The question to international businessman Ronald Lauder was clear and succinct: “Did you give money to Benjamin Netanyahu for his election campaign?”
And the answer, said Leon Levy, a former chairman of the Conference of Presidents of Major American Jewish Organizations, was equally clear. “He said no, he had not,” recalled Levy, who headed the conference’s search committee for its next chairman.With that answer, delivered emphatically, according to those present, Lauder — a major Jewish philanthropist, heir to the Lauder cosmetics fortune and president of the Jewish National Fund — secured his place two weeks ago as the next chairman of the Presidents Conference, American Jewry’s most prominent umbrella organization. The search committee proceeded to nominate him for the post, assured that the group’s scrupulously nonpartisan stance toward internal Israeli politics would not be compromised.
On Wednesday, the whole conference will meet formally to confirm the committee’s choice.
But a joint investigation by The Jewish Week and the Israeli daily paper Haaretz appears to raise some questions the committee did not. The inquiry, which has involved interviews with numerous fund-raisers, Netanyahu associates and reviews of tax records in Israel and America, indicates the possible existence of flows of cash and indirect support from Lauder to Netanyahu’s political activities. Such support may well be more complex than the committee’s simple question encompassed.
According to one source familiar with the JNF president’s activities, for example, Lauder has on multiple occasions taken Netanyahu’s American campaign strategist, Arthur Finkelstein, to Israel on his private plane to meet his client.
In addition, according to Israel’s Channel 2, Finkelstein stayed at the King David Hotel this month in a room registered to Steven Schneier. Schneier, a former fund-raiser and political advance man for Netanyahu, now works for Lauder.
Similarly, Yitzchak Fisher, Netanyahu’s 1996 campaign treasurer, launched a telecommunications partnership with Lauder soon after the election.
Lauder, who employed Finkelstein as his campaign strategist during an unsuccessful 1989 run for mayor of New York, has been widely reported to have originally brought Netanyahu and Finkelstein together, and to have provided financial backing for the consultant’s work for the Israeli leader.
But when asked about this at his appearance before the conference search committee, Lauder said, “Arthur Finkelstein was no longer my employee when he went to work for Netanyahu,” according to search committee member Judy Silverman.
An individual who was involved in the publication of Netanyahu’s 199x book, “A Place Among The Nations,” related that a Lauder financial guarantee had enabled Netanyahu to obtain a “six-figure advance” from Random House for writing it. According to this source, who also spoke on condition of anonymity, Random House offered the advance only after Lauder promised that he would buy up two printings if the book failed to sell. The book did well and Random House did not have to redeem the commitment.
Lauder is also the chairman and largest financial backer of the Shalem Center, a right-leaning Jerusalem think tank. Though independent of Netanyahu, it promoted a political and policy agenda that paralleled his in the years and months leading up to the 1996 election. Its chief fund-raiser was Schneier, the Netanyahu fund-raiser. And its executive director, Yoram Hazony, a sometime speechwriter and researcher for Netanyahu, was a participant in some of the Israeli politician’s strategy meetings during the 1996 campaign.
According to Hazony, Lauder contributes about one-third of Shalem’s $700,000 annual budget. Since the ’96 election, Hazony has distanced himself from Netanyahu, and the Shalem Center has broadened its political spectrum.
Finally, and perhaps most intriguingly, Lauder was also a major donor to the small not-for-profit Israel Research Foundation, controlled by Steven L. Friedman, one of Netanyahu’s oldest friends and officially registered with the U.S. Justice Department until 1996 as a foreign agent for the Likud Party. One of only three major donors to the foundation, Lauder gave $36,415 to the group in 1994. Friedman appears to be the nexus of an interlocking network of non-profits that have ties to Lauder associates and to Likud.
The Philadelphia-based IRF was active for only three years, during which it raised $150,000. But only $19,000, or about 12 percent, was used for programming. The remaining 88 percent went to salaries, and administrative and travel expenses for unspecified individuals.
The IRF was also tied closely to another not-for-profit group run by Friedman, the Israel Development Fund. Former associates of Netanyahu said the IDF channeled funds directly to Netanyahu’s political activities. According to Internal Revenue Service tax records, IDF, a tax-exempt group, channeled money directly to the Likud Party itself, which is illegal under IRS charity law.
Besides Friedman, its secretary-treasurer, the IDF had Schneier as its salaried fund-raiser and Menachem Atzmon, then treasurer of Likud in Israel, as its president. Atzmon left the board after he was convicted of campaign finance fraud by an Israeli court in 1996.
Friedman dissolved the two non-profits on the same day, Sept. 2, 1997.Later, Friedman established two other non-profit groups. One, the Education Fund for Israel, told the IRS in its 1995 application for tax exemption that it expected to raise some $650,000 over the next three years. But despite IRS requirements, the charity never filed any subsequent tax reports.
The other, the Committee for a Secure Peace, had Friedman as president and former U.S. Sen. Rudy Boschwitz as honorary chairman. The group, which brought in more than $500,000, listed “advertising” as accounting for 85 percent of its budget. According to Boschwitz, a Minnesota Republican, Finkelstein is one of its consultants. In 1996, a group with the same name ran a series of ads in Israel supporting Netanyahu.
It could not be learned what support, if any, Lauder has given the other groups within this network beyond the Israel Research Foundation. Both Lauder and Friedman failed to respond to requests for interviews on the topic.But at least some Presidents Conference members say the extent of Lauder’s financial support for Netanyahu could have a bearing on Lauder’s suitability to lead the strictly nonpartisan group.
“I think this information raises questions on two levels,” said Ammiel Hirsch, executive director of the American Reform Zionists Association. “One, was he completely open with our committee? And two, the committee asked him [about financial ties to Netanyahu] because they thought it was relevant, even critical for him to do a good job as chairman. … Did he give directly to Netanyahu, or indirectly? Did he support his candidacy?”
Abraham Foxman, national director of the Anti-Defamation League of B’nai B’rith, said, “It doesn’t compromise the due diligence of the nominating committee, but it does raise some questions which need clarification.”
David Harris, executive vice president of the American Jewish Committee, echoed Foxman. “What you’re reporting seems to me to require further clarification,” he said.
Conference members emphasized that their concern was not with Lauder’s views but his possible financial involvement in Israeli campaigns. In the past, many conference chairmen have held strong personal views on various questions related to Israel.
Since Israel passed a campaign finance reform law in 1994, foreign donations to Israeli political campaigns, including from American Jews, have, in fact, been illegal. According to Hebrew University political science Professor Menachem Hofnung, who helped draft the law, violators can face heavy fines and even prison sentences. He said wealthy foreigners and candidates have continued to flout the law widely, either through covert funding or indirect channeling.
One source who has been involved in these transactions related that wealthy donors are often asked to make their checks out not to the party or candidate but directly to companies and businesses whose services the campaign requires. A need for buses to transport campaign workers, for example, can be met by having a foreign donor write out a check to the bus company itself.
“This is how it’s done,” the fund-raiser said.
Hofnung said that donors also use “front organizations [that] raise money and then spend it independently.” The money is used for negative campaigning or public “education” touting the candidate’s agenda in terms that are widely understood. In-kind contributions are also popular.
Silverman, president of Women of Reform Judaism, said neither she nor other search committee members knew anything about this when they interviewed Lauder.
“When he said, I never gave money to Netanyahu and Finkelstein is not working for me, I basically ran out of questions to ask him,” she said.
Lester Pollack, another committee member and a former Presidents Conference chair, undertook to investigate the issue and report back to the committee. Two days later, Silverman said, Pollack told the committee he had looked into the matter and found that Lauder was telling the truth.
“When I asked where he looked, he said, ‘I cannot reveal my sources,’ ” said Silverman.
Pollack did not return two calls seeking comment.
Levy, the search committee chairman, strongly praised Lauder’s knowledge of the issue and record of Jewish philanthropy throughout the world.
“We don’t go after the good guys,” he said, suggesting that the Presidents Conference leaders prefer not to probe too deeply into their colleagues’ workings.