At a cabinet meeting three weeks ago that briefly debated the Milgrom committee report as part of the response to the Supreme Court in the agricultural lands affair, Prime Minister Ariel Sharon embarrassed his ministers. After expressing specific support to raise compensation to farmers and strengthen their land rights, Sharon spoke emotionally about the will left by his late mother, Vera Scheinerman, one of the founders of Kfar Malal, where he was born and raised. Sharon talked about his mother's dedication to work the land, her determination to hold onto the land, and how much he and his children were committed to working the land.
At the same time, Israel’s most prestigious office and high-tech complex, Azorim Park, celebrated IBM's entering its 30,000 sq.m. modern office building, joining the group of corporate heavyweights renting space in the complex. Azorim Park, located on Route 4 at the Geha Junction, adjacent to the Kiryat Arie industrial park in the jurisdiction of Petah Tikva, was built on a site that couldn't be better.
Azorim Park was built on land belonging to Kfar Malal. The Sharon family homestead is one of the beneficiaries of the project, which is expected to earn NIS 25-30 million a year when residency is filled to capacity.
Ministry of Agriculture and Rural Development documents recently obtained by "Globes" shed new light on decisions and measures taken in regard to Azorim Park by the organizations under Sharon's authority while a cabinet minister. The documents raise difficult questions.
Kfar Malal had 50 homesteads, held in individual Jewish National Fund leases that were later transferred to the Israel Land Authority (ILA). Ariel Sharon is a descendant of the family and formally became heir to the homestead upon the death of his mother, Vera, in May 1988. He later transferred his rights to the homestead to his son Omri. But in any case, the interests of the Sharon men are shared and indivisible.
In the early 1970s, when Sharon was a Likud MK, Kfar Malal launched a battle to acquire additional land, over and above its original 1,300 dunam (325-acre) allotment. Moshav members claimed that other moshavim established in the area received land based on a standard 30 dunam (7.5 acres) per homestead from the ILA, which was more than they had received. Kfar Malal therefore demanded more land.
The residents of Kfar Malal marked as their target a 516 dunam (129 acre) adjacent section of land, called "Gan Hayarkon", the land on which Azorim Park is now situated. The land had been leased to Yakhin Hakal, a company then controlled by the Jewish Agency, in short-term leases. The battle between Kfar Malal and Yakhin Hakal was waged on several fronts, with the residents having the backing of senior political figures, especially from the Moshav Movement.
Two Ministry of Agricultural departments – the ILA and the Rural Planning and Development Authority – reached a decision on the matter. At the recommendation of the ILA, the Authority transferred the land to Kfar Malal in November 1975, despite an appeal by Yakhin Hakal. The decision reads as follows:
"Reject the appeal by Yakhin Hakal and approve the leasing of the land for settlement, on the specific condition that the lease is temporary and solely for the raising of crops."
It couldn't be stated more clearly. In 1976, Kfar Malal received 516 dunam of state land on specific condition that the land was zoned exclusively for agriculture and by temporary three-year leases. The Sharon farm was one of the beneficiaries of this land.
A year after Kfar Malal received the land, Ariel Sharon took up his post as Minister of Agriculture in the Begin government, and therefore the responsibility for the ILA and the Rural Planning and Development Authority. In his capacity as Minister of Agriculture, Sharon was the supreme authority over the Rural Planning and Development Authority, and more importantly, the chairman of the Israel Lands Administration Board, which directs ILA activities and approves all land-related matters.
In spring 1981, toward the end of his job as Minister of Agriculture, there was a surprising development with this land.
Changing the status of agricultural land is usually based on the recommendation by the Minister of Agriculture, through the Rural Planning and Development Authority, and after the recommendation by the ILA, which also implements the change and adapts the leases. Under Sharon's aegis, the Ministry of Agriculture, through the Rural Planning and Development Authority land committee, decided on 15 March 1981 to:
"Attach to the Kfar Malal section 400 dunam (100 acres) of the temporary land. In the event that this land is transferred to the planned road, Kfar Malal will transfer said land to the road without compensation. The other 100 dunam (25 acres) of land will remain for the moshav's use under a temporary lease."
In this manner, the land that was transferred to the moshav, "for settlement, on the specific condition that the lease is temporary and solely for the raising of crops" became land that was attached to the permanent section and leasing of Kfar Malal. The Sharon farm was one of the beneficiaries of the change in status of the land.
The 1980s saw the beginning of the development and rise in land prices for the land of the Kiryat Arie industrial park that borders these 400 dunam. The Petah Tikva municipality, which has jurisdiction over Kiryat Arie, expanded its zoning for industry. This was the decade of the crisis in agriculture and the collapse of the marketing boards, and Kfar Malal began to think about other uses for its land.
The problem was that at that time, in was inconceivable for moshavim and kibbutzim to develop land zoned for agriculture. Nor was there any financing for such deals.
Sharon solved this problem, this time as Minister of Housing and Construction. One of the more wondrous phenomena in the history of the ILA should be noted in this context: three times, in the capacity as three different ministers, Sharon had the responsibility over the ILA, rather like the mountain following Mohammed around. The first time as Minister of Agriculture in 1977-81; the second time as Minister of Housing and Construction in 1990-92; and the third time in 1996 as the Minister of National Infrastructures, a ministry created specifically for him, to which the ILA was attached.
About the time he became Minister of Housing and Construction, becoming again chairman of the ILA board, Sharon stunned the agricultural and real estate sectors by passing ILA Resolution 441 in February 1990.
The resolution broke the taboo against rezoning agricultural land, thereby allowing moshavim and kibbutzim to become developers in rezoning their lands for income producing properties deals in partnership with commercial companies. The early 1990s saw the beginning of the greatest real estate boom in Israel's history, with companies looking for new land for commercial, industrial and office projects.
This resolution set up a heavenly match between a kibbutz or moshav that had land, and commercial companies that could bring financing and developers. There was a condition to Resolution 441: The kibbutz or moshav had to have 51% of a corporation founded for the purpose of a project. Payment to the ILA for the land, exempt from tenders, was 91% of the value after rezoning.
In fact, Sharon's Resolution 441 of 1990 was the breakthrough for the era of rezoning agricultural land for the construction of income yielding properties. Kfar Malal, armed with Resolution 441 and agricultural rezoning expert Adv. Shraga Biran, made a deal. In early 1994, Biran closed a deal with the Azorim group, the first stage of which covered 43 dunam (10.75 acres) of the 400 dunams of the land whose status was changed while Sharon was Minister of Agriculture. Later, an additional 19 dunam (4.75 acres) was added to the deal. Azorim decided to invest $100 million to build 70,000 sq.m. of main space in the first stage, in what it considered to be its flagship project. The Petah Tikva municipality also helped out by approving a flexible municipal building plan, taking into consideration the desires of the developers and customers.
The company that was formally founded in 1995 was called "Azorei Malal Industries". It was a partnership of Kfar Malal and Clal Real Estate Investments. Ordinary shares were equally divided between the parties, while Kfar Malal had 51% of voting shares and Clal Real Estate Investments had 49%. According to the contract between the parties, they share profits equally, so it can be said that the Sharon family farm is an indirect 1% partner in Azorim Park.
Another measure by Sharon was Resolution 533, passed by the ILA board in May 1992, on the eve of elections. In terms of payment for land rezoning, Resolution 533 was far preferable to Resolution 441, because it required payment to the ILA of 51% of the value of the land after rezoning and betterment taxes. In general, it can be said that rezoning of land in accordance with Resolution 533 is 20-30% better than rezoning in accordance with Resolution 441.
An examination of the Azorim Park deal, as described in its prospectus, shows that the parties benefited from both of Sharon's resolutions: 441 and 533. Kfar Malal owns 51% of the shares and 50% of the profits; Azorim did not pay 91% of value of the land in accordance with Resolution 441, but 51% of the value and the betterment tax, in accordance with Resolution 533. Azorim paid a total of $11 million for the land, after successfully reducing the ILA $15 million assessment, and $1 million in betterment tax.
In this manner, the land, that was transferred to the moshav, "for settlement, on the specific condition that the lease is temporary and solely for the raising of crops," became one of Israel’s most preferred income yielding properties, and the Sharon family a partner in it.
It can be concluded from this story that there was a degree of hypocrisy in Sharon's emotional words about the commitment to working the land. The reader may conclude that something more serious has occurred, specifically, a conflict of interests. Sharon supporters may respond that everything was merely coincidence.
One thing cannot be doubted. In light of the series of events described hereinabove, Prime Minister Ariel Sharon should not participate in decisions relating to agricultural land.
The Prime Minister's Bureau stated in response to the "Globes" investigation as follows:
- Throughout his public career and in all positions he has filled, including as Minister of Agriculture and Rural Development, the Prime Minister has acted solely in accordance with the regulations and the law.
- Moreover, when the Prime Minister was appointed Minister of Agriculture, he requested on his own initiative an arraignment that would avoid a conflict of interests between his position as minister and his ownership of Sycamore Farm, and such an arrangement was made.
- The homestead in question in Kfar Malal, where the Prime Minister was born, was owned by the Prime Minister's parents and was transferred as an inheritance, in accordance with the will of Dvorah Sharon, the mother of the Prime Minister, to the son of the Prime Minister, Omri Sharon. The Prime Minister did not own and was never involved in any of the matters relating to it.
- The mention of the subject of 20 years ago was entirely carried out in a skewed manner, with malicious intent and in an attempt to influence the decision-making process. The Prime Minister's participation in decision-making in all matters pertaining to the rezoning of agricultural land, was made and will be made in accordance with the regulations and instructions that have been set by and will be set by the proper legal authorities.
No response was received from Omri Sharon by web-posting.
Published by Israel's Business Arena on 25 November 2001