Israel

U.S.-based Helmsley Trust says Israeli hospital paid illicit $2m fee, asks for donation back

The U.S.-based Leona M. and Harry B. Helmsley Charitable Trust is demanding that Barzilai Medical Center return $13 million in donations it received from the foundation over the past seven years, after it emerged that the Ashkelon hospital paid a $2 million commission to its fundraising company without the trust’s knowledge.

The commission runs contrary to the terms of the donation, which stated that the full sum would go to the hospital, with none going to a third party.

The Helmsley Trust donated $13 million to the hospital over the past seven years in three payments. The most recent one, from 2019, totaled $5 million.

The fund is demanding that Prof. Hezi Levy, incoming director general of Israel’s Health Ministry and until recently the head of Barzilai, return the money in full.

“The trust takes seriously the deceit against it and the violation of the agreement with the hospital. This is a fundamental violation that means that a significant portion of the trust’s donation funds were not used for patients but rather went into the pocket of an anonymous private company, which clearly did not do anything to justify a payment of millions of shekels, or any payment,” states a letter penned by attorney Ran Sprinzak, the fund’s representative in Israel, addressed to Levy.

In the long, strongly worded letter, Sprinzak detailed what happened behind the scenes, after TheMarker revealed the illicit commission. In the letter, the trust stated it was shocked to learn about the commission in TheMarker.

Levy’s appointment as Health Ministry director general was approved despite the trust’s allegations of misdeeds. Levy led the hospital for eight years.

Levy stated in response that the information in the article “is not full or precise, to say the least.” But when pressed by the trust for answers, Levy acknowledged that Barzilai had in fact paid Politea, the private fundraising company it works with, part of the Helmsley Trust’s donation, which he termed “an unfortunate internal error.” He stated that the hospital had not been aware that the donation had been conditioned on not paying commissions.

The trust responded, “The excuse that this is ‘an unfortunate internal error’ is unacceptable,” adding that this was a fundamental violation of the sides’ agreement.

Levy said that the hospital had stopped working with Politea and demanded that it return the fees, and that the sides were in the middle of a legal dispute.

Barzilai started working with Politea in 2007, without conducting a bidding process. In their most recent contract, signed in 2019, the hospital pays the company a 29,000-shekel monthly retainer, plus up to 15% of donations and travel expenses of up to $25,000 a year. While the most recent agreement states that the commission will be paid based on brackets, the Helmsley Fund donation was exempted from this agreement, making it subject to the highest bracket, 15%.

The Finance Ministry’s accountant general criticized the arrangement, stating, “The criticism emphasizes the point that many millions of shekels that were supposed to serve the hospital’s development were transferred to Politea in violation of agreements.”

Politea has no website or other online presence.

In the letter, the Helmsley Trust representative said the foundation has no connection to Politea, knows of no such company and certainly never gave it a donation. At most, the trust briefly met one of the company’s representatives, who was presented as a hospital volunteer.

This runs contrary to the hospital’s own claim that the company enabled it to raise much more money from the Helmsley Trust than other hospitals did because it maintained a relationship with the trust, and it was this relationship that enabled the donations.

The trust’s representative demanded to know why the hospital did not inform it of the commission on its own accord, and also demanded the paper trail detailing its contacts with Politea.

He also demanded to know whether any person connected to the hospital ever received money or other illicit benefits out of the trust’s donations. He accused Levy of “not saying the truth” in his statements regarding the affair.

Barzilai stated in response: “The Barzilai Medical Center appreciates and values the U.S.-based Helmsley Trust for its many donations. The hospital met all its obligations to the fund. Due to the feeling of deep commitment to the region’s 500,000 residents, it employed the company Politea in 2007 to help raise money. The donation money was never used to pay people connected to the fund or the hospital. Contacts to clarify and respond to the allegations are being conducted via lawyers and not articles or tendentious leaks.”

The Leona M. and Harry B. Helmsley Charitable Trust is based on the estate of the controversial real estate entrepreneur Leona Helmsley, who served jail time in the 1990s for tax evasion and was dubbed the “queen of mean” by the press. The Helmsley’s real estate empire at one point included the Empire State Building and dozens of hotels.

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