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      Barak to Answer 'Conflict of Interests' Charge Sunday

      Defense Minister Ehud Barak will testify before the State Control Committee over conflict of interest charges levelled by the Comptroller.
      By Gabe Kahn.
      First Publish: 5/19/2011, 9:11 PM / Last Update: 5/22/2011, 10:03 AM

      Flash 90

      Defense Minister Ehud Barak will testify in a special session of the State Control Committee to explain actions pertaining to the transfer of shares in Ehud Barak Ltd. when he assumed his post, which were criticized by State Comptroller Micha Lindestrauss.

      Barak set up Ehud Barak Ltd., an international consulting firm named Ehud Barak, in 2002, a year after losing a special election for prime minister.

      In June 2007, a few days after winning the Labor Party's leadership primary, he transferred the company to his three daughters. Three days after that, he joined the Olmert government as defense minister.

      Lindenstrauss examined the transfer in light of the Asher Committee rules, which were formulated to prevent conflicts of interest between a minister's public duties and his business interests. The rules are intended to sever the minister completely from such interests.

      Barak's former company has earned revenues of about NIS 6.5 million since he took office in June 2007. Of this, some NIS 5 million went directly to Ehud Barak Ltd. while the remainder to a subsidiary called Cardo Business Development Ltd.

      Lindenstrauss criticized Barak for transferring the company only three days before his appointment, instead of immediately after winning the primary, since that victory guaranteed his entry into the cabinet: The Defense Ministry had previously been held by the man he beat in the primary, Amir Peretz.

      The comptroller also slammed Barak's refusal to let Lindenstrauss scrutinize the company, as Asher Committee rules require.

      According to the Lindenstrauss, Barak's transferring shares he owned to his three daughters when assuming his post was not "consistent with public norms" for avoiding conflicts of interest.

      "The Defense Minister was careful when it comes to the rules," Lindenstrauss said. "The rules seek to sever any connection between the Minister and his business with his appointment to avoid possible conflict of interest. Barak ran the consulting firms and the shares he transferred to his daughters, three days before he was appointed Minister."

      For a report on the comptroller's cricicism of Barak, which went beyond his business interests, click here.

      Lindestrauss held Barak's conduct, while technically ethical, did not follow the spirit of the rules because, in his opinion, following the first round election for prime minister in 2007 Barak's appointment was a given. Publicly, Lindenstrauss maintains, it would have been appropriate for Barak to act as he had already been appointed.

      "It is unfortunate that Barak did not act in this manner," Lindenstrauss wrote.

      Barak informed the permit committee of his assets and their transfer, Lindenstrauss wrote, but did omitted his affinity for the two companies, or the transfer to his daughters, who received his shares. Each group member received about NIS 4.7 million

      "The reality was short of full disclosure and effective oversight was avoided," wrote Lindestrauss.

      Lindestrauss noted Barak created its own conflict of interest arrangement as he could have turned to the permit committee in advance and made a full disclosure.

      Lindenstrauss stopped short of accusing Barak of deliberate malfeasance.

      A Barak aid on Thursday said Barak had “done nothing wrong.”