Photo: Shai Mor Yosef
Housing Minister Uri Ariel
Photo: Shai Mor Yosef

Housing Minister's deal with JNF raises legal questions

Uri Ariel's back-door agreement to act as middleman between Jewish National Fund and government ministries is an act of 'chutzpah'.

In an unusual step, the deputy attorney general has ordered a freeze on the transfer of some NIS 2.5 billion from the Jewish National Fund (JNF) to government offices. The funds were part of an agreement allegedly reached between Housing Minister Uri Ariel and the JNF, and their transfer raises legal and ethical questions.



Ariel was supposed to serve as a mediator between government offices and the JNF, advising the latter on which government projects to fund. However, according to a memo by the Finance Ministry's attorney general, Ariel broke a number of laws, including the Law for State Property, Basic Law the State's Economy, State Comptroller Law and others.


In response, Ariel's office said that the minister simply succeeded where Finance Minister Yair Lapid failed.


The proposed deal raised a number of concerns about the relationship between the JNF and the government. Ariel's partisan initiative would have injected NIS 2.5 billion over four years to projects he picked; JNF has accrued a cash surplus of 4-5 billion shekels in recent years from the government's sale of its lands.


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Justice Minister Tzipi Livni has asked the government to add the JNF to its legal framework so that the state comptroller could monitor its actions. But JNF's leadership has fought against every effort at nationalizing the organization.


The struggle is personal and political – and involves large sums of public funds.


Ministry budgets are approved after a lengthy and complex process in the Finance Ministry, the government, and the Knesset. The understanding reached by Minister Ariel with JNF creates – essentially – a private Finance Ministry for the enterprising minister. It makes Minister Ariel, a representative of a small party within a small faction of the government, into the "go-to patron" for the rest of the cabinet.


His recommendations could allow the ministers, whose offices are dealing daily with budgetary difficulties, to fund projects they hold dear: They'll request, he'll recommend, and JNF will approve.


If we had been looking at billions coming out of the private funds of a private donor, Israel Police would have opened an investigation into the matter. But since, unfortunately, the money in question is that of Israeli citizens – money that directly increases real estate prices.


An aide to the minister sent a letter on May 11 to the director generals of all the government ministries. In the letter he announces that the Housing Ministry and JNF have decided on "a joint venture to fund national projects for different ministries. Please send a number of high-priority projects pursued by your office."


The aide asked the leading administrators in each ministry to send him the name of the project, its general description, an estimate of expenses, and a timeline for execution. "This list is presented as our recommendation to JNF," explained the aide.


The letter even included a time table – the ministries had one week to contact a Housing Ministry employee with the request. The Finance Ministry was shocked by the letter. An official in charge of budgets at the ministry wrote back to Minister Ariel accusing him of overstepping his authority and breaking the law.


"I ask you immediately stop this activity," he wrote. Ariel ignored the letter.


Housing vs. Finance and Justice

On the same day the letter was sent to Ariel, the Finance Ministry's legal counsel also sent a letter to Attorney General Yehuda Weinstein. He listed the series of laws being broken by the Housing Ministry and demanded action be taken against the moves.


Minister Livni also demanded the government step in; on Monday a meeting was convened. During the discussion Housing Ministry officials claimed that the Finance Ministry had previously held such negotiations with JNF, but the deputy attorney general dismissed their claims.


The Housing Ministry was referencing negotiations held by Finance with JNF leadership in 2013 – when they transparently and legally requested JNF transfer a billion shekels to the budget. The negotiations were never finalized.


The Housing Ministry aide's letter was sent three days after JNF's two chairmen approved the budget request at the organization's financial committee. A JNF committee is supposed to decide on the funds' destinations "which go hand-in-hand with JNF's global view."


This year the organization will pay out 750 million shekels, but the JNF decision does not mention the Housing Ministry. One senior official at JNF described the Housing Ministry's attempt to position itself a middleman between JNF and the government as an unauthorized act of 'chutzpah'.


A response released by the Housing Ministry on Monday said that "Minister Ariel is glad to be part of an agreement reached with JNF." We can assume that, after this incident was revealed, future negotiations with JNF would be conducted in a transparent and legal manner – and that the billions from its treasury would eventually be transferred to the Finance Ministry.


But the Finance Ministry is not satisfied with that result. It claims that JNF lines its pockets with money that belongs to the country and not to the organization. The state increases the value of the land, paves roads, builds infrastructure – while JNF reaps giant sums of money without paying any sort of taxes. The Finance Ministry, echoing the Justice Ministry's request, demands to change the status of JNF in order to bring it under state authority.


Ofer Petersburg contributed to this report.


פרסום ראשון: 05.28.14, 01:15
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