JERUSALEM – The ethics committee of Israel’s Parliament, or Knesset, requested last month that a private investigative group provide more information about accusations of Vice Prime Minister Shimon Peres’s involvement in a technology fund affiliated with the Palestinian Authority, a conflict of interest that could require Mr. Peres to leave his government position.
The Israel Resource News Agency requested in February that the Knesset look into Mr. Peres’s establishment of the Peace Technology Fund, a $160 million venture capital group created in part to encourage investment in the Palestinian economy.
Investors, who allegedly joined the fund while Mr. Peres was the minister of regional cooperation in 1999 under then-Prime Minister Barak, include the Palestinian National Authority and several companies that have contributed at some point to the Peres Center for Peace, a nonprofit think tank founded by Mr. Peres.
The fund’s first investment, a $9 million, 3% stake in Paltel, a Palestinian telecommunications company, was announced in Business Week in June 1999, one month after Mr. Peres assumed his ministerial position.
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, a nearly $10 million profit from the fund’s investment. The increase in the stock price has been widely attributed to a monopoly license granted in August 1999 by the Palestinian Authority to Paltel that gave the company the exclusive right to offer wireless services in the West Bank and Gaza Strip.
The director of the Israel Resource News Agency, David Bedein, has raised questions regarding the possibility Mr. Peres profited from the Paltel investment. Mr. Bedein also questioned whether Mr. Peres knew in advance, through government contacts while he was an Israeli minister, that the authority was going to grant the exclusive contract.
Other questions surround Mr. Peres’s involvement in the procurement of a $22 million investment in the fund by the Palestinian National Authority, also allegedly made while Mr. Peres was a government minister. The PNC is a monetary branch of the Palestinian Authority.
As well, the fund raised nearly $10 million 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.
Mr. Bedein said the ethics committee responded last week to his request for an investigation, explaining that they are not an investigative body and can only determine whether documented activities violate government rules. He said the Knesset asked him to provide them with detailed information about whether Mr. Peres received or still receives fees for securing multimillion-dollar investments or profits from previous fund ventures.
“The next step is to find the proof,” said Mr. Bedein. “For example, since Peres was the minister of regional cooperation when the Palestinian investment was made, my agency will see if 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%. The Palestinian Authority’s investment of $22 million could have earned Mr. Peres a fee of $440,000, according to Mr. Bedein.
Mr. Bedein said he will also determine whether Mr. Peres currently holds any shares in the fund. If he does, that may be a conflict of interest since the Palestinian Authority is a major investor. Mr. Bedein also wants to know why the Peres Peace Center is qualified to provide financial-consultation services to the fund.
The investigation comes at a delicate time for Prime Minister Sharon’s administration, which is moving ahead with a plan to vacate Jewish settlements from Gaza and parts of the West Bank. Mr. Sharon’s plan has divided his Likud party and created many nationalist opponents who have called for Mr. Sharon’s resignation.
If Mr. Peres is found to have violated the Israeli government’s official code of ethics, he would be required to vacate his post. His departure likely would undo Mr. Sharon’s current unity government between Likud and Mr. Peres’ Labor party and could precipitate new elections in Israel.
Mr. Peres has been a political fixture in the Jewish government. He has served twice as Israel’s prime minister, once following the formation of a unity government in 1984 when he was an alternate prime minister with Likud leader Yitzhak Shamir and again in 1995 after Yitzhak Rabin, who was prime minister, was assassinated.
Mr. Peres has held several other government posts, including deputy defense minister, minister of immigrant absorption, minister-without-portfolio, minister of transport and communication, and minister of information. Mr. Sharon appointed Mr. Peres as foreign minister, a post he held until Labor left the government in 2003. Mr. Sharon then created the position of vice prime minister for Mr. Peres when Labor again joined Mr. Sharon’s coalition in December.
Mr. Peres founded the Center for Peace in 1996 with the goal of “realizing [Peres’s] 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,” according to the center’s Web site.
This appeared in the New York Sun on April 15, 2005: