Sharon’s Private Envoy at Center of Talks, Scandals

By Ori Nir

Published January 17, 2003, issue of January 17, 2003.
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WASHINGTON — When Ariel Sharon, newly elected prime minister in 2001, found he needed a confidant to deliver private messages to the White House, he turned to an old friend, the Israeli-born American businessman Arie Genger.

With no experience in diplomacy or statesmanship but with a fortune based in agricultural chemicals, Genger became Sharon’s de facto ambassador in Washington, carrying messages back and forth and participating in Sharon’s meetings with Vice President Dick Cheney and National Security Council Adviser Condoleezza Rice.

Now, Israeli police investigators suspect that in addition to stealthy diplomatic missions for Sharon, Genger was also the key behind-the-scenes player in the prime minister’s scandal-ridden campaign fundraising.

Although the latest polls indicate that Sharon’s Likud Party will likely hold its lead over Labor in the January 28 election, the financial scandals dogging the Israeli leader could threaten his political career. Last week Sharon called a news conference to defend himself against the allegations, but the chairman of the Central Elections Committee forced radio and television stations to cut the prime minister off in mid-sentence when he judged that Sharon had veered too far into electioneering. Sharon has since refused to answer questions about the scandal.

The elusive Genger is even more tight-lipped, but persistent Israeli press reports suggest he is at the center of the various probes. Genger was recently interrogated by Israeli police investigators on suspicion that he was the main contributor to a company, Annex Research, that channeled campaign contributions of questionable legality to Sharon and his son Omri. It was a government decision in 2001 requiring Sharon to return the company’s contributions that led Sharon’s sons to take a $1.5 million loan from a South African businessman, a loan that is at the center of the latest Sharon scandal. Israeli press reports now speculate that the South African, Cyril Kern, was in fact short on cash and may have been merely a conduit for money coming, once again, from Genger, though no proof has been offered.

Genger, following his longstanding practice, refused to comment this week. A secretary at his New York office said he “does not talk to the press, at all, on anything.”

The company at the heart of the scandal, Annex Research, was set up in 1999 by Dov Weisglass, then Sharon’s lawyer and now his chief of staff. It was run by Omri Sharon. Although it was registered in Israel, its shareholders were four American Jews.

One of them, New York lawyer Arnold Forster, former general counsel of the Anti-Defamation League, confirmed to the Forward that he was recruited by Genger to become a shareholder of the company, but said he does not remember any other details. Forster, who represented Sharon in his libel suit against Time magazine during the mid-1980’s, told the Israeli daily Yediot Aharonot that he assumes Annex Research was funded by Genger and donors that he gathered.

Annex was the focus of a 2001 investigation by Israel’s state comptroller, Eliezer Goldberg. Goldberg found that Annex Research received a sum of about $1 million to pay advisors and pollsters who helped Sharon win his September 1999 primary bid for Likud party leadership.

Yediot Aharonot last week reported that Genger was interrogated on suspicion that he funneled funds to the company in an attempt to help Sharon. Genger reportedly declined to cooperate with authorities under Israel’s version of the Fifth Amendment.

Genger, 56, grew up in Tel Aviv in a middle-class family. After a nondescript military service in the Israeli air force during the late 1960s, he applied to Tel Aviv University and was rejected. He left for the United States, and graduated from City University of New York with an masters degree in economics.

His successful career as a businessman was launched after he met Meshulam Riklis, a multi-millionaire who also grew up in Israel and made a fortune in the United States in cosmetics and retail. Genger became a Riklis protégé, and through him met Sharon during the early 1970s.

Later, while serving as defense minister in 1982, Sharon tried to appoint Genger to a senior ministry position. Sharon thought the Israeli-American had excellent skills and credentials to become Israel’s security industries’ coordinator of exports. Genger left New York and prepared to return to Israel with his family, but the Defense Ministry employees’ association torpedoed the appointment. The media also protested, and according to a profile published earlier this year in the local Israeli newspaper Tel Aviv, aired criticism that Genger was a yored, a term often used disparagingly to refer to an Israeli who lives abroad.

Instead Genger received an appointment as an advisor in the newly created and largely ineffectual Economic Ministry. After a year, again disillusioned, he returned to New York.

Back in the United States, he established Trans-Resources, which grew to become a world leader in specialty plant nutrients as well as industrial and organic chemicals for businesses worldwide. Today, Trans-Resources is one of the world’s largest producers of agricultural-grade potassium nitrate, a specialized growth nutrient for produce and tobacco, and propanil, a rice herbicide. It also exclusively supplies nitrogen tetroxide, a fuel additive, to the U.S. Air Force.

Genger kept up contact with Israel through business ventures. In 1986 he bought the massive Haifa Chemicals, which was in financial trouble at the time. Critics charged that Genger was offered a very low price for the company and speculated that Sharon, then minister of trade and industry, had helped him secure the deal. Genger pointed out, correctly, that he saved the floundering company. Today Haifa Chemicals, a subsidiary of Trans-Resources, is the world’s largest producer of potassium nitrate, an environment friendly fertilizer.

In 1989 Genger bought a small Israeli laser-optics company and turned it into Lumenis, a prominent provider of laser and light-based systems used in the aesthetic, medical and ophthalmic markets. Lumenis is headquartered in Yokneam, in northern Israel, and has 1,400 employees.

Through it all, Genger continued to nurture a close friendship with Sharon for more than 30 years. He provided financial and moral backing through Sharon’s punishing libel suit against Time magazine during the mid-1980s and stayed close when Sharon’s wife Lilli died in March 2000.

Sharon likes to use confidants for sensitive missions, a practice that has landed him in repeated controversies. After he became prime minister two years ago, he dispatched his son Omri as special envoy to Yasser Arafat. The government’s legal advisor, Elyakim Rubinstein, strongly prohibited such missions, citing “phenomena which may lead to nepotism.”

But Rubinstein stopped short of prohibiting the use of Genger as a go-between with the Bush administration. According to Israeli press reports, Genger was present at one of Sharon’s meetings in the White House with Rice. He was reportedly invited to attend Sharon’s meeting with Cheney in Israel last March and carried various other messages between Sharon and the Bush administration. As recently as last month, according to Israeli press reports, Secretary of State Colin Powell used Genger to urge Sharon to allow Arafat’s participation in festivities in Bethlehem. The reverse channel didn’t work, however; Arafat remained barred from Bethlehem, and spent Christmas Eve in his Ramallah headquarters.

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