Cronyism Israel-Style: ‘That’s What Friends are For’

Remember that wonderful Bachrach-David song, That’s What Friends are For?  It should be the ironic sound track of this post about the cronyism and self-dealing of one of Israel’s better-connected political operatives, Zeev Bielski.  Bielski is a former Kadima MK and power broker who was nominated as chairman of the Jewish Agency (2005-2009) by Prime Minister Ariel Sharon.  It is a post traditionally reserved for a close political ally of the sitting prime minister, a member of the power élite and political mandarin class.  Natan Sharansky, a prominent neocon member of Bibi Netanyahu’s coterie, now holds the post.

Early in his career, Bielski played for Israel’s national basketball league.  He then became a Jewish Agency operative, which he represented in South Africa (more on that later), among other locales.  Later, he served nearly four terms (17 years) as mayor of Raanana.  He left in the middle of his fourth term to become chairman of the Jewish Agency, despite the fact that he promised his constituents that he would serve out his entire term.  Now he is now running for a fifth term.  The election is this Tuesday.  A knowledgeable source gave me documents detailing real estate wheeling and dealing in the city. The source also helped research and prepare this for publication.  A Hebrew version of what follows can be read here.

How did Bielski’s former partner enjoy a “gift” worth millions from the Raanana municipality?

At the western edges of Raanana, next to Beit  Loewenstein, rises one of the most beautiful office buildings in the city, Gamla Millenium.  But the area is better known for the Arcaffe, on the corner.  For years, there have been rumors in the city about the decision-making process that resulted in a project of such huge proportions in such a central, attractive location.

The land on which the office building sits functioned as a parking lot for the Loewenstein Rehabilitation Center.  According to the original project description, filed with the city building department, a medical center was to be built on a relatively large piece of land totaling 6,000 square meters (65,000 square feet).  It’s reasonable to believe that the area around the medical center would become a commercial center with stores, cafes, restaurants, and hotel, similar to what stands there today.

This land belonged to real estate developer, Alan Oken (and another profile here), who made aliya from South Africa.

Bielski’s pal, Alan Oken

According to a report in Globes (Hebrew) from May 8, 2000, Oken represented the business interests of South African investors in Israel.  Before the 1989 elections, when Bielski first ran for mayor of Raanana on the Likud list, Oken was among those closest to the candidate.  The latter’s campaign headquarters were located in one of Oken’s offices at the corner of Ahuza and Keren HaYesod (Streets), on the second floor above what is now the Bank Leumi branch.

When Bielski Met His Bashert

Bielski and Oken first became acquainted at the home of Wolf Sacks, among the wealthiest Jews in the country, when Bielski arrived in South Africa as a Jewish Agency shaliach (emissary).  Bielski began to go out regularly with Caron, the young daughter of the Sacks family.  Alan Oken was practically a member of the family and one of the best friends of the two brothers of Caron, Rodney and Leslie.  Eventually, Bielski and Caron wed and Oken made aliya and settled in Raanana.

Raanana is a medium-sized city in central Israel adjoining Kfar Saba and Herzlyia, all of which are suburbs of Tel Aviv.  It was settled by English-speaking pioneers just after Tel Aviv was founded.  It continues to have a very large English-speaking community (right-wing party leader, Naftali Bennett lives here) and also is home to many families of Mossad and Shabak agents.  Ben Zygier and his family made their home here.

Bielski  and Oken’s as business partners

Not long after, Zeev and Caron Bielski also came to Raanana.  In the beginning, they rented a villa at 56 HaSharon Street.  They also bought a piece of land in the exclusive Kiryat Ganim neighborhood.  There they began to build their home, a villa in which they live to this day (it’s currently assessed at a value of at least $2.5-million).  The relationship between Oken and Bielski further strengthened when they formed, together with investor Herzl Luria, who was another South African, five real estate companies which operated in Raanana.  Their names are Misradey P’er Ha’Migdal (Fine Tower Offices), Leshkot B’Raanana (Raanana Offices), Misradey Ha’Migdal B’Raanana (Tower Offices of Raanana), Migdal Sheyrutey Misrad (Tower Services Office), and Ha’Misrad Ha’Yokrati (Exclusive Office).  Each of the companies had a foreign name and was registered in Zurich, Switzerland.   Names of those who were shareholders were concealed (they were represented by the attorney, Yaakov Bertler).  Bielski was also a director of six other companies registered both in the Channel Islands and Israel.  As an aside, the Channel Islands are known as a tax haven for wealthy Israelis where they park their assets so that they don’t have to be declared under Israeli tax regulations.

Before that in 1983, Bielski’s wife, Caron, and her brother, Rodney C. Sacks, formed another real estate company, L. Sacks First Investment, whose purpose was the buy and lease real estate.  The company was jointly operated by Caron and Zeev Bielski.

Bielski Becomes Mayor

Eight months after the election, Bielski announced through the corporate registry that he was resigning from all the real estate companies which he ran with Oken and Luria.  Oken continued his activities as a real estate developer and retained ownership of the four dunams next to Loewenstein.

From $1-million to $6-million

At a certain point, the Raanana municipality began a process of changing the permit for the property owned by Oken.  It originally was public land and designated for a medical center of 6,000 square meters.  The land designation was changed to private use as a commercial/office center of 20,000 square meters (215,000 square feet).  The new use was pushed through the city building committee chaired by none other than the mayor, Zeev Bielski.  The result was an additional 14,000 square meters of buildable commercial space.  But the primary value of the change from a medical to a commercial use involving stores, restaurants, cafes and offices of 20 stories was: the value of the property as a medical center was $1-million.  After the permit revision arranged by Bielski’s good graces, Oken’s Gamla Millenium was worth, according to the Globes article, $6-million.  As part of the same investment, Oken and two foreign investors bought land in the city’s industrial area near property intended for a Converse office complex.  The total investment was $12.8-million of which Oken owned a 35% share.

My Lovely Garden: how a piece of expropriated private land became the Bielski’s public park

The year is 1993, during Bielski’s first term as mayor.  He and his wife, Caron, are building a beautiful 3,300 square foot (then quite large by Israeli standards) villa at the end of Ha’Brosh Street.  Opposite the villa sat a 3 1/2 dunam lot.  As the construction of the villa progressed, the owners of the adjoining property were shocked to discover that the city had planted trees on their private property and it was being turned into a public park, which would provide a clear vista for the Bielskis.

The municipality planted beautiful trees, an expansive lawn and rockery.  The owners of the property didn’t get any satisfactory answers from the municipality.  But after they discovered that the new neighbor would be none other than the mayor, Zeev Bielski, they turned for help to an attorney.    The municipality was embarrassed.  They said that the initiative for creating the park related to a decision from the 1960s, when it had been decided to develop the neighborhood at the western end of the city.  They expropriated and designated the private lands for use as future parks.  But then the city reverted title back to the original private owners.

Eventually, the neighborhood was developed.  When it became clear that there were enough green spaces, then regional director Binyamin Wolfowitz decided to return the lands which were expropriated to their owners.  This was done especially to avoid having to pay damages to property owners from the regional authority’s coffers.  So ownership of the property returned to the original owner of the vacant lot across from the Bielski home, as it was being built.

The city’s claim is that when it began building the Bielski park it did not know that the land was no longer public and had reverted to the private owners.  It seems that those who built the park couldn’t be bothered to review city records to confirm the city still owned the land (which it didn’t).

Returning to the Bielski era: the Raanana municipality realized there was a problem and tried to reach a compromise with the owners of the land.  The intent was to allow them to build two apartment units in an area consisting of 700 meters of the entire three and a half dunam lot, while retaining the massive space opposite the home as a park.

The city decides in favor of the mayor

It’s the period just before elections for Bielski’s second term.  The municipality delayed in implementing the agreement.  Bielski was elected to a second term.  An appeal of the decision was filed with the regional commission.  Its members filed a preliminary ruling that appeared shocking on its face: to permit the garden to take up the entire lot.  That is, Zeev Bielski received a private benefit in the form of his own person park bought and built by the adoring taxpayers of his city.  While the residents received virtually nothing in return.

The city of Raanana as distinct from other similar cases, declined to appeal the ruling.  So in a new agreement, residents of the city “donated” to the owners of the park land a city lot on one of the city’s most exclusive streets in exchange.  That property was worth $1.7-million.  Again, the residents of Raanana were in effect stiffed by their own mayor who saw city land as his own piggy bank.  On the lot for which it was exchanged, two beautiful apartments were built.  By the way, the garden opposite the Bielski’s home is the only one in all of Raanana that has no benches, apparently in order to prevent, among others, young people from congregating in the spot and disturbing the tranquility of the neighbors.

In another city project, Bielski added sixty units without securing a permit.  This violation left the other 200 apartment owners unable to officially register their property in their names.  Shortly before Bielski left the Jewish Agency (which used to be tasked with helping settle new immigrants), PM Ariel Sharon granted the former a permit to build a new neighborhood in Raanana for immigrants.  Instead, luxury housing was built and at a much greater height than permits originally specified.  No new immigrant can afford the sky-high prices there.  When I asked Jewish Agency social media flack, Avi Mayer whether he had any comment on this story he said:

…Asking me about Bielski is like asking Jay Carney about Bush.

Not quite true, since Bielski’s actions both before and while he was Jewish Agency chair reflect on the reputation of that organization, hard as it may be for Mayer to understand that.

There is a Facebook group (The Bielski You Never Knew, Hebrew) devoted to satirizing Bielski’s foibles.  In a review of mayoral candidates for Israel’s biggest cities, The Marker found that Bielski refused to provide a financial statement and that he lived in one of the more opulent homes of all of them. A recent headline of Raanana’s professional real estate publication reads:

Zeev Bielski is a true friend. One who, without a doubt, does everything in his power to help his friends and former business partners.  When you have a friend like Zeevik, it’s worth millions.  Read for yourselves.  He doesn’t just know how to smile.  He brings smiles to the faces of all his friends.

Israeli politicians enrich themselves personally in these ways all the time.  They engage in acts of corruption both large and small: think of Ehud Olmert’s cozy deal regarding the Holyland project which cost him his premiership.  Local mayors are known for such intrigue with developers.  Officials, including a number of mayors, are under indictment for such corrupt dealings.  A few of those indictees are even on the ballot for re-election.  Haaretz also ran an article saying that four mayors under investigation had hired former senior police officers as city managers in order to keep them out of prison.  A recent poll found that 63% of Israelis believed their city government was corrupt.  Corruption further strengthens Israelis’ general cynicism about their political processes and their sense of powerlessness to change anything in a meaningful way.

I would maintain that this is also a factor that governs Israelis’ attitude toward the Occupation.  It is a burden that they, in principle don’t like, but have learned how to live with.  There is a sense that the situation can’t change, so just learn to accept it.  Corruption starts in the Occupation with theft of Palestinian land and cross over the Green Line where speculators and wheeler-dealers like Bielski essentially appropriate pieces of land for their own and their partners’ enrichment.  They’re very elegant hogs at the public trough.

Corruption in Israel runs high and low.  But the poorest of the poor are, as always, the victims since their taxes are stolen and they receive nothing in return.  At least in some circumstances those in the middle may benefit in some indirect way from these real estate deals and the amenities they offer the public.  It is of course the élite like the Bielskis who gain the most.  They rig the system to their benefit and their friends and cronies join the gravy train.

In a relatively short span on 30 years, Israel has gone from a relatively poor country struggling economically but governed by socialist values; to a country brimming with flashy cars and office towers and governed by Friedman-school vulture capitalism.  I’ve written here about the concentration of enormous amounts of Israeli capital in the hands of the eighteen families which own the lion’s share of the nation’s conglomerates.  Zeev Bielski isn’t among them.  But that’s not for a lack of trying.