The Republic of the Marshall Islands, an exotic island state whose most familiar neighbor, among Israeli readers, is Micronesia, is mainly known internationally for its excellent coconuts and for the nuclear experiments the United States had conducted in its territory after the Second World War. Despite the agricultural and touristic potential of the tropical archipelagos, the miniature local economy culminates in finance: the Republic of the Marshall Islands is a tax haven which offers individuals and organizations from across the globe the benefit of its inhabitants' discretion and generosity, which enable these companies to register in the island without having to pay taxes or reveal the identity of their owners and functionaries.
The permissive local corporate laws are manifested in a building complex located on the tiny republic's central island, a miniature heaven called Majuro, which accumulates data on all the international corporations whose owners have decided to take advantage of the Marshall Islands Government's registration services. Among these data, file number 15898 belongs to a company named Holyland Holdings Ltd.
None of the 68 thousand residents of the Marshall Islands, we may assume, has any interest in the identity of the individuals whose business is reviewed in the holdings company's folders. After all, the majority of its commercial activity, if not all of it, takes place far across the ocean, thousands of kilometers away to the north-west, in a land called Israel, in the region that stretches between the Kiryat Aryeh Industrial Park in Petah Tikva and the mountainous west bank settlement of Beit El.
From The Seventh Eye's investigation, it appears that the anonymous corporation registered in the Marshall Islands crowns a pyramid of Israeli companies which pull the strings behind two thriving media outlets identified with the settlers' community and national-religious sector in Israel: the popular free weekly B'Sheva (At Seven) and the Arutz Sheva (Channel Seven) group of websites, legal descendants of the late pirate radio station. For many years, a webwork of commercial companies and non-profit organizations has been associated with the operation of these ideological media outlets, whose footprints have been meticulously covered up in a manner one would expect to find in the business world rather than in journalism.
First Station: the Ulpana neighborhood
We began tracing Arutz Sheva's and B'Sheva's mysterious ownership structure while working on "The Israeli Media Ownership Map" – a project whose goal was to map out the ownerships of Israel's media outlets. Generally speaking, Israeli media companies do not tend to conceal the identity of their owners (in fact, according to the Israeli Press Council's ethical code, owners are obligated to make their commercial interests public). Media companies indicate the identity of their owners on official publications, and when ownership structure changes, many issue a statement about it. Companies subject to state control allow the regulator to publish their holding structure; and media outlets controlled by companies traded in the capital market make such information available in their regular reports to the stock exchange.
In doing so, media companies enable customers who wish it, to place the information they consume in its proper context, taking into account the identity of their control and stake holders and their commercial and political interests. The first lead on the identity of Arutz Sheva's and B'Sheva's owners is linked to such a potential conflict of interests: some of these companies' founders and directors have recently been caught up as both the reviewer and reviewee in an affair that took up numerous headlines in the general and sectorial media: the Ulpana neighborhood affair.
The Ulpana neighborhood in the settlement of Beit El was built in the course of the previous decade on the hill called Jabel Artis, part of which is privately owned by several individuals from the neighboring Palestinian village Dura Al-Kara. Following a petition filed on their behalf by the left-wing organization Yesh Din, the High Court judges determined that five of the neighborhood's buildings were built on land that had not been purchased from its Palestinian owners, and should therefore be demolished.
Naturally, the petition focused on the company that had built the neighborhood, selling and renting its illegal apartments to tenants who were misled to think they were lawfully built – the Kiryat HaYeshiva Beit El & Beit El B Development Corporation Ltd. Documents submitted by this company to the registrar of companies, as required by law, indicate that its control holder is none other than Holyland Holdings, the same company from the Marshall Islands in control of Arutz Sheva and B'Sheva, which naturally covered the affair at length.
But who sits at the head of the foreign company? This question was not brought up by the court, nor by the petitioners, but rather by Knesset Member Raleb Majadele. A report published last May in the Jerusalem Post referred to the Labor Party's member who argued that one of the owners of the company that had built the housing units in the Ulpana Neighborhood was none other than Knesset Member Ya'akov Katz, chairman of the National Union Party, a resident of the Beit El settlement, who, in the midst of the affair, attempted (and failed) to promote a law which would have legalized the unlawful construction in Jabel Artis.
In a conversation with The Seventh Eye, Knesset Member Majadele repeated the argument, claiming to rely on documents given to him. Repeated appeals to Majadele and his assistants did not yield those documents upon which he had based his claims, which we were therefore unable to verify. However, The Seventh Eye's investigation revealed that in the past Katz had indeed held (managerial) shares in the company behind the Ulpana neighborhood, in which he had also acted as CEO. On the 31st of December, 2006, Katz sold his holdings in the company to Holyland Holdings for one Israeli cent, but continued to fill a managerial position in the Israeli company for two more years.
Is Katz connected to the company today, as a member of the Israeli Parliament? And if not, does he know who stands at the head of an organization in which he had once held a senior position and to whom he had submitted his holdings for practically no financial compensation? In order to try and answer this question, we turned to Katz.
Second Station: Katz doesn't remember
Ya'akov Katz is not a marginal figure in the settlers' community. He was among the founders of the Gush Emounim movement and one of its most prominent and powerful representatives in the Israeli Parliament. Katz also held a key position in Arutz Sheva at the time it functioned as a pirate radio station. In 2003, as the station's financial manager, Katz was convicted along with its other executives for unlawfully operating the station, as well as for perjury and forswearing.
Since his conviction and after the radio station had been shut down, Katz filled central positions in the companies that control Arutz Sheva's internet activity and the B'Sheva newspaper; in Israeli companies that are currently controlled by the Marshallese corporation: the Em Yehudit Exhibition Ltd. and S.P.H. Advertising Ltd., which together hold all shares of the free weekly's publishing company; and in Israel National News.com Ltd., a company responsible for the operation and management of the sectorial news and religion websites.
It appears that Katz' position in these companies' board of directors is directly connected to the international company's involvement in them: in all three companies Katz had held managerial positions prior to their purchase by Holyland Holdings; and in all three he had been appointed director in the course of the last three days of 2006 – just as they were handed over to the foreign corporation. Katz continued to hold these offices under Holyland Holdings' control for a little over two years. As is required by law, he retired from them in early 2009, towards his swearing in as a fully-fledged member of Israel's 18th Knesset.
For two years, Knesset Member Katz had held managerial positions in companies controlled by the anonymous corporation until this day, signing numerous documents on their behalf. Yet, in a conversation with The Seventh Eye, Katz claims he has no idea who is behind the organization. "I don't know", he asserts when asked who is in control of the two sectorial media outlets, and wonders: "you thought I would know? That was many years ago, you don't expect me to remember what happened so many years ago".
Katz declares he is not in any way connected to Holyland Holdings. "I don't remember these things and am not familiar with them", he says when the foreign corporation is brought up. He argues that he is also oblivious of his current private holdings (Katz has a franchise for the operation of gas stations). From the minute one is appointed to the Knesset, Katz proclaims, "one is completely immersed in parliamentary work". Indifferent to his colleague's assertion he concludes, "If Knesset Member Majadele says so, surely he knows so. Do you expect me to enter his mind?"
At the end of our conversation Katz wishes to emphasize: "I have not had anything to do with Arutz Sheva or with the B'Sheva newspaper for years". Similarly, the media outlets' attorneys' response was that "Knesset Member Katz is not in any way involved in my client's business".
On B'Sheva's editorial board, however, they seem to think otherwise. Last August, in a special project celebrating a decade to the Paper, Katz was selected as one of the hundred "most influential figures in the national-religious community in Israel". In the rationale for their choice the editors made sure to include the following laconic comment: "Proper disclosure: related to the B'Sheva media network".
Third Station: the Bulldozer from Kdumim
Ya'akov Katz, who was often described as the living spirit behind Arutz Sheva, claims that he does not know who today controls the media outlet via an international company. But Dudu Saada, the chairman of B'Sheva's board of directors, who is regarded by his journalists as the Paper's acting manager, does know. Saada, an educator in training, referred to as the Bulldozer from Kdumim in the Paper's list of one hundred most influential figures, headed the National Union's headquarters in the elections for the 18th Knesset and was ranked in the Party's 13th place for the 2003 elections.
When asked about its structure, several of B'Sheva's journalists, among them the Paper's editor in chief, Emanuel Shilo, advised that we turn to Saada. Indeed, in a conversation with The Seventh Eye, Saada confirms that he knows who's the boss, and is quick to comment: "I don't know what you'll gain from getting into this". True, the Chairman admits, his boss is in control of the media network via the foreign Holyland Holdings, which is also the proprietor of the company that had built the Ulpana neighborhood. "But if you'll ask me who the owners are – I will have to say that they do not want to be known", he says. "Except the bank, which bears complete responsibility for the existence of B'Sheva, no one knows they are the owners". When asked whether the owners are Israeli, Saada replies: "No".
According to information recently provided by the Marshall Islands registrar of companies, Holyland Holdings was removed from its registries on the 22nd of October, 2011, approximately six years after its registration. Can it be that the group of companies in its ownership has, for a year now, been operating without a boss? This catches the Chairman off-guard. "That's not true", he says. A written question on the matter, sent to Saada after our talk, remained unanswered. Finally, Saada's lawyer issued this response in his name: "As for the shareholder, I am to inform you that your application has brought to our attention the fact that it had been erased from the registries due to a technical error ‒ an error that has now been corrected ‒ and that it is now registered as active, for which my client is thankful".
Upon the conclusion of our conversation, Saada provided us with the name of a man he claimed is linked to the owners, and with whom we may speak in order to request information about the anonymous control holder and about the corporation's official status. Hanoch Hacohen Pioterkowski, a resident of Beit El, a Rabbi and member of the local council's plenum. "I will tell him to call you", promised Saada. As the expected call failed to arrive, we called him, but in vain. Hacohen Pioterkowski refuses to speak with media representatives, and refuses even to explain why we were referred to him. "Who am I? I am Hanoch. I represent myself only".
Fourth Station: Rabbi and Rebbetzin Melamed
As expected from a religious media outlet, and after the custom among newspapers appealing to the Orthodox public, Arutz Sheva and B'Sheva have a spiritual leader: Rabbi Zalman Baruch Melamed, one of the most influential and most conservative Rabbis in the National-Religious community, a founder of Beit El, who rules his congregation with an iron fist. Rabbi Melamed, born 1937, is the head of the Beit El Yeshiva (the very same Yeshiva from the "Kiryat HaYeshiva Development Corporation"), and is responsible for a long list of organizations and religious educational institutions affiliated with the Yeshiva – a financial system which handles tens of millions of NIS from state subsidizing, donations and tuition fees. Melamed is also involved with the National Union Party, headed by Knesset Member Katz, who himself was once among the managers of the nonprofit organizations operating the institutions under the Rabbi's patronage.
Rabbi Melamed is also a board member for the Israeli companies in control of Arutz Sheva and B'Sheva, as well as for some of the companies which were involved in the management of the pirate Arutz Sheva, which these days are subjugated to the foreign Holyland Holdings corporation. Like Katz, Melamed was formerly a director and managerial shareholder at the Kiryat HaYeshiva Development Corporation, which he too sold for one cent to the Marshallese company on the last day of 2006 (the company's third shareholder, Rabbi Melamed's Sukkat Ovadia Organization, sold its holdings on the same date for the same negligible sum).
Like his colleague in the Knesset, Rabbi Melamed was also involved in Arutz Sheva in its piratic form, and was likewise convicted with felonies relating to its illegal operation; having been identified by the court as the one who had conceived the station and initiated its establishment, and took an active part in the station' conduct, heading the companies that had operated it. Like Knesset Member Katz and Chairman Saada, Rabbi Melamed also had the honor of being mentioned in B'Sheva's list of influential individuals, along with a proper disclosure regarding his involvement in the media network.
Rabbi Melamed refused to answer our questions, claiming that it is well known that he does not speak with journalists. "Don't waste your time, I won't talk", he replied when asked what he had to hide. When we offered him to speak off the record, he hung up the call.
It was the Rabbi's wife whom we managed to engage in a short talk. In her conversation with The Seventh Eye, Shulamit Melamd referred to herself as "the content manager and human resources manager" for the Arutz Sheva website. As one of the pirate station's convicts, the small, vigorous woman was at that time the station's programs manager.
"Who's the owner? I can't tell you", says Rebbetzin Melamed. When asked how we may contact an official representative of the owners she likewise advised that we turn to Hanoch Hacohen Pioterkowski. But as was the case when we had first tried to contact him, Hacohen Pioterkowski yet again kept his lips sealed. Perhaps then this is the time to dwell upon the special connection between Hacohen Pioterkowski and the thriving media group. For this purpose, however, we must first review its fundamental economic model.
Fifth Station: The money trail
B'Sheva's captains make a point of presenting their paper as a financial success. Last summer B'Sheva had celebrated a decade in a series of festive events which began with a photographed solidarity get-together of journalists of religious background employed in prominent media outlets, and culminated in an impressive event at the Sultan's Pool in Jerusalem, with the popular Hasidic performer Avraham Fried hosting the popular secular singer Rami Kleinstein.
In a report published in B'Sheva towards the event, the free weekly's managers provided several data attesting, they claim, to the Paper's commercial success, which is all the more remarkable in view of the competing Makor Rishon's financial struggles. According to Chairman Saada, the Paper is distributed weekly to 120 thousand households across the country. This distribution rate is manifested in the Paper's weekend exposure (4.9%) rated fifth among the Israeli printed newspapers, after Israel HaYom, Yedioth Aharonoth, Maariv and Haaretz, and before Globes and Makor Rishon – according a TGI survey published last July.
The success of B'Sheva's distribution division is echoed by its commercial department, which according to Saada can even afford to turn down offers from advertisers whose merchandise is not fitting with the Paper's agenda (for example advertisements for alcoholic beverages, or on behalf of the Governmental Administration for the Rehabilitation of Gush Katif Evacuees). "Advertisements in the Paper have doubled since its establishment, and the religious public values them as much as it values content", the report quotes Dudi Finkler, marketing assistant director general at B'Sheva, which since its establishment has been printed at Haaretz Group's press ("Amos Schocken [Haaretz's publisher] is my best friend – we are best friends", declared in this regard Katz from the Knesset's rostrum on November 21st, 2011).
"I am the only free newspaper making real money", said Saada when interviewed to Globes in 2010, and specified: "We broke even on the fifth year, in the sixth and seventh year we made a good profit. 2009 was our toughest year, and at its end we were still balanced. 2010 began wonderfully. Katz too, in an interview given shortly before his appointment to the Knesset, declared: "B'Sheva is a profitable paper. Ideology too should be promoted wisely".
Arutz Sheva also appears to be a successful enterprise. After the pirate station's transformation into a website and online radio station, its directors managed to expand its operation with websites in English, Russian and French. Two years ago Saada heralded the media group's intention to open a branch in Arabic, for a proclaimed investment of a one million NIS.
How is it ‒ at a time when even the strong and senior players in the Israeli media market struggle ‒ that two minor, sectorial and free outlets manage to beat the market and not only survive but thrive? How big an income can sectorial advertisements, mostly purchased by small businesses and ideological, not-for-profit enterprises, yield?
Like most media outlets in Israel, Arutz Sheva and B'Sheva are held by private companies, which as such are not obligated to expose their financial data. Therefore it is hard to determine whether their directors' financial haughtiness can be backed up by facts. However, it appears that there is another entity related to these companies, which is bound by its very legal definition to submit its financial statements to the state and the public's review – and thus to reveal also a part of Arutz Sheva's and B'Sheva's vague financial conduct.
Sixth Station: the Friends of Arutz Sheva
The registered nonprofit organization Friends of Arutz Sheva was established in 1993 in order to assist in the management of the pirate Arutz Sheva, founded approximately five years earlier. At the time, its goals were "to assist Arutz Sheva in the production of programs, their improvement and growth", and its address referred to the home of Hanoch Hacohen Pioterkowski, representative of Holyland Holdings' owners, who also served on the organization's auditing committee. Until a few years ago, Hacohen Pioterkowski also held office as the general manager of Rabbi Melamed's Beit El Yeshiva's institutions.
The two members on Friends of Arutz Sheva's management committee are Rabbi Melamed and Yoel Zur – another central figure in Beit El and in the pyramid of companies controlled by the Holyland Holdings Corporation. Zur, a bereaved father and husband, is the manager of the company responsible for the illegal building in the Ulpana neighborhood, and a member of the board of directors on each of the Israeli companies controlling the media group.
From statements submitted by Friends of Arutz Sheva to the registrar of nonprofit organizations, it appears that its activity essentially deals with raising funds and allocating them to its affiliated media outlets in the framework of "purchasing radio programs and other written and photographed editorial material, to be published on the internet and radio broadcasted on the website" (it should be noted that the contents of B'Sheva are also available on the Arutz Sheva website).
The support of Friends of Arutz Sheva is in no way negligible. In 2008, for instance, the organization reported having contributed a total of 1.8 million NIS; in 2009 support for "purchasing programs" rose to 2 million NIS, and a year later, in 2010, it amounted to 922 thousand NIS. In 2007, the organization recruited a total of 3.9 NIS to promote its goals.
Friends of Arutz Sheva is not the only nonprofit organization which contributes its resources and energy to the operation of the sectorial media group. 5% of the shares of one of the companies affiliated with the B'Sheva weekly are held by an American philanthropic organization called The Goldstein Family Charitable Foundation, which also supports other institutions beyond the green line. As for B'Sheva, according to the outlets' lawyer, it is "not funded from donations and is a commercial business for all its implications".
Seventh Station: The Bahamas
The use of tax havens is not new to the people of Arutz Sheva. It has accompanied them since their days as operators of a pirate radio station in the 1980s and 1990s. At that time Arutz Sheva was operating from several hubs in Israel (including the Yeshiva grounds in Beit El), as well as from the Eretz HaTzvi ship, which operated at sea, inside and outside Israel's territorial waters (Bnei Tzvi is the name of the secondary yeshiva operating within Beit El's Yeshiva, founded in 1997 by Hacohen Pioterkowski and named after Rabbi Tzvi Yehuda Hacohen Kook, the rabbinical figure behind the settlements enterprise).
The pirate Arutz Sheva trials conducted in the beginning of the former decade revealed how the station's managers made use of the company registered in a tax haven. Evidence presented in court by the State demonstrated that the station had operated partly through a company called Blue Waves Shipping Ltd., registered in the Bahamas. During his investigation, Katz claimed that this was an independent company, to which he and his colleagues were not related, and that he is not familiar with its owners. The court determined that this was a falsity, inter alia based on Katz's later testimony which attested to the fact that he and his colleagues were given a free hand to use the foreign company's financials as they see fit, going so far as to write off Arutz Sheva's debt of over six million Dollars to the company.
In another trial, which ended in 2007, the Israeli legal system was once again confronted with Arutz Sheva's company in the Bahamas and with the outlet's tendency to conceal its connection to the foreign entity. A suit for severance pay filed by one of the ship's employees, a Tanzanian citizen called Muhamad Ismail Salach, revealed that he had been employed by the ship's managers via their company registered in the Bahamas. Despite the fact that only a few years earlier the court had determined that they had not spoken the truth when arguing that they are in no way connected to the foreign company, Yaakov Katz and Yoel Zur, owner of the ship, again denied their engagement with Blue Waves. The court then once again determined that their claim was false: the company may be registered in the Bahamas, but its anonymous operators live in Bet El, Israel, and they are none other than those convicted of operating the pirate station.
The suit filed by the Tanzanian ship employee points to a breach in the manner in which the pirate Arutz Sheva had employed the foreign company, exploiting the vagueness that went along with its registration in a tax haven: once such a company found itself involved in a legal dispute ‒ be it a minor suit of a former employee ‒ the foreign corporation was obligated to reveal its hidden guts before the court. However today, Arutz Sheva's men employ the confidential foreign corporation in a more complex manner.
Holyland Holdings – as the name implies – is a holdings company. Employees of the sectorial media group are not required to come to contact with the foreign company, and their engagement with the anonymous owners is limited to the group's various subsidiaries. The chance a legal or business dispute will break out between Holyland Holdings and another company is meager, since it appears that its business activity in Israel is conducted solely via its local companies.
And yet the question arises: in the case of an illegal radio station, the need for a cover up is clearly to prevent a confrontation with the law; in the case of the Marshallese corporation, the legal clash occurred following the exposure of the illegal construction in the Ulpana neighborhood. However, as far as we know, the media outlets controlled by the foreign corporation are not involved in anything illegal. Therefore why is it that their owners decided to control them via a foreign company? What have they got to hide? These questions remain unanswered by Arutz Sheva and B'Sheva.
Eighth and Last Station: Back to Beit El
As aforementioned, the financial statements of the Israeli companies controlled by Holyland Holdings are confidential, making it is difficult to determine whether and to what extent they are profitable. However this is not the case with the entities that operate Rabbi Melamed's educational network – nonprofit organizations responsible, among other things, for the operation of the high and secondary Yeshivas, the paramilitary preparatory program and the Ulpana in Beit El, as well as of two educational institutions outside Beti El, in Arad and in the settlement of Kokhav HaShahar.
The annual statements of the nonprofit organization which operates the Yeshiva in Beit El headed by Rabbi Melamed reveal that it is bonded in a regular and productive financial relationship with the corporation registered in the Marshall Islands, which, since 2008, has been transferring at least 1.5 million NIS annually to the nonprofit via the Kiryat HaYeshiva Development Corporation, the company which had built the Ulpana neighborhood and which is also the Yeshiva's food supplier.
The Kiryat HaYeshiva Development Corporation, the real-estate branch of the foreign corporation, is responsible for the maintenance and management of dozens of real-estate units in Beit El, assets which, from time to time, are sold or let, among others, to Rabbi Melamed's institutions. The anonymous corporation can then transfer the profits from one pocket to another, and in this case – from the contractual company to the media companies, or to any other business that seeks protection from the harsh market.
A shrewd entrepreneur with a vision may thus find a way to fund a small empire of free media, nurtured, besides its own commercial income, upon state funding as well as tax free donation funds. Can this be the scenario behind the operation of Arutz Sheva and B'Sheva? This was firmly denied by the media outlet's lawyer: "My clients are not funded by funds of the Kiryat HaYeshiva Development Corporation".
"Listen, we know very well who we are working for", concludes a senior journalist for the Arutz Sheva and B'Sheva group. "How they have chosen to register the company that controls the company that owns us? We don't care too much about it, and we don't know. It didn't concern us and doesn't concern us. If it turns out that there is a legal issue – of course we will care, but there is no reason to assume that there is", and he recapitulates: "so it doesn’t concern us".
This Article was first published on The Seventh Eye. English translation by Shira Marom. Read it in Hebrew here