The arrest of Israeli billionaire Beny Steinmetz Monday on suspicions that include fraud and money laundering is connected to a case against him in Romania, police and other sources say.
During Steinmetz’s remand hearing at the Rishon Letzion Magistrate’s Court on Monday, senior investigating officer Avshalom Ahrak said that the allegations against him also concern alleged wrongdoings in Romania.
In March 2016, Steinmetz was indicted by the Romanian National Anticorruption Directorate (DNA) for complicity in money laundering, peddling influence and forming an organized crime group with 13 other suspects, which included Silberstein.
According to Attila Biro from the Romanian investigative Rise Project, the trial began in January this year, and there have been 20 hearings thus far. His sources, he said, have told him that some of the charges that led to Steinmetz’s arrest in Israel are related to the Romanian case.
The Rise Project report said that, according to the DNA, Steinmetz had financed a criminal group that sought to acquire a large property claimed by 67-year-old Paul Lambrino, the nephew of the last king of Romania.
The group was coordinated in Romania by a local businessman, Remus Truica, the chief of staff to former Romanian Prime Minister Adrian Nastase. Nastase was eventually sentenced to prison for corruption.
Truica and Steinmetz have a long history together, having worked as partners 16 years ago in a Romanian real estate company.
According to the Rise Project report, prosecutors claimed that Steinmetz had transferred 4 million euros ($4.7 million) to be used in the allegedly illegal acquisition of the former royal property – now highly expensive land near the capital of Bucharest.
That money was used to make a purchase for an offshore company in the British Virgin Islands set up by the Panamanian law firm Mossack Fonseca, a leader in creating shell companies that often serve to conceal ownership of assets.
That company became the legal owner of two swaths of land for Steinmetz’s local partners.
One was the former royal farm Baneasa in Bucharest, and the second was a nearby forest. Prosecutors said the two allegedly illegal land deals cost the state €145 million ($170 million) in damages.
Wiretaps that the prosecutors presented in court indicated that Steinmetz was orchestrating the land deals. An arrest warrant was issued on March 15 for Steinmetz, who was not in the country at the time, but the Romanian supreme court revoked it two weeks later.
The court has not yet explained its reasons for doing so, but prosecutors say the charges remain.
Leaked documents from Mossack Fonseca, part of the “Panama Papers,” documents identified by the Rise Project indicate that Steinmetz set up another offshore company, which owns 20 hectares of land in Snagov, near Bucharest.
The land was initially owned by a local company.
In 2009, that company was acquired by the shell corporation that Mossack Fonseca had established, represented by Robert Rosu, a well-known lawyer in Romania who was also indicted in the criminal case against Steinmetz.
Tal Silberstein, who stands accused of similar crimes alongside Steinmetz, hired the prominent strategist Moshe Klughaft as a subcontractor for some of his work, though Klughaft is not linked to the current investigation.
Silberstein is a former political consultant to ex-premier Ehud Barak and – up until his arrest Monday – an advisor to the Austrian chancellor.
Klughaft has been one of Israel’s leading political campaigners in recent year and is known for his aggressive, sometime controversial, campaigns.
Klughaft led the Habayit Hayehudi party’s campaign in 2013 and helped its chairman, Naftali Bennett, retain his leadership position during the past three primaries.
This year he worked with Labor party candidate Erel Margalit on his unsuccessful primary run, helping him win 16 percent of the vote before he dropped out.
The Austrian chancellor’s office confirmed that Klughaft was responsible for some controversial video in which the chancellor delivered a pizza.
For the past few years, he has been working outside of Israel, including in Romania’s 2016 elections, where he worked with the Social Democratic Party.
According to sources, Klughaft’s relationship with Silberstein entailed his involvement in work for Austrian Chancellor Christian Kern, as well as in other campaigns.
In a short phone conversation, Klughaft refused to comment on the matter and stated he does not discuss his clients publicly.
Both Steinmetz and Silberstein remain in custody until Friday.