I am shocked, shocked!

March 2, 2010

In News

By Gidi Weitz

Nadav Haetzni’s law firm, which provides legal advice to the state-owned Company for Restitution of Holocaust Victims Assets, has earned millions of shekels in fees over the last three years.

Information obtained by Haaretz shows that the firm, Puris Haetzni Rosenberg & Co., took in NIS 1.2 million in fees in 2008 and over NIS 1 million in 2009; the figure for 2007 was similar. That sum is on top of the hundreds of thousands of shekels the company paid to other law firms during those years.

The government established the restitution company in summer 2006 pursuant to law passed by the Knesset. Its charged with locating the heirs of Holocaust victims who had assets of any kind – land, money, stocks, etc. – in prestate Israel, and to compensate the heirs for these assets according to their real value today.

If the heirs cannot be located, the company is supposed to use the assets to help Holocaust survivors and fund Holocaust education.

Last summer, Brig. Gen. (res.) Zvi Kanor, a former senior air force officer, was appointed the company’s CEO. He sought to reduce Haetzni’s fees, which other senior company officials thought were excessive. In November 2009, the company’s board of directors met to discuss the issue.

At that meeting, Miriam Rubinstein, a board member who formerly served as a deputy attorney general, said that in light of the growing criticism of the huge legal fees the company was paying, as well as the problems it was having getting prompt legal advice when needed, the CEO had proposed hiring an in-house lawyer who would be administratively subject to Kanor and professionally subject to the external legal advisor. That would enable the company to reduce the retainer it was paying to Haetzni.

From now on, Rubinstein said, the company would limit its outlays on litigation and prelitigation to a maximum of NIS 55,000 a month. Haetzni’s retainer would be cut from NIS 28,000 to NIS 20,000 a month, Kanor added.

Haetzni told the board that he agreed to Kanor’s proposal, on the understanding that any work that was neither litigation nor prelitigation and was not covered by the retainer would be billed separately.

Relations between Kanor and Haetzni have reportedly been tense, both because of the high fees Haetzni charged and because Kanor was unhappy with the lawyer’s work from a professional standpoint.

These tensions flared after Kanor himself became the focus of another controversy: As Haaretz reported a few weeks ago, an audit report submitted by the company’s in-house auditor, accountant Gali Gana, accused Kanor of a conflict of interests in the company’s relocation from Ramat Gan to Petah Tikva three months ago.

The contract for planning and designing the new offices was awarded to Toolbox Design, which counts Kanor’s son Yaron as a partner.

During discussions on the move, Kanor had lashed out at Haetzni over the contract he drew up with the owner of the original office in Ramat Gan, even calling him a “lousy lawyer.” After Gana’s report was published, Haetzni responded with a harsh letter to the company’s audit committee.

“In light of the two critical reports that have been placed on your desks, it is hard not to conclude that Mr. Kanor’s unsystematic and unjustified criticism of me is meant to serve an ulterior purpose,” Haetzni wrote. “Its purpose is to justify the fact that the issue of the move, and many other legal issues affecting the company, have not been given to the legal advisor to handle, as they should have been, since Mr. Kanor took office. In light of the facts presented in the above reports, it is also hard not to reach the conclusion that I was kept out of these issues so that it would be possible to do things that could not have been done had I been involved – things that I could not have approved in my role as legal advisor.”

Haetzni also noted that at Kanor’s insistence, he did not draw up the contract with the owner of the new offices.

On Friday, the board of directors discussed Gana’s report and issued a statement saying it viewed Kanor’s behavior in this case very gravely, and would take steps against him should such an incident ever recur.

The directors also decided to tighten their own supervision over the company and the CEO. “Effectively, this is a CEO whose wings have been clipped,” one senior company official said on Sunday.

Lawyers, incidentally, are not the company’s only outside consultants. For instance, it also pays Eyal Arad’s public relations firm thousands of dollars a month for PR services. One senior company official said Arad’s retainer used to be $6,000 a month, but was recently reduced to $1,000.

That is on top of the hundreds of thousands of shekels Arad was paid to run a campaign to locate the victims’ heirs in Israel, and the approximately NIS 1 million the company plans to spend to have him run a similar campaign abroad.

In response to this report, company chairman Menachem Ariav and Haetzni issued a joint statement saying, “The company deals with a wide variety of legal issues and has to deal with many parties who try to prevent it from restituting the assets of Holocaust victims or even from receiving information about them.”

Haetzni’s office, they added, contains several lawyers “who work full-time for the company and essentially serve as its legal department.”

Haetzni also stressed that his fees are within the limits specified by the Government Companies Authority.

Regarding fees paid to other lawyers, the statement noted that Jacob Weinroth’s firm was paid for the essential job of trying to extract some NIS 400 million in victims’ assets from Bank Leumi.