Peres Fund Folds

JERUSALEM, Israel

In what some here are calling a curious development, a multi-million-dollar investment fund founded in 1999 by Israel’s Vice Prime Minister Shimon Peres announced this week it would liquidate its assets and return the money to all investors, according to an Israeli media report.

The move follows WorldNetDaily exclusive articles exposing a private probe, brought to Israel’s Knesset Ethics Committee, questioning whether Peres profited from the fund, which secured investments from the Palestinian Authority and several supporters of the politician while he was a government minister – a conflict of interest that could require Peres to vacate his government position.

As WND reported, the Israel Resource News Agency in February privately requested the Knesset probe 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 in the past have contributed to the Peres Center for Peace, a non-profit think tank founded by Peres.

The fund’s first investment – a $9 million, 3-percent stake in Paltel, a Palestinian telecommunications company – 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 investment is the first by the peace fund, which was established last year by Israeli and Palestinian investors.”

The price of Paltel’s shares jumped from 2.5 Jordanian dinars in May 1999 to 4.5 in August of that year, reportedly realizing a nearly $10 million profit for the Fund’s investment.

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.

David Bedein, director of the Israel Resource News Agency, raised questions regarding the possibility Peres profited from the Paltel investment, and whether he knew in advance, through government contacts while he was an Israeli minister, the PA was going to grant Paltel the exclusive contract.

Other questions surround Peres’ involvement in the procurement of a $22 million investment in the fund by the Palestinian National Authority, also allegedly while Peres was an Israeli minister. The PNC is a monetary branch of the Palestinian Authority.

As well, nearly $10 million was raised by the fund from 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.

WND reported that the Ethics Committee responded last month to Bedein’s probe request, explaining to him they are not an investigative body and can determine only whether documented activities violate government rules. Bedein said the Knesset asked him to provide them with detailed information about whether Peres received or continues to receive fees for allegedly securing multimillion-dollar investments or profits from previous fund ventures.

But before Bedein commenced the next stages of the investigation, the fund sold all its holdings and decided to return all monies to original investors, according to an article this week in Israel’s Yediot Ahronot Hebrew daily. The fund reportedly sold its investments to Palestinian entities.

“I find it to be a very strange coincidence that immediately after the Knesset ethics committee asked for verification of Peres’ assets in the Palestinian Authority, and after their request was publicized, the fund suddenly announced they are divesting and returning assets,” said Bedein. “It sounds like they are running scared.”

The fund, registered in the Cayman Islands and classified as an international investment entity, did not issue an explanation for its sudden closure.

Sources told WND a slew of private investigative firms have quietly offered their services in conducting various probes of the fund.

“The next step is to find the proof of any wrongdoing,” said Bedein. “For example, since Peres was the minister of regional cooperation when the Palestinian investment was made, was Peres was paid a consulting or broker fee as payment for bringing in the investment?

Consultants procuring investments for companies or funds typically receive finder’s 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 Bedein.

“Also, why is the Peres Peace Center, a nonprofit political think tank, qualified to provide financial consultation services to the fund?” asked Bedein.

He added, “all this comes at a very strange time regarding financial interests of Peres and others. It happened just as Peres announced he wants to turn Gaza into a Club Med. Who is going to profit from that?”

Bedein was referring to statements Peres made this week following talks with French President Jacques Chirac regarding economic possibilities from Israel’s plan to withdraw Jewish communities this summer from Gaza and parts of the West Bank. Peres suggested building a Club Med in the lands being evacuated.

“We could convert a settlement into a Club Med,” Peres told reporters.

This ran in WND on April 22nd, 2005