Israeli Fund Raising in U.S. Provides Context for Olmert Case

Donors to Israeli political campaigns are like any others: They want to influence politics and wouldn’t mind a bit of yichus — access — besides.

Amid an Israeli scandal that could spell the end of Israeli Prime Minister Ehud Olmert’s career, three Jews who live in the United States and are deeply involved in fund raising for Israeli politicians spoke to JTA about how Israelis raise money overseas.

All three, who spoke on condition of anonymity in order to protect their ties with a range of Israeli political figures, say that if the allegations of illegal financial dealings between Olmert and New York businessman Morris Talansky are true, they are very much the exception.

“No quid pro quo is expected,” said one who frequently attends fund-raisers for hawkish Israeli politicians. “When people are giving a couple thousand bucks, they’re expecting that the candidate will win and do what they promised to do.”

Israeli politicians regularly collude with American Jews to sidestep Israeli law in raising money from overseas Jews interested in influencing Israeli elections.

One Washington consultant to Israeli and American politicians described a common tactic: An American donor pays a grossly inflated price for some minor publicity work by a well-known U.S. political consultant. The consultant — perhaps Arthur Finkelstein on the right or James Carville on the left — then “donates” his services to an Israeli party or candidate.

The Israeli politician avoids having to deal with fund-raising restrictions in finding the money to pay the U.S. political consultant; the consultant is working for “free.” In reality, the American donor picks up the tab.

“It’s come to appall me,” the Washington consultant said of Israeli politicians’ outreach to American Jews. “It must be an entrenched thing that they just can’t give it up.”

Israeli police have questioned Olmert and several wealthy American Jewish businessmen in recent days about corruption allegations.

All three of the fund-raisers interviewed by JTA for this story acknowledged having heard of super donors who might expect specific dividends for their money, but only as hearsay. None knew of specific instances.

But U.S. Jewish influence on Israeli politics is inevitable, a left-wing fund-raiser told JTA.

He pointed to the free Israeli daily Yisrael Hayom, a new newspaper launched recently by Las Vegas casino mogul Sheldon Adelson, the world’s sixth-wealthiest individual and a close associate of Likud Party leader Benjamin Netanyahu. The paper has focused on boosting Netanyahu’s political prospects.

The newspaper is “clearly running at a loss, but Adelson is getting the influence he seeks,” the fund-raiser said.

On Tuesday, Israeli police interviewed Adelson about the allegations against Olmert. Ha’aretz reported that police asked Adelson about whether Olmert had asked him to purchase mini-bar services from Talansky for Adelson’s many hotels.

Adelson, who has hawkish views on Israel, told JTA in a rare interview last year that he believed Olmert was prepared to discuss far-reaching territorial compromises with the Palestinians “to stay out of jail.”

Adelson also has contributed to President Bush’s campaigns. Before his trip to Israel this week, Bush wished the Israeli prime minister well.

“The legal issue goes on, and I fully understand that and respect Israeli rule of law,” Bush said in an interview Monday with Israel’s Channel 10. “I will just tell you, in my — I have great relations with the prime minister. I find him to be a frank man, an honest man, an open man, a guy easy to talk to and somebody who understands the vision necessary for Israeli security.”

One complicating factor in donating to Israeli politicians is the constantly shifting laws governing such donations. Limits vary according to whether it is a national election, a primary election or a municipal election.

The laws have been changed with an eye toward reducing Israel’s dependence on Diaspora Jews.

Ironically, Olmert has been outspoken in rejecting such dependence.

Last year he reprimanded Diaspora Jews who have opposed negotiations on Jerusalem as infringing on Israel’s sovereignty. In 2006, he bridled when U.S. Jewish federations sought credit for helping to build Israel’s North after the Hezbollah war, saying the American Jewish aid was helpful but hedging when asked if it was necessary.

In the mid-1990s, the Knesset passed a law severely limiting donations to political parties, and another allowing for the direct election of a prime minister. The donations law did not cover direct elections. That allowed parties to funnel unlimited cash into the prime minister’s race and made a mockery of the earlier effort to limit cash donations. The direct elections law has since been rescinded.

Contributions to primary elections for the leadership of Israeli political parties carry the highest maximum restriction. Individuals may donate up to about $11,000 within nine months before the election; donations are unlimited before this period.

Limitations on how much candidates may raise overall depend on party membership. Candidates for the leadership of parties with more than 5,000 electors may raise up to $570,000.

General elections are funded by the state.

The perpetually shifting laws have led to confusion both among American donors and Israeli politicians.

In recent years, some U.S. Jewish donors have asked for translations of current Israeli law — in some cases even asking for lawyers’ letters guaranteeing that the donor will not be placed in legal jeopardy, according to one of the fund-raisers interviewed.

The biggest loophole enabling American Jewish donors to tinker in Israeli politics is in contributions to NGOs and nonprofit groups that champion one or another Israeli political party or cause, experts say.

“An ad campaign can say, ‘When you vote for prime minister, vote for the candidate who’s best for the environment’ — and everyone knows who that is,” said the Washington consultant.

A similar phenomenon exists in the United States, where campaign finance restrictions on direct donations to parties in recent years have spurred the growth of so-called “527s” — groups associated with the U.S. tax code loophole that allows issue-based, non-profits to attack candidates so long as the groups don’t endorse a particular candidate.

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