Exclusive: Israel’s PM Netanyahu Benefited From Cousin’s Unauthorized Deals With Libya

Nathan Milikowsky's firm sold electrodes to Libya while Netanyahu invested in its raw material supply company.
Israel has been roiled by a scandal involving Prime Minister Benjamin Netanyahu's connections to a firm that was previously owned by his cousin Nathan Milikowsky and illegally sold equipment to Libya.
Israel has been roiled by a scandal involving Prime Minister Benjamin Netanyahu's connections to a firm that was previously owned by his cousin Nathan Milikowsky and illegally sold equipment to Libya.

Israeli Prime Minister Benjamin Netanyahu is enmeshed in a roiling scandal over his connections to Seadrift Coke, a Texas-based firm previously owned by his cousin Nathan Milikowsky. Netanyahu made a return of over 700 percent from the company’s stock, which he purchased in 2007 and sold in 2010.

HuffPost has learned that while Netanyahu held Seadrift’s stock, another company owned by Milikowsky, C/G Electrodes, was charged by the U.S. Department of Commerce with selling electrodes to Muammar Gaddafi’s Libya in 2007 and 2008, in violation of U.S. nuclear nonproliferation regulations. During that time, Seadrift Coke was the main supplier of raw materials to C/G Electrodes, which means that Netanyahu likely benefited from the Libya sales ― raising even more questions about the scandal-plagued prime minister, with the country holding a general election next week.

The documents related to the Commerce investigation do not detail which Libyan entity purchased the materials, which are essential in the production of steel for various industries.

Commerce charged the company for the illegal sales to Libya on 23 occasions. The shipments, several of which went through Canada, were valued at $6.8 million. The agency fined the company $250,000 as part of a settlement agreement.

In August 2007 ― a month after the Libyan transactions began ― Netanyahu purchased shares in C/G Electrodes’ main supplier of raw material, Seadrift Coke. Since both companies were controlled by Milikowsky and Seadrift had binding supply agreements with C/G Electrodes to supply the majority of the raw material required to make graphite electrodes, the business ties between Seadrift and C/G Electrodes suggest that Netanyahu likely benefited from his cousin’s Libya dealings.

Libya and Israel have had an adversarial relationship for decades. Last year, Israel’s Mossad reportedly assassinated two Iranian military advisers in Libya. Gaddafi’s Libya never recognized Israel, referring to it pejoratively only as the “Zionist entity.” In 2011, Netanyahu called for a forceful international intervention to topple Gaddafi. Yet as Libyan rebels were closing in on him that year, it was Gaddafi who showed pragmatism by reportedly reaching out to Israel through an intermediary to ask that it use its influence to stop U.S. support for the insurgency.

Milikowsky told HuffPost that Netanyahu did not know about C/G Electrodes’ sales to Libya. “He was not involved in that company and was just a passive investor in Seadrift,” said Milikowsky. “Besides that, I won’t say anything else, since I’m not talking to reporters.”

A Netanyahu spokesman said the prime minister was a passive investor in Seadrift with a small percentage of shares. “He did not take any part in the company’s management or business,” said the spokesperson.

“The actions taken in the case were reported appropriately to the relevant authorities,” he added. HuffPost asked him to clarify whether he was referring to the Commerce Department or to Netanyahu’s investment in Seadrift, but he did not respond. He also did not respond to repeated questions about whether Netanyahu was aware of his cousin’s dealings with Libya.

The revelations add another layer to the brewing scandal in Israel over Netanyahu’s monetary links to Milikowsky. In late February, an Israeli government comptroller report revealed Netanyahu’s previous holdings in Seadrift. The news came as the comptroller’s office denied Netanyahu’s request to retroactively approve a $300,000 loan from Milikowsky to finance his legal battles over three other corruption charges, which include bribery and breach of trust.

According to a report in the Israeli daily Ha’aretz, Netanyahu bought 1.6% of Seadrift’s shares in August 2007 for $600,000, when he was the head of the country’s parliamentary opposition, and sold them for $4.3 million 2010, when he was prime minister. The sale took place shortly after Milikowsky sold both companies to Ohio-based GrafTech International, which did not respond to a request for comment on this story.

The enormous gap in Seadrift’s valuation, which did not report strong finances from 2007 to 2010, has raised suspicion that Netanyahu received an improper discount from Milikowsky — in essence, a capital transfer from a private business entity to a high-level politician.

In a video message he broadcast last Friday, Netanyahu denied those allegations, saying, “Other people also purchased the shares at the same price, and no one got any discounts.”

According to recent media reports in Israel, the Netanyahu-Milikowsky ties may be part of an even bigger scandal.

After selling Seadrift and C/G Electrodes to GrafTech International, Milikowsky held large shares in Graftech, as well as a seat on its board of directors from 2010 to 2015. GrafTech is a supplier of Thyssenkrupp, a German company at the center of a major corruption scandal involving several people close to Netanyahu. Former high-ranking Israeli navy officers, politicians and Netanyahu’s personal lawyer were involved in a bribery and fraud scheme, according to an Israeli police probe.

Netanyahu was interviewed in that case but was not indicted.

Ha’aretz reported last week that the state prosecutor’s office has begun a preliminary inquiry into the various links between Milikowsky and Netanyahu.

In March, Israel’s attorney general announced he was indicting Netanyahu on charges related to three cases involving bribery and breach of trust. The allegations in all three show a similar pattern of using his connections to wealthy individuals to obtain favors, from expensive cigars to positive coverage in the press.

Those indictments will be the subject of a special hearing before the attorney general, which is not scheduled until after the upcoming election, with Netanyahu up for prime minister again as head of the right-wing Likud party.

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