The corruption scandal of the Netanyahu gang continues to unfold.  Today, Bibi’s son, Yair was questioned by police for several hours about the shower of gifts he received from Australian billionaire James Packer.  During the interrogation Netanyahu had the naivete or chutzpah to claim that his “friendship” with Packer had nothing to do with his father being prime minister.

But the most interesting corruption news (Hebrew) of the evening regards (English) Mossad chief, Yossi Cohen, and another billionaire, Hollywood film producer, Arnon Milchan.  You’ll recall that the latter regularly couriered Dom Perignon pink champagne and Cohiba Cuban cigars to Mr. and Mrs. Netanyahu, to the tune of $100,000.  It was a rich and rewarding outlay.  As Haaretz reports, Bibi helped usher in the Milchan Law, which was tailored to the Hollywood entrepreneur’s special tax-abatement needs:

Milchan made Israel his permanent residence in order to take advantage of major tax benefits. These benefits – sometimes referred to as the “Milchan Law” – were created to encourage wealthy Jews with assets abroad like Milchan to relocate to Israel. They include a tax break of 10 years on foreign-sourced income as well as a 10-year waiver on tax reporting.

According to media reports, Packer has been very interested in obtaining Israeli citizenship or permanent-resident status in the country so that he, like his business partner Milchan, can take advantage of these tax benefits.

Milchan’s largesse didn’t stop at the Netanyahus.  He’s apparently also known Cohen for years.  In 2000, after being passed over for a promotion, Cohen took a two-year unpaid leave of absence from the Mossad.  During that time he moved to the U.S. and took a job working for a high-tech company, ImageID.  The company’s owner was Israeli entrepreneur Moti Shneiberg.  His partner in the business was Yariv Milchan, Arnon’s son.

When you hear about the product the company developed you’ll wonder how such entrepreneurs don’t go bankrupt more often: they developed a barcode sticker which guests at parties or weddings could wear.  All photographs taken at the event could then be identified based on the barcode.  They would later be sent to the guests by e-mail and they would order copies.  Naturally, the business tanked and it was sold at a loss.

Milchan created a cybersecurity company, BSI (Blue Sky International), in which James Packer also invested $15-million. The former recruited Cohen to join the startup, which launched in 2008.  But nothing ever came of the invitation.  BSI did employ a number of Israeli security personnel, among them Dan Dagan, son of the then-chief of the Mossad,  Among its clients were businesses owned by the Indian billionaire entrepreneur, Ratan Tata (this was just after the Mumbai terror attack at one of his hotels) and Packer himself.  Eventually, the business was disbanded and Packer’s money was returned to him (quite magnanimous!).

You can imagine why it’s terrific for a billionaire engaged in shady transactions of all sorts to have a well-connected intelligence officer like Cohen on the payroll.  The question becomes, in sharing such information with his Sugar Daddies, did he ever betray state secrets?  Did he ever compromise his duty to the nation on behalf of his patrons?  That is a question Avichai Mandelblit is pondering right now, I’d guess.

UPDATE: News1 reports yet another way in which the Good Old Boys take advantage of their ties: it says that Cohen used Packer’s penthouse apartment in Tel Aviv’s Royal Beach Hotel for “intimate encounters.”  Those would be encounters with women other than his wife.  We should recall that Cohen’s nickname, derived from his early days as a playboy during Mossad training: The Model.  He pursued these dalliances as his wife lay in the hospital giving birth to their first child.  Apparently, old, bad habits never cease.

News1 argues that Bibi will soon have to decide whether to ask for Cohen’s resignation or to force his hand and demand it.  I think this is a bit premature and the product of a media outlet with an ulterior political motive.  But it is the first time I’ve seen an Israeli media outlet be so bold in making such a demand.

Cohen returned to the Mossad in 2002, after he was offered the number 2 job with the promise that he’d be considered for the top position after Meir Dagan stepped down.  That time, the job went to Tamir Pardo.  But sure enough, when Pardo completed his tenure, the job went to Cohen.  But not before Netanyahu, under pressure to consider another internal Mossad candidate, dithered for several hours.  He called the alternate candidate and asked him if he would be loyal (to Bibi) if the PM appointed him to the job.  N. replied that if he was named to the job he would be loyal to the State.  That was all Bibi needed to affirm that he wanted the more pliant Cohen.

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