Israel's Peres Under
Investigation for Role in Funds Tied to Palestinian
The investigation, to be conducted by members of the Knesset Ethics Committee, focuses around the establishment by Peres of the Peace Technology Fund, a $160 million venture-capital entity created in part to encourage investment in the Palestinian economy. Investors in the fund, allegedly procured while Peres was minister of regional cooperation under Israeli Prime Minister Ehud Barak in 1999, include the Palestinian National Authority and several companies that have in the past contributed to the Peres Center for Peace, a non-profit think tank he founded.
The fund's first investment was announced in Business Week in June 1999, one month after Peres assumed his ministerial position that year.
The article reported, "A venture capital fund founded by former Israeli Prime Minister Shimon Peres has taken a $9 million, 3.3 percent stake in Paltel, the Palestinian Telecommunications Co., according to officials of the Peace Technology Fund. The investment is the first by the peace fund, which was established last year by Israeli and Palestinian investors."
"The fund has raised $60 million from Israeli, Palestinian, and foreign investors. The Peace Technology Fund was established by Peres and the World Bank as part of an attempt to spur investment in the Palestinian economy."
The Palestinian National Authority, according to a report by the Democratic Council, invested $22 million in the fund, also allegedly while Peres was an Israeli minister. The PNC is a monetary branch of the Palestinian Authority.
Other investments in the fund, totaling nearly $10 million, were made by Bank Leumi, Teva Pharmaceuticals, Federmann Enterprises, Koor Industries, Arison Investments, Strauss Holding, Delta Galil, Daimler Chrysler and Keter Plastics. Most are contributors to the Peres Center for Peace, which itself is listed as a member of the fund's advisory board.
David Bedein, director of the Israel Resource News Agency, alerted members of the Knesset Ethics Committee yesterday to the fund's activities and has sparked a Knesset investigation to determine if Peres' involvement with the fund was a conflict of interest and whether the veteran Israeli politician received or continues to receive fees for allegedly securing multimillion dollar investments or profits from previous fund ventures.
Bedein told WND, "Since Peres was the minister of regional cooperation when the Palestinian investment was made, the Knesset Ethics Committee will now investigate whether Peres was paid a consulting or broker fee as payment for bringing in the investment."
Consultants procuring investments for companies or funds typically receive finders fees of 2 to 5 percent. The Palestinian Authority's investment of $22 million could have earned Peres a fee of $440,000, according to yesterday's briefing to members of the Ethics Committee.
Another charge brought to the Knesset focuses around the fund's $9 million investment in the Paltel Palestinian communications company, also after Peres assumed his 1999 government position.
The price of Paltel's shares rose from 2.5 Jordanian dinars in May 1999 to 4.5 in August 1999, reportedly realizing a nearly $10 million profit for the fund's investment that year.
The stock increase has been widely attributed to a monopoly license granted in August 1999 by the Palestinian Authority to Paltel for the company to operate exclusive wireless services in the West Bank and Gaza Strip.
WND has learned the Ethics Committee will investigate whether Peres knew in advance, through contacts while he was a member of the Israeli government, the PA was planning to grant Paltel the exclusive contract, and whether Peres personally profited from the fund's investment.
Other questions surround Peres' relationship to Evergreen Canada Investment Management, a Canadian company listed on the advisory board of the fund. A subsidiary of the company was reportedly granted an advisory contract to help the Palestinian Commercial Services Corporation, a financial arm of the Palestinian Authority, invest more than $170 million in international private equity funds in the U.S., Europe and Asia.
Bedein asks, "What was the role of Peres in helping Evergreen receive the advisory contract from the PCSC? Was Mr. Peres paid a consultancy fee by Evergreen for his work in convincing the directors of the PCSC that they should give this investment advisory work to Evergreen? As Evergreen has no expertise or experience whatsoever on investment capital into private equity funds, the question remains why the PCSC would chose Evergreen?"
Further questions being raised by the Ethics Committee include: "Do Mr. Peres or the Peres Peace Center today hold any shares or equity in the Peace Technology Fund? Why does the Peres Peace Center maintain an advisory role in the private held Peace Technology Fund?"
Peres served twice as Israel's prime minister - following the formation of a unity government in 1984, he was an alternate prime minister with Likud leader Yitzhak Shamir, and again in 1995 after Prime Minister Yitzhak Rabin was assassinated. Peres has held numerous other government posts, including deputy defense minister, minister of immigrant absorption, minister-without-portfolio, minister of transport and communication, and minister of information. Prime Minister Ariel Sharon appointed Peres foreign minister until Labor left the government in 2003, and created for him the position of vice prime minister when Labor again joined Sharon's coalition in December.
Peres founded the Center for Peace in 1996 with the aim, according to its website, of "realizing [Peres'] vision of a 'New Middle East,' in which people of the region work together to build peace through socio-economic cooperation and people-to-people relations."