Dysfunctions
The Money Trail
By
Apr 27, 2007 - 11:11:35 AM

The documents consisted of records concerning a private account and companies that Lieberman had set up and which were managed from the Cyprus Popular Bank in Limassol. The records covered 2001, when Lieberman served as a Knesset member and as national infrastructure minister in the government of Ariel Sharon. In November 2001, the documents were sent from the offices of Cyprus attorney Andreas Neocleous, the manager of one of the companies, to Lieberman's lawyer, Yoav Many. In a letter to Many, Daniella Mourtzis, head of the companies management department at the Cyprus law firm, noted that she was sending him "reports for our mutual client." Not one report, relating to a private account, but many.

One of the reports showed the movements in the account of a company called Mountain View Assets. In May 2001, the company received $500,000 from MCG Holding, which belongs to the Russian oligarch and businessman Mikhail Chernoy. Israeli attorney Jacob Weinroth, who represents Chernoy, said this week that the money was transferred by his client as part of a "wine deal," and explained: "The person who got Chernoy involved was a Bulgarian lawyer. He introduced Chernoy to businessmen who carried out a series of transactions involving wine with Lieberman. Lieberman was not a cabinet minister at the time."

When reminded that Lieberman was a minister at the time the money was transferred, Weinroth sounded surprise, and said: "The money was transferred when he was a minister?!"

By October 2001, the account was almost totally emptied out, with most of the money in it being transferred to Lieberman confidants and recorded as loans or payments on loans. Gershan Trestman, an activist in Yisrael Beiteinu, the political party Lieberman founded, and the minister's neighbor in the West Bank settlement of Nokdim, received $320,000. Ronit Guy, the partner of Lior Tenenbaum, a central figure in Lieberman's dealings in a company called Nativ el Hamizrach (literally, Path to the East), received $85,000. Their names would come up again in connection with other accounts that were sent to Lieberman's lawyer.

On March 22, 2001, shortly after his appointment as national infrastructure minister, Lieberman transferred $60,000 to Tenenbaum from his private account. Concurrently, during 2001, Tenenbaum received about $44,000 from Trasimeno, the "reincarnation" of Nativ el Hamizrach Cyprus, a company which was established by Lieberman and owned at the time by the firm of attorney Neocleous. At the beginning of May, Guy received $10,000 from Trasimeno. On May 28, Trestman deposited $270,000 in the company's account, and a week later withdrew $210,000.

The name of another confidant, Igor Snaider, who was Lieberman's chauffeur and became involved in his business dealings in Eastern Europe, appears in connection with three accounts. He received $400 from Lieberman's private account, which was recorded as a loan; $15,000 from Mountain View Assets, for transportation and office equipment services; and $12,215 was transferred to him from Trasimeno.

On May 4, 2001, a month after Lieberman entered the government, $1,725 was transferred from his private account to a company called Onyx Trust Services. That company belongs to the Swiss-based Onyx Group, which establishes international companies and deals in tax planning.

Neocleous' office in Cyprus received fees from all the accounts mentioned thus far - from Lieberman's private one, as well as the Trasimeno and Mountain View Assets accounts - in amounts ranging from $600 to $4,000. Yoav Many, Lieberman's confidant and lawyer, and also the legal adviser of Yisrael Beiteinu, received about $7,000 from Trasimeno in the period covered by the reports, for traveling expenses.

Barred from business

All this time, Lieberman was a cabinet minister and an MK. As such - under the Knesset members' immunity law, and according to regulations stipulated by the Asher Committee concerning value added tax (VAT) - he was barred from engaging in business activities and from being in a situation involving a conflict of interest (see box).

Why did Lieberman transfer $60,000 to Tenenbaum from his private account? Why did he pay $1,700 to a Swiss firm that specializes in setting up companies and tax havens? What was the nature of his involvement in the "wine deal" with Chernoy? How is Lieberman connected to Mountain View Assets, and why did the company's bank account empty out on behalf of his associates Trestman, Snaider and Guy?

In April 2001, just a month before this so-called wine deal, the media reported that a secret investigation was under way against Chernoy, on suspicion that he had purchased Bezeq, the huge Israeli telecommunications company, illegally. The investigation produced an indictment. Lieberman expressed support for his good friend, asserting that "his only crime is that he succeeded in his life," and declaring that he placed more trust in Chernoy "than in the integrity of all the heads of the [police] investigative departments together." In a query to the public security minister, Lieberman asked how much money had been spent on the Chernoy investigation.

The scope of the ties that existed between Lieberman and Chernoy could be gauged from an affidavit submitted to the court by a member of the Eilat municipal council, Oleg Chernomoretz. Chernomoretz claimed that the police investigators "told me in no uncertain terms that they had a photograph of Mr. Chernoy and Lieberman that was taken in January 2000 in a restaurant called the Last Refuge in Eilat, on the day the minister and the ambassador of Moldavia in Israel met with the president of Moldavia and his family, who had come to Eilat for a visit." Chernoy also sold Lieberman an armored jeep for his wife to use on the way from their home in the settlement to Jerusalem.

At that time, Lieberman asked prime minister Sharon to order "an urgent and comprehensive clarification into the attempt by the police to use an undercover agent against me, and perhaps other measures as well, apparently at its own doing, without authorization." During the investigation, when Chernoy's passport was taken from him, his lawyers suggested to Lieberman that he vouch for Chernoy's return to Israel.

A few weeks after the Knesset elections, when the probe by the police National Fraud Investigation Unit (NFIU) had just begun, Lieberman demanded the public security portfolio in the coalition negotiations. Prime Minister Ehud Olmert asked the attorney general for an opinion concerning Lieberman's possible appointment to that post, and was told by Mazuz that he would have to forgo it, because the police had received "new material" revealing suspicions against Lieberman in the sphere of "probity."

In November 2006, the Justice Ministry asked the Cypriot authorities to take a deposition in regard to the accounts that have been mentioned here. In the past few months, NFIU officers went abroad to take depositions from various witnesses in the case, and in the wake of the findings Mazuz authorized the police to question Lieberman under caution.

Last Sunday, Lieberman was interrogated at NFIU headquarters in Bat Yam on suspicion that he received illegal donations from Austrian businessman Martin Schlaff via fictitious bank accounts in Cyprus. Lieberman allegedly did not report the donations, as the law requires. Lieberman is also suspected of laundering money through confidants and of advancing his business interests while serving as an MK and as a cabinet minister.

Lieberman himself preferred not to comment on the suspicions against him or on the questions that have arisen from this Haaretz investigation (see box).

A Volvo and cigars

To understand how Lieberman's confidants became part of the companies he established, and how the complicated web of relations between his people and the various accounts was created, we have to go back to late 1997, when Lieberman resigned as director general of the Prime Minister's Office and first went into business. It was then that Lieberman established Nativ el Hamizrach Israel, an international trading company that was to operate in Eastern Europe and focus its activity abroad.

"I have no businesses in Israel," Lieberman told Haaretz at the time. "I prefer to concentrate my business dealings in other places."

Indeed, the all-powerful director general of the Prime Minister's Office during Benjamin Netanyahu's tenure joined the list of public officials who wanted to feather their nest, and within a short time became a success story. He pocketed $3 million after bringing about a significant devaluation of the Russian ruble, on behalf of an Austrian bank.

"It's like gambling on metals in the stock market," Lieberman told the mass-circulation daily Yedioth Ahronoth in 2003. "Some people specialize in wines, and others in Swiss francs. You check to see whether it's going up or down and you do all kinds of financial transactions."

This financial juggling act also impressed the NFIU, which conducted depositions in Vienna of senior officials at the Austrian bank. The officials were unable to explain to the investigators how Lieberman was able to save the bank from a loss of millions of dollars.

Baruch Kra, then a correspondent for Haaretz, reported that during a discussion in the Austrian parliament's committee on the secret services, local police intelligence officers presented information concerning donations from Austrian businessman Martin Schlaff to Lieberman's party, Yisrael Beiteinu. The NFIU investigated suspicions of illegal campaign contributions to Lieberman for seven years.

Lieberman's political ties, which date back to the glory days in the Likud Party Central Committee, apparently did not hurt his business dealings, either. In 1998, about NIS 735,000 was transferred to Nativ el Hamizrach from Tzivyon, a company owned by businessman David Appel. Lieberman received the fat check for consulting services rendered to the Greek island tourism project, even though he opposed it. "Appel asked me for an opinion and I told him that the project has no chance and that he was going to lose his shirt there," Lieberman explained several years ago.

Lieberman's metamorphosis from civil servant to businessman became obvious immediately. The modest new immigrant from Nokdim bought a fancy new Volvo, started to smoke cigars and opened a spacious, expensively designed office, complete with a bar, in Jerusalem's Givat Shaul industrial zone. It was obvious to everyone who entered the office that Lieberman had made it.

Employees of Nativ el Hamizrach relate that initially it was far from clear what the company would do. Said Iris Markman, the company's office manager until the elections of 1999, in which Lieberman ran for the Knesset for the first time: "There were a lot of ideas. They went for entrepreneurship, mediation between companies."

Lieberman and his aides visited Kyrgyzstan, touring the cotton industry there, and meeting with the president of the former Soviet republic, all the while escorted by the Israeli ambassador. A company employee recalls that they also considered going into the farming business in Africa: "Someone wanted to sell a flower-growing farm in Kenya. We went to look at it. We saw the business and we sat with the lawyer and the accountant of the enterprise, but in the end the owner changed his mind and didn't want to sell."

The breakthrough came in 1999, when millions of shekels began to flow to Nativ el Hamizrach from companies associated with the lumber industry and firms dealing in raw materials for construction. Lieberman then established another company, Nativ el Hamizrach Cyprus, afterward known as Trasimeno, which operated parallel to its Israeli sister-company. The relations between the two firms are mentioned in a Trasimeno bank account statement. In March 2001, for example, the Israeli company transferred about $35,000 to the Cyprus company.

After being elected to the Knesset in the May 1999 elections, Lieberman resigned, as he had to under the law, as CEO of Nativ el Hamizrach Israel. Three directors were appointed in his place: his right-hand person at the time, MK Ruhama Avraham, attorney Hagai Meidan and accountant Uri Lazar. At the end of 2000, the company informed Israel's Registrar of Companies that the shareholders were Lieberman's wife, Ella (one share), and Strauss Lazar, a trust company (99 shares). One of the owners of Strauss Lazar, Micha Lazar, was also the company's accountant. Lieberman's state-related business became intertwined with his private business affairs. In March 2001, when he was named minister of national infrastructure, he appointed Lazar to the board of directors of the Israel Electric Corporation. The request for a change of directors in Nativ el Hamizrach was signed by attorney Dov Weissglas, who acted as Lieberman's lawyer in various instances. Weissglas hooked Lieberman up with another of his clients, Martin Schlaff, who is suspected of having bribed former prime minister Ariel Sharon in the episode allegedly involving South African businessman Cyril Kern. The paths of Lieberman and Schlaff also converged in the lumber business, as will be seen later.

In April 2001, Nativ el Hamizrach Israel underwent another change of ownership: Strauss Lazar and Ella Lieberman transferred all their shares to a Belgian citizen named Yosi Shoultiner. Shoultiner, who died about a year ago, was a close friend of Lieberman. In June 2001, Shoultiner, then owner of Nativ el Hamizrach Israel, deposited some $450,000 in the account of the Cyprus-based Trasimeno company, formerly Nativ el Hamizrach Cyprus.

Officially, Lieberman acted as the law stipulates, formally divesting himself of the companies he established. But people who worked with him in the Knesset and the government recall that senior officials of Nativ el Hamizrach - CEO Andy Boiangiu and accountant Kalman Besser - visited his offices frequently during his tenures as MK and minister. The three declined to comment on the meetings.

Additional evidence that Lieberman engaged in business activity while serving in the Knesset appears in a suit that was filed in 2004 by his former adviser, Yossi Kamisa, against the diamond merchant Dan Gertler. Kamisa alleged that in July 2000, Lieberman invited him to a meeting in the Jerusalem offices of Nativ el Hamizrach, told him he was a partner to future deals in Congo, and that he wanted to have Kamisa take part in their security aspect. Kamisa noted in the suit that he had met Lieberman when the latter was establishing his party, Yisrael Beiteinu.

According to Kamisa, Lieberman sent him to Gertler, describing him as a partner in the deals. Gertler, the suit alleges, offered Kamisa the task of training the Congolese army, as part of a settlement the diamond merchant concocted with the African country: provision of security advice in return for being granted exclusive franchises for the export of uncut diamonds from Congo. Ultimately, the Gertler-Kamisa partnership fell apart. Kamisa's suit was rejected outright by District Court Judge Adi Azar. The grounds for the rejection: Kamisa reputedly signed a statement of receipt and annulment of all his claims and demands from Gertler - in return for which he received NIS 1.4 million.

With two masters

Avigdor Lieberman's private account in Cyprus, which remains active, is managed in dollar terms. In a relatively short period, from the end of January until the beginning of May 2001, when he served as an MK and afterward as a cabinet minister, large withdrawals - upward of $200,000 - were made from the account.

On January 24, 2001, while Ehud Barak and Ariel Sharon were waging their campaigns against each other in the bid to be prime minister, Lieberman withdrew about $50,000 from the account. Six days later, $50,000 was transferred to Lieberman's checking account in Cyprus from a fixed-deposit account. On February 15, Lieberman again withdrew $50,000 from the checking account, and a week later, shortly before Lieberman took over as national infrastructure minister in the Sharon government, the same amount was again transferred from a fixed-deposit account to his checking account.

Lieberman was appointed national infrastructure minister on March 7, 2001. A day later he transferred $35,000 to the Sheraton Plaza Hotel in Jerusalem. On March 19, he withdrew another $15,000 from the checking account. Three days later, another $75,000 was transferred from a fixed-deposit account, and on the same day Lieberman transferred about $60,000 to Lior Tenenbaum.

An Israeli who divides his time between his home in the affluent community of Kfar Shmaryahu, outside Tel Aviv, and business trips to republics of the former Soviet Union, Tenenbaum is a central figure in Lieberman's business dealings. In the 1990s, after the collapse of the Soviet Bloc, Tenenbaum began to engage in transactions in Uzbekistan, Kyrgyzstan and Turkmenistan, focusing on business involving the cotton industry. Later, after consolidating his ties in the republics, he started to import and export metals and lumber.

At the end of 1999, Lieberman was hired by Nativ el Hamizrach CEO Andy Boiangiu to set up an apparatus for creating commercial ties with the lumber industry in Ukraine. Lumber became the focus of the company; it began to import it from the area of Czernowitz in Ukraine, on the border with Romania. Sources in the lumber industry explained that in contrast to the import of lumber from Scandinavia, which is done according to clear criteria, obtaining a permit to trade in quality lumber from countries of the former Soviet Union entails mainly "good connections." And Tenenbaum had them.

Tenenbaum's task was to buy trees for his company, to send them to be processed in sawmills and to ship the finished product to Israel. Initially, Nativ el Hamizrach used Ukrainian sawmills, which were subsequently upgraded by an Austrian company, Placzek, owned by Martin Schlaff. Schlaff's Vienna-based international trading company also helped Nativ el Hamizrach locate Austrian clients and lumber merchants.

In response to queries for this article, the official responsible for this sector in Placzek, Leon Lewkowicz, did not return repeated calls from Haaretz.

Tenenbaum later related that the payments he received from Nativ el Hamizrach and from Trasimeno were for consultancy services, to pay suppliers and to cover expenses in obtaining franchises and permits. The money was transferred to him from the Israel- and Cyprus-based companies to accounts he held in Ukraine.

The ties with Schlaff, Tenenbaum said, began at the end of 1999 or the beginning of 2000, after Lieberman entered the Knesset. Tenenbaum was contacted by a representative of Schlaff, who told him that he had heard from Nativ el Hamizrach that he was an expert in the lumber trade and that Placzek wanted to work with him. Tenenbaum said that he knew Schlaff and Lieberman were friends. The middleman became a servant to two masters.

Lumber, gas and oil

Employees in Nativ el Hamizrach this week sounded more sure of themselves than Tenenbaum; they said Lieberman himself had forged the connection between him and Schlaff. Tenenbaum said he had gone to Vienna and met with Schlaff, who explained to him that Placzek was interested in getting back into the Ukraine market, having lost its permits there after the collapse of the Soviet Union. After Schlaff visited Ukraine, Tenenbaum related, they started to work together. At this stage, Tenenbaum noted, he was barely active in Nativ el Hamizrach, because the company did not send him money.

At the end of 2005, Tenenbaum said, Schlaff sold his lumber business to a Ukrainian firm and since then has maintained indirect ties with him, in projects related to gas and oil. As noted, the fact that money was transferred from Lieberman's account, while he served as a minister, to Tenenbaum's account strengthened the suspicion that Lieberman continued to be involved in the companies' business affairs.

Tenenbaum refused this week to talk to Haaretz about his business affairs. "I have no interest in talking. I am a businessman who works abroad. I have no interest in getting into things in Israel. I know what you are talking about - let's say you didn't find the right person to talk to. Drop the matter and that's all."

Tenenbaum's partner, Ronit Guy, who received $10,000 from Trasimeno in May 2001 (and $85,000 from Mountain View Assets a day after the wine deal with Chernoy), said: "We are his [Lieberman's] friends, there is no doubt of that, but we are not connected to him in business. Apart from organizing an evening for him before the elections, when I invited many people here, I have nothing to do with him ... I saw him a few times in my life, but I don't talk to him, I am not involved with him. I don't know where this is coming from. I don't understand how my name got mixed up in this."

Are you familiar with all of Lior's business affairs?

Guy: "Yes."

And he is not connected to Lieberman in any way?

"No, he is connected independently to himself. He is not connected to Lieberman in anything."

Then how did his name get connected to bank accounts that Lieberman has in Cyprus? How could it be that he transferred $60,000 to him and you didn't know?

"I don't know. It all seems imaginary. He wasn't at all involved in this matter. And I know all there is to know about Lior because I do his books."

Maybe you don't know everything?

"I know everything, believe me. Not only are we a couple, we have lived together for many years."

'He gave us a hand'

Nativ el Hamizrach Cyprus became Trasimeno in 2001. After the Lieberman era, the shareholder and CEO of the company was Andrei Papadopoulo, from the Cyprus firm of Andreas Neocleous, who continued to share the "mutual client" with attorney Many and update him about the companies' activities.

The choice of Neocleous, one of the leading financial lawyers in Cyprus, was obvious: His firm has representations in Moscow, Budapest, Kiev and Prague, he is active in Europe and the Middle East, and he is an expert in representing international companies. A former member of the Cyprus parliament and the vice president of the International Academy of Tax Advisers, Neocleous is considered a world expert in tax matters, and his firm offers a range of legal services to companies and businessmen who want to take advantage of the generous tax relief available on the island.

Trasimeno and Nativ el Hamizrach sold lumber to Israeli and international companies. In some cases, payment was made to the Cyprus account, in some cases to the account in Israel. Thus, for example, between January 2000 and June 2001, Triwall Containers - which manufactures cardboard boxes and wooden pallets, and has factories in Netivot and Netanya - paid Trasimeno more than $300,000; Gal Pallets, one of the largest manufacturers of wooden pallets in Israel, transferred $75,000 to a Limassol bank.

Like Tenenbaum, Lieberman's confidants Gershan Trestman and Igor Snaider continued to benefit from the booming lumber business. After the boss entered politics, Snaider, who was Lieberman's chauffeur for many years, went to Eastern Europe and continued to deal with ongoing matters.

On May 18, 2001, a day after the wine deal with Chernoy, Trestman received $250,000 from Mountain View Assets. The money was recorded as a loan. Ten days later, he received another $70,000 from the account, and on the same day transferred $270,000 to the Trasimeno account. A week later he withdrew $210,000 from the Trasimeno account. On June 21, he transferred $7,000 to Mountain View Assets; the money was recorded as a loan repayment.

Trestman immigrated to Israel in 1990. He does not speak Hebrew. People in Nokdim describe him as an intellectual, a poet and a writer, who holds long talks with Lieberman about Pushkin and Tolstoy. A neighbor in the settlement says that he works closely with Lieberman and therefore moved to Jerusalem about a year ago. Trestman's wife, Ludmilla, confirmed this account: "We met Lieberman in our first days in the country. We lived in trailers that were next to each other. He helped us, gave us a hand, and I thank him very much." She adds that they were also friends with Igor Snaider, who is not living in Israel today. In Nokdim, she explained, "the relations between the Russian speakers are very good." She added that there were no business connections between her husband and Lieberman: "It was just good neighbors, that is all. Now he is working in the party, but that is something else. Now he is working with the press and the media."

In 2001, your husband conducted transactions involving large sums of money in Cyprus bank accounts.

Trestman: "That is something I am not involved in. My husband has worked abroad for a few years, but in his own affairs; it has nothing to do with Yvette [Lieberman's nickname]."

Even though Gershan Trestman withdrew hundreds of thousands of dollars from the Trasimeno account, he is not known to the authorities in Israel as a businessman, but rather as a not particularly well-off writer and lecturer. As far as is known, there are no assets registered to his name in Israel. In the past few years he has flown abroad dozens of times - to Russia, Moldova and Cyprus, among other destinations.

From 1999 to 2004, Nativ el Hamizrach prospered, selling lumber to Israeli companies in the millions of shekels. In addition to Triwall and Gal Pallets, Ltd. its clients included the major players of the lumber and construction industry in Israel: Tubul, a construction materials company owned by the Jerusalem-based Tubul family (Simu Tubul, one of the company's owners, a member of the Likud central committee and a Lieberman confidant, was questioned by police a few months ago in connection with the investigation of the Israel Tax Authority); Meir Pines & Sons, which imports lumber for building; Botwin, a company that sells lumber for construction, carpentry and tile roofs; Kargal, which specializes in cardboard packaging; and the real estate firm Bonei Hatichon Civil Engineering & Infrastructures, Ltd., which deals mainly in residential construction.

The revenues of Nativ el Hamizrach skyrocketed in the years when Lieberman was an MK and a cabinet minister: from about NIS 1 million in 1999 to more than NIS 5 million in 2000, NIS 8.5 million in 2001, NIS 6 million in 2002 and NIS 4 million in 2003. In 2004, revenues fell by half, to about NIS 2 million, and in the past two years they have stood at hundreds of thousands of shekels a year.

In 2004, revenues fell by half, to about NIS 2 million, and in the past two years they have stood at hundreds of thousands of shekels a year. Since 2004, new and more productive sources of income were generated for Lieberman. At the age of 21, his daughter established a "business consultancy" company, and within three years more than NIS 7 million flowed into the firm from unknown sources abroad. In the years when he was not in the Knesset or the government, Lieberman withdrew from the company salaries of hundreds of thousands of shekels. Upon his appointment as minister of strategic affairs in October 2006, his daughter founded another company, MLG Jerusalem Properties, Ltd. The NFIU is now examining whether the minister prima facie conducted business through his daughter's company.