerns are not mentioned at all. "The JNF has no mandate, and was never intended," Leket said, "to collect money for hospitals or universities, or firefighters, or cancer research, etc. Likewise, we don't expect universities to collect money for forestation and the creation of water reservoirs. It's completely immoral." Also stated in the report to the Charity Commission is that less than GBP2.9m of the money raised by JNF-UK in 2004 was remitted to projects in Israel. Twice that amount was distributed to UK-based charities. After JNF-UK brought its legal suit in London, Leket railed against what he called "the chutzpah of Mrs. Seal, who uses the historical name of the JNF and exploits this name for other purposes." "LEKET SEEMS to think that he owns JNF-UK. Well, he doesn't," answered Michael Gross, a major donor to the British organization. "JNF-UK is an English-registered charity; it operates under English law. That requires accountability and transparency, neither of which exists in KKL." Gross echoed a complaint from Seal and others that KKL has not completed projects in a timely manner. But he also said that KKL had lost its moral authority after a series of scandals in recent years. Two of the most egregious: In 2000, saplings planted by tourists at a KKL site near Hadassah-University Hospital, Ein Kerem, were uprooted to allow other tourists to plant in the same spot the next day. And former KKL official Haim Cohen - despite being indicted earlier this year in an elaborate, multi-million dollar scheme to fraudulently sell land in the West Bank - is collecting a large salary and comfortable living expenses as a supervisor of KKL emissaries in Western Europe. Leket has a co-chairman, Ezra Binyamini, and they both have deputy co-chairmen. Together, the four receive compensation approaching NIS 200,000 per month. KKL's annual travel expenditures, Leket acknowledged, total some $200,000. "It seems to me," Gross said, "that KKL today is redundant. It is largely run for the benefit of failed politicians who get full-time salaries for part-time work, including cars and chauffeurs. This is not what British donors are prepared to finance." JNF-UK donors, he added, "have a feeling that we are paying too much for projects, and that there is a huge take-off by the KKL, whether for legitimate or illegitimate reasons. We don't think they're honest, we don't think they're competent, we don't think they're the right people to entrust our money to anymore." The KKL's corporate governance procedures, Gross continued, "are more appropriate to a Third World country than to a civilized country." He called on Jewish Agency chairman Zeev Bielski "to conduct a full audit of KKL activities, expenditures and procedures." (Bielski is related to KKL through the Jewish Agency and the World Zionist Organization, in the alphabet soup of Zionist bodies that controls, at least partially, KKL.) Gross also claimed that Bielski, when he was mayor of Ra'anana, advised JNF-UK donors not to send their money for a project in Ra'anana via KKL. Bielski declined comment for this article, noting only his recent offer to help mediate the dispute between KKL and JNF-UK. "He talks of mediation," said Gross. "Well, there's no mediation between right and wrong. Wrong, you get rid of." Gross, a major contributor to the Israel Youth Award, the Jaffa Institute, Ascent of Safed, and Ben-Gurion University, among others, said the public battle between KKL and JNF-UK would dissuade Diaspora Jews from contributing to Israeli causes. Leket "is going to finish donations to Israel - to every charity - because he is bringing the whole of the Israeli charitable structure into disrepute," he said. Gross noted that Seal and JNF-UK chief executive Simon Winters, Leket's rivals in London, are volunteers. "So if they are being treated like milk cows, in an impolite and disgusting way, by people in Israel," Gross declared, "then those people in Israel should not wonder why they're not getting money!" SEAL HAS her detractors too, however. London-based hotelier David Lewis, who has considerable holdings in Eilat, has sharply criticized Seal in Britain's Jewish press. He had supported JNF-UK until 1999, when Seal initiated a similar conflict with KKL that nearly brought the relationship between the two organizations to a bitter end. The reasons for the flare-up then were practically identical to the reasons for the current imbroglio, centering on JNF-UK's declaration of independence from KKL authority and oversight. Seal was the one who faxed an angry letter to Shlomo Gravetz, who was then the world chairman of KKL (Leket was co-chairman, in a rotation with Gravetz), saying that JNF-UK would begin to formally raise money for Israeli organizations other than KKL. Earlier, JNF-UK had thoroughly embarrassed KKL by barring two of its emissaries from the London office. Gravetz was furious. He accused JNF-UK of "trying to alter the relationship between the office in London and the office in Israel [in a way] that gives preference to the office in London. It was trying to transfer the center of power to London." He was adamant that KKL would not agree "in any way, that there will be any other center than in Jerusalem. Any attempt to transfer the center to another country points to an attempt at political manipulations that is unacceptable," he said. Unlike the current dispute, though, Leket tried to salvage the relationship with Seal. He helped convince Gravetz to come to an agreement with JNF-UK on the issues in dispute and to anchor that agreement in a memorandum of understanding. In that memo, which Seal signed, the JNF-UK:
  • recognized the activities of KKL and its Jerusalem office as the center of all affiliated offices throughout the world;
  • committed to allow KKL transparent access to its budget and accounts;
  • committed to remit to KKL "all funds raised in the UK... apart from costs" (including estates, money entrusted to JNF-UK by donors in their wills). Leket hailed the agreement as "a new kind of dialogue." But the detente would not last long. Seal told The Jerusalem Post last month that JNF-UK treated the memo like "just a piece of paper" that was not legally binding. In London, it was almost immediately seen as a dead letter. HOW DID the understanding unravel? One person who saw it happen from up close was Mike Flax. A lawyer who litigated court cases for KKL in Israel, Flax was asked to become the KKL emissary in London shortly after the memorandum of understanding was finalized. "I started hearing, already in early 1999, about the problems between JNF-UK and KKL in Israel," Flax told the Post. "I could see that the legal adviser of KKL [Meir Alfia] was spending a lot of time on this, as was the upper echelon of KKL. "The problems began when Gail Seal became the president of JNF-UK. [She was elected to the position in 1995, but her powers grew significantly in 1997-98.] I was told that she had an agenda to broaden what she perceived as her mandate to raise money for all sorts of charities not having to do with KKL, and I was told that this was not just professional but personal - a way to enhance her stature within the UK community." But Flax believed he could help turn things around, so, against the advice of several colleagues, the American-born immigrant with a British-born wife took up the challenge and accepted the job. First, though, Flax met Seal at her Netanya apartment so she could personally approve his appointment. Upon his arrival in London, late in the summer of 1999, Flax was optimistic that the relationship with JNF-UK could be repaired. But that optimism quickly faded. One of the first signs of trouble was that JNF-UK wanted to change its logo, which until shortly before then had included the Hebrew acronym of the Keren Kayemeth. The alteration in itself was not alarming, Flax said; certainly, he didn't take it as proof of a plot by Seal and Winters to break with KKL. But later, the JNF-UK said that they had to remove the KKL logo entirely from their letterhead, claiming that the Charity Commission required the move because some KKL projects were not in line with the Charity Commission's guidelines. So Flax suggested they keep the KKL logo while adding a caveat that JNF-UK supports only those KKL projects that comply with Charity Commissions rules. This solution, too, was rejected. Flax thought things were serious then, but he still believed they could be worked out. What convinced him that a break was inevitable was the way in which JNF-UK handled the lands issue, which was (and still remains) a major snag in relations between London and Jerusalem. For years, KKL would send annual reports to JNF-UK including a list of lands that JNF-UK owned; KKL would pay rent to JNF-UK for those lands, and JNF-UK would immediately donate that sum to KKL, in a paper transfer of money that never actually changed hands. It was a significant amount, though: In 1997, rents received by KKL on behalf of lands claimed by JNF-UK exceeded GBP400,000. But at the end of 1999, KKL excluded the list of holdings in its annual report to JNF-UK, lighting a spark that would reignite Seal's passions against the Jerusalem office. Seal claims that KKL has never explained why it stopped reporting on the lands in question; she also claims that the lack of such a list puts JNF-UK in a precarious situation vis-a-vis the Charity Commission, which still demands an accounting. But in a letter dated December 26, 2000, Leket wrote to Seal: "I would like to make it clear that, legally, the land belongs to Keren Kayemeth LeIsrael, even though the land was purchased with donations from JNF-UK, as [is the case regarding] other lands purchased with donations from JNF offices around the world." He continued: "In past years we credited you with rent we received from the land, based on the fictional assumption that it belonged to JNF-UK. Whatever information was on paper did not reflect the reality of land ownership, which has always been in the hands of KKL Israel." As for the threat of action from the Charity Commission, Leket promised, "We are willing to produce a document that shows the lands are owned by KKL Israel for you to give to the Charity Commission." Seal did not take Leket up on that offer. Her office also failed to produce for the Post any letter from the Charity Commission regarding the disputed land holdings. Nonetheless, at the end of 1999, Flax suggested a solution to the land disagreement, whereby KKL would pay JNF-UK a certain amount of money for the lands in dispute and, like the annual rents arrangement, JNF-UK would send that money right back to KKL for projects. In return for the "sale," JNF-UK would give up all claims to those lands. Simon Winters, chief executive of the JNF-UK, rejected that compromise. And that's when it clicked for Flax that the situation had become dangerous. "At that point I said, 'I've really stepped in it now,'" Flax recalled. That's when he realized, he said, that Seal and Winters were not interested in solving the dispute, but had other plans for their organization. DID LEKET realize what was going on? In Jerusalem last week, he swore that he did not know until September what Seal had planned. "She deceived me all these years," he said, "and I didn't know!" Letters that Flax sent to Leket and other senior KKL officials, however, suggest otherwise. At least five years ago, Flax had come to the conclusion that the JNF-UK's two most senior figures were undermining the KKL, and he did not keep this opinion to himself. In April 2000, Flax wrote to Leket: "It seems to me that Gail and Simon are interpreting your desire to reach solutions as a sign of weakness, and they are using it as a lever toward finding ways to further their plans regarding... the status of JNF-UK vis-a-vis KKL." A month later, he wrote to Avi Dickstein, director of KKL's Resources and Development Division: "They are planning to change the style of the logo drastically. When Gail was asked why by a board member, she said, 'The present logo looks too much like KKL.' ...If they can use the logo and change it to whatever they like (I am referring to the initials JNF), then they can make a stronger claim for [ownership of the name] JNF at a later date." At the conclusion of his first year in London, Flax again wrote to Leket. "It is my estimation," he said, "that JNF-UK is at this moment building an infrastructure with groups in Israel which would accept donations from them in the future, in addition to KKL or in place of it. It may also be that preparatory work is being done in England... in order to deny KKL the ability to take preventative steps against JNF-UK. I wish to sound the alarm about these activities now." But Leket did not answer that alarm, nor did anyone else in KKL. And in London, JNF-UK grew bolder. According to the minutes of a meeting of the executive board of JNF-UK that was held on July 31, 2000, "it was unanimously agreed that... a delaying strategy be adopted with KKL," especially in regard to handing over information about the money that JNF-UK was receiving in wills and legacies. At one point, Flax said, Winters called Flax and another emissary in England and asked, "If we break from KKL, whose side would you guys be on?" Flax made it clear that his loyalties were with KKL. After that, he said, "things went from bad to worse." In October of 2000, Flax wrote to Leket again to tell him about a meeting of the JNF board of directors. "At least five or six members of the board stated in the clearest terms," he wrote, "that the time had come to completely break with JNF Israel [meaning, KKL]. I have absolutely no doubt that, if a vote had been taken at that meeting, a resolution calling for such a break would have passed unanimously. "Gail's response to those calling for a break was... (in my opinion) a purposely weak response, made for the protocol only. "From my observations," Flax continued, "her tactic vis-a-vis JNF Israel is clear. She is openly giving to other charities in Israel... I have been given documents (copies were forwarded to you) that clearly indicate that she does so in the name of JNF, thereby reinforcing her claim to the name JNF as well as the assets of JNF... It is not the result of an innocent misunderstanding. It is part of the undeclared war being waged by Gail against KKL." Flax ended his job in London early and, during the large cut in personnel at KKL, left the organization entirely. But as clear as the writing on the wall was to him, others saw it, too. They just couldn't convince Leket to act on it. "Leket was told, he was warned," confided a KKL spokesperson. "He just didn't want to believe that what people were saying was true." There is another possibility, however, suggested by Flax. "Leket's motto is, 'The dogs bark in the night, but the convoy passes anyway.' He hoped that the whole thing would just go away," Flax said, "or at least not blow up until his term was over." That won't happen now, of course: Leket's term is scheduled to end this coming summer. IN THE next few weeks, a judge in London is to decide which organization will get to keep the name Jewish National Fund. At the same time, Jews across England will decide which one will get the money that has traditionally gone to the JNF. Seal is putting up a confident front, claiming the JNF name - and the role of the victim - for her own organization. "We are a British charity and we have done nothing wrong," she said. "We do everything kosher, 100%. When I go to bed at night, I go to sleep easily." Leket, though, is certain that his will be the winning cause. "I expect massive support from the Jewish world," he said. Leket knows, however, that separating from JNF-UK will almost assuredly lead to at least a temporary drop in donations from England. "Donors won't rush to give while there's a problem," he said. "But that's just short-term. Long-term, I am convinced that our vision and our appeal will only grow." Both Seal and Leket have a personal stake in the outcome of the case, not just a professional one. And neither one wants to end up in the Al Gore role.