JNF’s Is­raeli char­ity: ‘con­flicts of in­ter­est, mis­rep­re­sented ac­counts’

The Jewish Chronicle - - News -

Th­ese are edited ex­tracts from a pre­lim­i­nary in­ves­ti­ga­tion car­ried out for the JNF Char­i­ta­ble Trust by a firm of foren­sic ac­coun­tants, smith &Wil­liamson.There­port,dat­edJuly 21 2008, was com­mis­sioned by the new JNF chair­man, sa­muel hayek, amid con­cerns over al­le­ga­tions of fi­nan­cial mis­man­age­ment within the char­ity, and over the es­tab­lish­ment of an Is­raeli char­ity, Nes Is­rael. It emerged in the pub­lic do­main in a re­cent court case brought by for­mer JNF chief ex­ec­u­tive si­mon Win­ters against the char­ity’s lawyers, Mish­con de reya.

NES IS­RaEL

Nes Is­rael was es­tab­lished in 2004. Its op­er­a­tions ap­pear to have been di­rected by Ms [Gail] Seal and Mr [Si­mon] Win­ters, with in­volve­ment from Mr [David] Ki­bel [then trea­surer], amongst oth­ers.

Nes Is­rael has raised all, or sub­stan­tially all, of its in­come from do­na­tions from the JNF. The re­sults of Nes Is­rael have not been con­sol­i­dated into those of JNF group, de­spite them ap­par­ently be­ing un­der ef­fec­tive com­mon con­trol.

The do­na­tions to Nes Is­rael have been recorded in the JNF’s fi­nan­cial state­ments as char­i­ta­ble do­na­tions, but Nes Is­rael may have spent a pro­por­tion of those do­na­tions on fundrais­ing ac­tiv­i­ties on be­half of the JNF. If this is the case, the pro­por­tion of the JNF's in­come ul­ti­mately spent on fundrais­ing and ad­min­is­tra­tion may be un­der­stated.

The ob­jec­tives of Nes Is­rael and the JNF may not co­in­cide and there­fore po­ten­tial con­flicts of in­ter­est may have arisen for Ms Seal and Mr Win­ters.

Nes Is­rael has been in­ves­ti­gated by the Is­raeli au­thor­i­ties fol­low­ing an anony­mous com­plaint...

Nes Is­rael has pur­chased a build­ing for ap­prox­i­mately $1m us­ing do­na­tions from the JNF which orig­i­nally came from a KKL CA ac­count holder.

ES­Tab­LISH­mENT Of NES IS­RaEL

We un­der­stand from its 2004 fi­nan­cial state­ments that Nes Is­rael was es­tab­lished in Septem­ber 2004 and is reg­is­tered at the reg­is­trar of Amu­tot [char­i­ties] in Is­rael. Nes Is­rael’s 2004 fi­nan­cial state­ments were signed by Mr Win­ters in his ca­pac­ity as Gen­eral Man­ager and by Ms Seal in her ca­pac­ity as chair­per­son of the Board.

The notes to Nes Is­rael's 2004 Fi­nan­cial state­ments re­fer to the Amuta’s in­come be­ing “made up mainly of do­na­tions from JNF UK” and hav­ing the fol­low­ing ob­jec­tives: 1. Pro­mo­tion and sup­port for Jewish val­ues in Is­rael 2. Ad­vance­ment and sup­port for ed­u­ca­tion in Is­rael 3. Help­ing the needy in Is­rael 4. Pro­mo­tion of pro­grammes to pre­serve the en­vi­ron­ment in Is­rael.

We have not es­tab­lished whether “Amuta” is the Is­raeli equiv­a­lent of a UK char­ity (reg­u­lated by the Char­ity Com­mis­sion) or more akin to a not-for­profit en­tity which is not reg­u­lated...

From our re­view of a range of doc­u­ments, it ap­pears that Nes Is­rael was es­tab­lished at about the time the re­la­tion­ship be­tween the JNF and KKL de­te­ri­o­rated. When this hap­pened, the JNF ap­pears to have lost a fa­cil­ity to make pay­ments to projects in Is­rael, which Nes Is­rael re­placed...

In 2005, Nes Is­rael raised all its in­come from do­na­tions from the JNF in the UK, whilst in 2006, all but NIS 5,000 was raised from the JNF...

The ma­jor­ity of Nes Is­rael’s ex­pen­di­ture in 2004 aned 2005 was spent on “Tours of Is­rael for the strength­en­ing of Jewish val­ues”, which was also the largest ex­pen­di­ture cat­e­gory in 206. It has been al­leged that at least a pro­por­tion of th­ese costs were ac­tu­ally fundrais­ing costs for JNF events...

We have been pro­vided with an anal­y­sis of the do­na­tions by the JNF group to Nes Is­rael in the years 2004 to 2007. Be­tween 2004 and 2006, be­tween £75,000 and £175,000 was do­nated an­nu­ally. In 2007 it ap­pears that over £470,000 has been do­nated. The do­na­tions in the years 2004 to 2006 have been cat­e­gorised as “Re­mit­tances to Is­rael” which falls within char­i­ta­ble ac­tiv­i­ties...

We do not know whether the JNF’s au­di­tors knew of the re­la­tion­ship be­tween the JNF and Nes Is­rael... We also know from Nes Is­rael’s fi­nan­cial state­ments that the JNF fi­nanced all or sub­stan­tially all of Nes Is­rael’s ac­tiv­i­ties...

IN­vES­TI­ga­TION Of NES IS­RaEL

We have been pro­vided with a trans­la­tion of a let­ter from Is­rael’s Min­istry of Jus­tice to Nes Is­rael dated Jan­uary 1, 2007 which refers to an anony­mous com­plaint made through an ad­vo­cate against the Amuta con­tain­ing the fol­low­ing al­le­ga­tions: a) The ac­tiv­i­ties of Nes Is­rael dur­ing 2005 were con­cen­trated in the con­duct of tours and ex­tremely high ex­penses for ad­ver­tis­ing which is con­trary to the pur­pose of the Amuta. b) The in­come of the Amuta is de­rived from KKL in the UK [ie JNF], whose pur­pose is the eas­ing of poverty in Is­rael, whereas most of the par­tic­i­pants in the tours were groups from the KKL in Eng­land [ie JNF]. c) The tours in ques­tion were booked through a travel agency owned or un­der the con­trol or con­nected in some way with one of the mem­bers of the Amuta. d) The ser­vices of the ac­coun­tant were en­gaged through some­one who is ap­par­ently a “first de­gree fam­ily rel­a­tive” of one of the mem­bers of the “Board of Con­trol Com­mit­tee”.

This let­ter was re­sponded to by ad­vo­cates on be­half of Nes Is­rael. The com­plaint was... strongly re­jected.

NES IS­RaEL’S au­dI­TOR

One of the spe­cific com­plaints re­lates to a “first de­gree fam­ily rel­a­tive”... The ac­coun­tant for the Amuta, Ms Re­vi­tal Ki­bel, is mar­ried to the son of one of the mem­bers of the Amuta... From our re­view of the Nes Is­rael fi­nan­cial state­ments for 2004 and 2006, we note that the au­di­tor was Re­vi­tal Ki­bel...

CaR RaLLy

In an email dated Jan­uary 11, 2008 from Mr [David] Pol­lock [the fi­nan­cial con­troller] to Re­vi­tal Ki­bel (cc Mr Win­ters) Mr Pol­lock sug­gested that “In­stead of stat­ing Char­lie Sher­ling’s do­na­tion was the only in­come of Nes Is­rael, could we state that each of the 26 cars that took part, paid $5,000 for Nes Is­rael.” Re­vi­tal Ki­bel re­sponds to all ad­dressees that this is “... a good idea”.

She fur­ther stated: “Please pro­vide a let­ter from JNF UK to Nes Is­rael dated De­cem­ber 31 2006 stat­ing that Nes Is­rael is to re­ceive $130,000 (5,000 x 26 cars) raised from the car rally that took place in 2006.”

It ap­pears there­fore that the 2006 JNF Car Rally has been used to raise funds specif­i­cally for Nes Is­rael rather than gen­eral funds for the work of the JNF. It also ap­pears that Nes Is­rael’s au­di­tor has con­doned a sug­ges­tion to mis­rep­re­sent the source of funds and to back­date a let­ter by more than a year to sup­port this mis­rep­re­sen­ta­tion.

We note that Mr Win­ters’ re­ply to Mr Pol­lock re­gard­ing th­ese emails be­tween Re­vi­tal Ki­bel and Mr Pol­lock was “Looks like you've sorted it!”. Mr Win­ters ap­pears to have also con­doned the sug­ges­tion to mis­rep­re­sent the source of funds and the back­dat­ing of the let­ter...

COST Of THE au­dIT

We have re­viewed Nes Is­rael’s 2006 Fi­nan­cial State­ments which dis­close that the cost of the au­dit was NIS 17,586 in 2005 and NIS 15,000 in 2006.

It there­fore ap­pears that... Nes Is­rael may have been charged at a higher than mar­ket rate for its au­dit.

ICHLu REIm (SOup kITCHEN)

Mr Leaver [a donor] wrote to Hi­lary Cane, the man­ager of KKL CA, on 5 De­cem­ber 2007 ex­plain­ing that he had sent a KKL CA voucher to the JNF for £400,000 for the pur­chase of a build­ing in Jerusalem.

We have been pro­vided with a copy of a re­ceipt from Nes Is­rael to the JNF ac­knowl­edg­ing a de­posit of $820,000 on De­cem­ber 12, 2007.

The trans­fer on De­cem­ber 12, 2007 was fol­lowed by a sim­i­lar de­posit on April 5, 2008 in the sum of $270,000. We do not know if the amount was trans­ferred to Nes Is­rael via the JNF.

We un­der­stand that KKL CA re­ceived a re­quest to trans­fer a fur­ther sum from Mr Leaver of £150,000 to Nes Is­rael, but this time the trans­fer was to be made di­rectly and not through the JNF. This re­quest was high­light to Mr Hayek who emailed Ms Cane on May 2, 2008 ex­press­ing con­cern about the pro­posed trans­fer and ask­ing for in­for­ma­tion con­cern­ing Nes Is­rael. This email was copied to Mr Win­ters, Mr Pol­lock and Mr Ki­bel.

We have been pro­vided with a copy of a com­pleted in­for­ma­tion sheet dated May15,2008,signed­byGailSealan­done other Trus­tee of Nes Is­rael. The sheet in­cluded, as an ex­am­ple of a re­cent project, the “pro­mo­tion of Zion­ism and tourism to Is­rael”. We un­der­stand that this re­sponse caused con­cern as tourism is not a char­i­ta­ble ob­jec­tive in the UK and that “gift aid” had been claimed on the amounts to be re­mit­ted.

CON­CLu­SIONS:

There is ev­i­dence that Nes Is­rael and the JNF have been un­der com­mon con­trol and yet the re­sults of Nes Is­rael have not been con­sol­i­dated with those of JNF group.

There is ev­i­dence that Mr Win­ters at­tempt­ed­to­di­ver­ta­do­na­tion­totheJNF di­rectly to Nes Is­rael’s bank ac­count.

Al­le­ga­tions have been made that Nes Is­rael acted out­side of its char­i­ta­ble ob­jec­tives.

There is ev­i­dence that Nes Is­rael has been au­dited by a fam­ily mem­ber of one of its Board mem­bers and ev­i­dence that the cost of au­dit ser­vices is ex­ces­sive.

There is ev­i­dence that the JNF Car Rally has been used to raise funds for Nes Is­rael. There is also ev­i­dence that the au­di­tor and Fi­nan­cial Con­troller mis­rep­re­sented the source of Nes Is­rael’s in­come through the cre­ation of back­dated doc­u­men­ta­tion. This prac­tice was con­doned by Mr Win­ters.

There is ev­i­dence that do­na­tions from the JNF to Nes Is­rael have been used to pur­chase a prop­erty cost­ing ap­prox­i­mately US$1m which ap­pears to be 100 per cent owned by Nes Is­rael.

REC­Om­mEN­da­TIONS:

Nes Is­rael be con­sid­ered for con­sol­i­da­tion into JNF group; and le­gal ad­vice be ob­tained as to whether the JNF has a claim on the own­er­ship or con­trol of the build­ing.

at the start of the 2006 car rally: rally vol­un­teer an­drew sing­ton, for­mer F1 driver Da­mon hill and ( cen­tre) Gail seal, then JNF pres­i­dent; ( right) si­mon Win­ters

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