Netanyahu Shimon Peres Armon Milchan
© Flash90
Former president and prime minister of Israel Shimon Peres (L) with a one-time spy turn Hollywood producer Arnon Milchan (center) and Israeli Prime Minister Benjamin Netanyahu, March 28, 2005.
On Sunday, December 2, Israeli police recommended indicting Prime Minister Benjamin Netanyahu on charges of bribery and fraud. The charge is that Netanyahu traded regulatory favours to the news website Walla, including approval of its controversial merger with the satellite television company Yes, for publishing articles that flattered him and removing articles that were critical of him. Netanyahu is also accused of attempting to influence Walla's hiring of senior editors and reporters. Walla is owned by Bezec, the biggest telecommunications company in Israel.

This is the third time this year that Israeli police have recommended that Netanyahu be indicted. The other two both involve a mysterious figure named Arnon Milchan.

In one, Netanyahu is charged with helping a leading Israeli newspaper, Yediot Aharonot, by curtailing a rival paper, the Netanyahu positive, Sheldon Adelson financed Israel Hayom, in exchange, again, for publishing positive pieces on Netanyahu. Yediot Aharon's coverage of Netanyahu could be critical. The deal was that they would cover Netanyahu more positively, and Netanyahu would get Israel Hayom to limit its circulation. This case involves Milchan because Israeli police seem to have evidence that Milchan acted as Netanyahu's middleman in the illegal deal with Yediot Aharonot.

The other directly involves Milchan. Netanyahu is accused of accepting more than $283,000 worth of champagne and cigars in exchange for tax breaks and for intervening to help Milchan get his U.S. visa. Netanyahu is actually reported to have asked Secretary of State John Kerry three times to intervene on Milchan's behalf by helping to arrange a long-term visa for Milchan to stay in the U.S.

The recommendations to indict Netanyahu could be dangerous for much more than the survival of Netanyahu's government. Probing of the Netanyahu-Milchan connection could, more seriously, threaten long hidden secrets about Israel's nuclear weapons program and about how it was illegally midwifed by betraying Israel's American ally.

The Mysterious Milchan

Milchan needed Netanyahu's help to secure a long-term visa in the States because his long enjoyed right to long term visas had been revoked. Milchan, an Israeli citizen, was the regular recipient of ten-year U.S. visas until the right was revoked over his confession that he had been working in America on behalf of Israeli intelligence.

Milchan is an Israeli billionaire who is publicly known in the U.S as the Hollywood producer of over 150 movies, including Birdman, Brazil, JFK, Pretty Woman, The Revenant and 12 Years a Slave. He owned over thirty companies in seventeen countries. But at least some of those companies were fronts. According to the biography Confidential: The Life of Secret Agent Turned Hollywood Producer, Milchan set up straw companies and secret bank accounts around the world whose purpose was to finance Israel's secret Dimona nuclear plant.

While publicly Milchan was a Hollywood producer, in a second, secret life, he was an Israeli agent and weapons dealer operating inside the United States. Milchan purchased American equipment for Israel's clandestine nuclear weapons program.

Shimon Peres confirmed that it was he who recruited Milchan into Israeli intelligence in the 1960's. Milchan was an agent in the darkly shadowy Science Liaison Bureau, known by its Hebrew acronym, LAKAM. LAKAM was established in 1957 by then defense minister Shimon Peres. It was so secret, according to Roger Mattson, author of Stealing the Atom Bomb: How Denial and Deception Armed Israel, that it worked out of the view even of Israeli intelligence. It reported directly to the minister of defense and was tasked with maintaining security inside the secret Dimona nuclear facility and with hiding its true purpose from U.S. intelligence. Its other reason for being was the secret collection, and even stealing, of scientific intelligence from Israel's western allies. In 1968, Mattson reports, the FBI became cognizant of LAKAM and set up a secret program code named "Scope" to track Israeli scientific delegations and embassy personnel inside the U.S. FBI wiretaps inside the Israeli embassy led to the expulsion of some Israelis.

The Krytron Case

In the mid 1980's, U.S. customs discovered an operation that was smuggling switches that were dual use: they could be used for medical purposes, but they could also be used in the manufacture nuclear weapons. The high-speed switches, known as krytrons, can't be exported without a State Department munitions license because they can be used as triggers for nuclear weapons. The smuggling operation was run by a California company called MILCO International Inc. MILCO's CEO and owner was Richard Kelly Smyth, an American physicist and business associate of Arnon Milchan. Smyth was a NATO consultant with high-level security clearance. Between 1979 and 1983, MILCO smuggled fifteen orders of a total of over 800 krytrons to the Israeli Ministry of Defense. Smyth was indicted on thirty counts of perjury and illegally transferring restricted materials. In 2001 he pleaded guilty to violating the U.S. Arms Export Control Act and was sentenced to forty years in prison. Immediately following the krytron case, Milchan contacted his recruiter, Shimon Peres, and asked for his help in dealing with the Reagan administration.

The Netanyahu-Smyth Link

According to an FBI memorandum dated February 13, 2002 that is clearly reporting an interview with Smyth, Benjamin Netanyahu collaborated with Smyth in the smuggling operation. The memorandum says that "Smyth and [Netanyahu] would meet in restaurants in Tel Aviv and in [Netanyahu's] home and/or business. It was not uncommon for [Netanyahu] to ask Smyth for unclassified material."

But, for Netanyahu, it gets worse. MILCO was a front. In 1972, Milchan got Smyth to incorporate MILCO and share profits with Milchan's company, Milchan Limited. MILCO was really just one of Milchan's many front companies. So, Netanyahu was really collaborating with Arnon Milchan, the man he is now being indicted over for accepting bribes.

The Netanyahu-Milchan Link

But the link between Netanyahu and Milchan is actually a much more direct one. According to the FBI memorandum, the krytrons were smuggled by MILCO "at the behest of [redacted] HELI TRADING COMPANY and MILCHAN LIMITED." "HELI TRADING CORPORATION was purchasing the krytrons at the behest of Israel's Ministry of Defense (MOD)" with money that "came directly from the MOD." The memorandum further clarifies that Heli and Milchan Limited are actually the same company: "HELI TRADING COMPANY was also known as MILCHAN LIMITED" (Grant Smith, a leading researcher in the krytrons case, clarified in a personal correspondence that Heli and Milchan Limited are actually two distinct companies both owned by Arnon Milchan). But the crucial link in the Netanyahu-Milchan connection is that Netanyahu, at the time of the smuggling operation and at the time he was holding regular meetings with Smyth, was, according to the FBI memorandum, working for Heli and, therefore, was actually working for Arnon Milchan. This direct line seems to implicate Netanyahu as being directly involved in an Israeli operation to illegally smuggle American equipment into Israel for use in Israel's nuclear weapons program.

Potential Ramifications

Though the Netanyahu-Smyth connection is occasionally glanced at, the direct link between Netanyahu and Arnon Milchan, the man he is facing charges over, is never mentioned in the mainstream media. If Netanyahu were to face trial over the Milchan indictments, the ramifications could go beyond his remaining in office. If a legal examination of the relationship between Netanyahu and Milchan, which may include his currently using Milchan as a middle man in one of the newspaper bribery cases, were to bring out that Netanyahu used Milchan as a middleman in the 1980's to illegally smuggle U.S. parts into Israel for use in Israel's clandestine nuclear program, then that could potentially not only force a public admission of the existence of the nuclear program, but also an American admission that they knew Israel was illegally acquiring U.S. parts to help them develop that nuclear program. And that, and not the survival of Netanyahu's government, may be the biggest danger in these indictments.