By Raphael Ahren

Keren Kayemet L’Israel-Jewish National Fund slammed a report this month in Globes that slammed its contract with a local solar energy company.

Calling it “one of the strangest deals in its 110-year history,” the Israeli business paper Globes last month described alleged problems in KKL-JNF’s $3 million investment in APC, a company located in Kibbutz Ketura that builds photovoltaic solar farms in the country’s south. The report lists factors that turned the deal “from exceptional to almost mysterious.” For example KKL-JNF never issued a tender before making the investment; its management never brought the deal before the board of directors for approval and the cooperation never publicly announced the deal.

KKL-JNF deputy chairman Menachem Lebovic rejected the criticism. “The agreement between Arava Power and the landholders was made directly with the Kibbutzim and the Moshavim of the Arava, which is in accordance with historical decisions made by the ILA allowing this,” he stated in a written response to an Anglo File query.

The main problem with the recent KKL-JNF deal, according to Globes, is that APC’s activity in building solar power plants requires it to lease land from the Israel Lands Administration. KKL-JNF officials sit on the ILA board of directors. Furthermore, under the government’s planned land reform, KKL-JNF is to receive 90,000 dunams in the Negev and Galilee in exchange for land in city centers, which, the paper writes, “puts JNF in a position of conflict of interests as a shareholder in a company that sets up solar energy plants.”

Lebovic pointed out in his letter that KKL-JNF currently holds only two of 11 seats on the ILA board of directors, adding, however, that if the so-called Land Swap Agreement between the state and KKL-JNF is signed, the latter would receive more seats.

“As with other similar issues,” Lebovic asserted, “where a conflict of interest arises (such as a farmer sitting on the ILA board of directors, those parties do not participate in either the meetings or voting where the likelihood of conflict of interest is likely to arise. Also in this matter, our representatives on the ILA Board will not participate in the meetings or votes that concern land for solar projects in the Negev or the Galilee.”

As for the land swap, he writes: “If the Land Swap Agreement is ever signed, the only organization that manages the land in Israel is the ILA and they will have to deal with this issue.”

One Israeli with intimate knowledge of the deal played down the claims of conflict of interest, saying Resolution 1162 – ILA’s “key policy decision to encourage kibbutzim and moshavim to produce solar power” – was signed on September 9, 2008, months before the deal between KKL-JNF and the company was conceived.

Last summer, APC made headlines for securing the largest international investment ever in an Israeli solar company when German engineering powerhouse Siemens paid $15 million for 40 percent of the company’s shares.

Responding to the Globes report, Yosef Abramowitz, the American-born head of APC, told Anglo File this week, “This relationship with the JNF is not only kosher, it’s glatt kosher.” A native of Boston and co-founder of the company, he added: “What’s treif here is people who prematurely leaked a beautiful story in such a mean-spirited and cynical way, which characterizes the business environment, unfortunately, in the state of Israel.”