In December 2023, as the raging Israel-Hamas war entered its third month, Israeli Economy Minister Nir Barkat and his lawyer arrived for a meeting with three members of the State Comptroller’s Permits Committee. Barkat, one of the wealthiest people in Israel, was asking for special permission to hold onto his vast business empire, which is currently in a blind trust controlled by his brother Eli, rather than have to sell it or transfer it to an independent public trust company, as dictated by regulations designed to ensure that ministers are not embroiled in conflicts of interest. The committee heard Barkat’s explanations, discussed the matter and, in the end, approved the request.

Shomrim can now reveal, however, that one of three members of the committee, Shmuel Slavin, is in business with Barkat and his brother, Eli. The brothers, it turns out, own a significant share in Sella Capital, a real estate investment trust founded by Slavin, through one of the companies they own. Sella is the current chair of Sella Capital and owns shares in the trust. This, however, is not the end of the connection between Barkat and Slavin: last year, Barkat and Finance Minister Bezalel Smotrich appointed Slavin chair of the Committee to Reduce Centralization and Increase Competition.

Slavin confirmed to Shomrim that he did not report these facts to the committee, explaining that they are not relevant since Barkat has severed all ties with his business interests. Slavin did not respond to the fact that Eli Barkat – the purportedly blind trustee looking after the minister’s businesses – is also his partner in Sella Capital.

Shomrim brought these facts to the attention of the State Comptroller, who announced that the Permits Committee will be reconvened to discuss Barkat’s request again.

The State Comptroller’s Office: "In light of the failure to report the matter to the Permits Committee and the State Comptroller, the Comptroller has directed the panel's head, retired Judge Mounitz, to convene a separate panel to reconsider Minister Barkat's request."

An Empire of Dozens of Companies

Barkat, a former businessman and, for the past two decades, a public figure in Israeli life, is believed to be the wealthiest of the currently serving members of Knesset and the government. Last year, a Shomrim investigation revealed that, 15 years after launching his political career, Barkat remains a stakeholder in many companies registered in Israel, the United States, Luxembourg, the Virgin Islands tax haven, and other places.

Despite the cabinet passing a resolution in 2003, which introduced clear and binding regulations regarding the private businesses of government ministers, Barkat has neither “sold nor leased,” in the words of the directive, his businesses. Instead, they have been transferred to a “blind trust” that has been controlled by his brother Eli since Barkat was elected to the Knesset. This arrangement itself has raised questions, in part over the question of how “blind” a brother’s trust can be.

This is not merely a procedural matter; it is a grave concern directly related to potential conflicts of interest for the minister. One of the companies that Barkat owns engages in business dealings with retail chains – something that Barkat's ministry is directly involved with. Additionally, one of his companies owns Meitav, one of Israel’s largest investment houses, while others have received loans from various banks.

At the time, Barkat’s officer responded by saying that “Minister Nir Barkat does what is required of him by law and holds professional consultations with people responsible for these issues in the Justice Ministry and the State Comptroller’s Office.” Despite the minister’s reassuring response, however, when his conflict-of-interest declaration was finally published late last year, after a series of delays, it merely added to the questions about the blind trust. The team of officials from the Justice Ministry which examined the declaration that Barkat has been obligated to submit since his appointment, determined that, “[…] in accordance with the Asher Regulation, the minister is obligated to transfer money and shares he or his family owns to an independent public trust company which will manage them through a blind trust. Prima facie, it appears that the agreement whereby your shares are being managed in a trust by Mr. Eli Barkat does not meet the definition stipulated in the regulation regarding blind trusts controlled by an independent public trust company.”

Although the conflict-of-interest declaration was eventually approved, the Justice Ministry sent Barkat back to the Permits Committee in the State Comptroller’s Office to finalize the details of the trust agreement with his brother.

Income Still Goes to the Minister and his Family

The Permits Committee deliberates on requests by ministers and deputy ministers for exceptions to regulations governing conflicts of interest. There are eight members of the committee, three of whom are selected as a team to decide on each case. The current members of the committee were appointed by State Comptroller Matanyahu Engleman, after almost half the previous membership resigned over disagreements with him. The team appointed to hear Barkat’s request was headed by Nechama Mounitz, as well as attorney Esther Luzzatto and Slavin.

Barkat, accompanied by his attorney, turned up for the hearing in person. According to the ruling published after the hearing, he told members of the committee that in 2019, when he was first elected to the Knesset, he transferred shares in his holding company to his brother. In the protocol, the committee noted that “withdrawal of profit from the assets which had accrued was done from time to time in accordance with the needs of the minister and of his nuclear family.”

The ruling does not directly address the problematic nature of a trust controlled by the minister’s brother, although there is some suggestion that at least some of those present recognized that there was an elephant in the room. Barkat, according to the ruling, “agreed to ensure that there was an extra barrier in terms of those assets which are under a trust agreement, by appointing an external and independent representative who will act on his behalf in dealings with the trustee – to ensure that the trustee does not contact the minister on matters relating to the trust, but, rather, to the minister’s representative and the minister will only contact the trustee via his representative. This is in order to eliminate any suspicion of conflict of interest – or even the appearance thereof.” In other words, the Barkat brothers, Nir and Eli, will not talk to each other about the trust (which, as mentioned, includes all the minister’s business interests), but will communicate via a third party.

The committee concluded by stating that it has approved the minister’ request to continue controlling his business empire in a trust controlled by his brother.

According to Slavin, the Permits Committee approved Barkat’s request, which was backed up by a legal opinion from the attorney general, saying that “he is distancing himself from every imaginable matter, he is not dealing with things and he is holding everything in a blind trust.”

Billion-dollar assets

What appears to have escaped the attention of the panel is the existence of a professional and commercial relationship between Barkat and Slavin, a Likud stalwart who served as director general of the Finance Ministry. Slavin is the founder and paid chair of Sella Capital, a real estate investment trust that was floated on the Tel Aviv Stock Exchange in 2009. According to its website, the value of its revenue-producing properties is more than 5 billion shekels ($1.4 billion), including apartment complexes, hotels and industrial parks. As of this month, Slavin owns more than 1 percent of Sella Capital (valued at more than 17 million shekels). Slavin also owns a quarter of the shares of Sella Investment, a private company that operates as Sella Capital’s management company.

According to the company’s most recent filing to the stock exchange, the Meitav investment house owns just over 10 percent of Sella Capital, with its trust fund and its provident fund each holding around 5.25 percent. Meitav also owns around 13 percent of Sella Investment.

Meirav, as already mentioned, is partly owned by Nir Barkat, his brother Eli and their partner Yuval Rechavi, each of whom owns around 9.4 percent of the investment house. Sella Capitals specifically lists all three of them as interested parties in its reports to the stock exchange.

Meirav is partly owned by Nir Barkat, his brother Eli and their partner Yuval Rechavi, each of whom owns around 9.4 percent of the investment house. Sella Capitals specifically lists all three of them as interested parties in its reports to the stock exchange.

The connection between Slavin and Barkat goes beyond the business world, however. Just six months ago, Barkat and the finance minister appointed Slavin as the head of the Committee to Reduce Centralization and Increase Competition. According to one Finance Ministry official, being chair of a committee of this kind cannot harm the lucky appointee’s relationships in the political world and the business world.

The mutual esteem with which Slavin and Barkat hold each other was evident as far back as 2014, when the latter was seeking reelection as mayor of Jerusalem. In an interview with the Likudnik website, Slavin described Barkat as “as a very pleasant surprise. To my great delight, he managed to overcome all the obstacles and he had run the city impressively […] That is why I will not only vote for him, but I am also asking other people to do so as well.”

Shomrim approached several former members of the Permits Committee and asked them, without referencing Slavin specifically, how a committee member is supposed to act if there is a potential conflict of interest with someone filing a request with the committee. Attorney Avigdor Ravid, who served on the committee until 2019, explained that if a member has a potential problem with an issue being brought before the committee, they must report it. Nurit Yisraeli, another former member of the committee, added that it should go without saying that any connection between someone making a request before the committee and a committee member should disqualify that member from discussing the issue.

Slavin’s response, when asked this week about the Barkat brothers’ investment in Sella Capital, was to burst out laughing.“They are invested through their investment house and it’s got nothing to do with me,” he said. “It’s a public company and anyone can invest as much as they want … They buy and sell as they see fit.”

When asked why he did not recuse himself from ruling on Barkat’s request, Slavin said that “everything appears in order to me. He has distanced himself from all [business] activity.” Later in the conversation, he added: “I have no connection with Nir Barkat. I do not work with him and we barely say hello to each other.” According to Slavin, the Permits Committee approved Barkat’s request, which was backed up by a legal opinion from the attorney general, saying that “he is distancing himself from every imaginable matter, he is not dealing with things and he is holding everything in a blind trust.” He also stressed that he was appointed chair of the Committee to Reduce Centralization by the finance minister. It should be noted, however, that when the Finance Ministry announced the establishment of the centralization committee, it stipulated that the finance minister and the economy minister would appoint the chair.

The State Comptroller’s Office submitted the following response: "In light of the failure to report the matter to the Permits Committee and the State Comptroller, the Comptroller has directed the panel's head, retired Judge Mounitz, to convene a separate panel to reconsider Minister Barkat's request. This action is intended to ensure the absence of any impropriety or perceived conflicts of interest that might tarnish the reputation of the committee or its membership. Additionally, the Permits Committee shall receive clarified guidance regarding the ethical standards incumbent upon their role and their mandatory obligation to consult with the State Comptroller's legal advisor on any communication with a minister or deputy minister whose case is under consideration. This consultation is required by the conflict-of-interest arrangement to which all members have assented."

Barkat did not respond to a request for comment.