Journalism in the Public Interest

Slim Fast Billionaire Fattens Wallet of Scandal-Plagued Former Israeli Prime Minister

A private foundation funded by the founder of Slim Fast paid tax deductible dollars to a consulting company owned by Ehud Olmert, an Israeli political figure accused of corruption.

Former Israeli Prime Minister Ehud Olmert, shown after delivering a public statement in 2010, resigned from office in 2009 to defend himself against a spate of corruption charges. (Uriel Sinai/Getty Images)

An American foundation paid a firm owned by Ehud Olmert, the former Israeli prime minister, $1.25 million for "consulting" services, U.S. tax records show. The money was transferred to Olmert's company in 2012 and 2013, years in which Israeli authorities were prosecuting Olmert for bribery, tax evasion and fraud.

The private foundation is funded by S. Daniel Abraham, the 90-year old billionaire and founder of the company that created the Slim Fast diet products. It sponsors the S. Daniel Abraham Center for Middle East Peace, a Washington-based institute. Under U.S. tax law, Abraham is entitled to take a deduction from his personal returns of the $5 million he gave the foundation over those years.

That means U.S. taxpayers subsidized Abraham's payments to the former prime minister's company.

The foundation's tax returns did not describe the scope and purpose of the consulting, but a spokesman for the center said it had "engaged Olmert to promote its mission of resolving the Arab-Israeli conflict by speaking before influential audiences at distinguished institutions throughout the United States."

It is not clear how many lectures Olmert delivered. The spokesman named 10 institutions and organizations, which would work out to $125,000 per speech.

They were: Stanford University; Columbia University Law School; the 92nd Street Y, The Conference of Presidents of Major American Jewish Organizations and the Council on Foreign Relations (all in New York City); The United States Institute of Peace; The Washington Institute for Near East Policy; The McCain Institute for International Leadership; the Johns Hopkins School of Advanced International Studies (all in Washington, D.C.); and the Chicago Council on Global Affairs.

Amir Dan, a spokesman for Olmert, declined to elaborate or say whether the consulting services went beyond the speeches. "Mr. Olmert is a citizen and an owner of a consulting firm. He files the reports on the company businesses to the authorities.''

Olmert became Israel's prime minister in May of 2006 after Ariel Sharon suffered a stroke and was incapacitated. Olmert resigned from office in 2009 to defend himself against a spate of corruption charges arising from both his years as mayor of Jerusalem and his tenure in the Israeli cabinet. He was acquitted of some charges but was sentenced to six years in prison earlier this year after he was found guilty of accepting bribes while mayor.

Prosecutors appealed his conviction and the Israeli Supreme Court ordered Olmert to return to court to face additional corruption charges.

That trial opened at the beginning of September. On Monday the court heard testimony from Shula Zaken, a former aide to Olmert who had not previously cooperated with prosecutors.

Earlier this year, Olmert was interrogated by Israeli police about whether he had arranged for Abraham to pay $50,000 to Zaken for her legal fees. Olmert denied organizing that payment but confirmed he was aware of it, saying, "I knew about it and gave my blessing to it. I am not trying to distance myself from this."

Abraham is best known for introducing the world to Slim Fast diet products almost 40 years ago. Forbes valued his fortune at $2 billion. He is a philanthropist who supports educational programs both in the U.S. and in Israel.

In 1989, Abraham joined with a Utah congressman to create the S. Daniel Abraham Center for Middle East Peace. According to its mission statement, the center "works with leaders, policymakers, and constituencies in the United States and the Middle East to help reach a just and comprehensive peace that will bring an end to the Arab-Israeli conflict."

Olmert and Abraham have known each other for more than 20 years. In 1993, as Olmert was running for mayor of Jerusalem, Abraham contributed tens of thousands of dollars to his campaign. Their connection has repeatedly been at the center of investigations in Israel.

Abraham bought Olmert's house in Jerusalem in 2004, using funds from a British Virgin Islands company. The Israeli State Comptroller wrote a report on that issue, examining why Olmert continued to live in the house and how much he was paying for rent.

In 2005 the Israeli police investigated whether Olmert, then finance minister, tried to steer the sale of a state-controlled bank, Bank Leumi, to a group of investors including Abraham. That inquiry was closed without charges.

In 2008 Abraham was questioned by Israeli police who asked whether he had funneled money to Olmert. He denied doing so.

Now, the publicly available tax returns of Abraham's foundation document the most recent dealings. The documents show that Olmert's firm was paid $700,000 in 2012 and $550,000 in 2013 for "consulting.''

Those sums are a significant percentage of the foundation's annual spending, which stood at $2.2 million during 2013 and $2.8 million the previous year.

Olmert opened his consulting firm soon after stepping as prime minister. Figures published by the Israeli newspaper Haaretz show that over four years, the company's revenue totaled more than 25 million NIS ($6.75 million). Some of that money was paid by Israeli companies, but the bulk came from what Haartez said was unknown sources.

Last April, Olmert traveled to the United States and gave a speech at the New Synagogue of Palm Beach, which was founded by Abraham. A reporter from The Palm Beach Daily News asked about Olmert's legal struggles. "That's all behind him," Abraham said. "We never lost touch."

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