Hollywood Producer in the Spotlight in Netanyahu Probe
Israeli police said they had questioned a financier behind Academy Award-winning films
TEL AVIV—Arnon Milchan, an Israeli intelligence agent turned Hollywood producer, has long cultivated ties with his country’s leaders. Now, he has become a political problem for the prime minister.
Israeli police said last month that they had questioned Mr. Milchan—who has financed Academy Award-winning movies such as “12 Years a Slave” and “Birdman”—about whether he gave Prime Minister Benjamin Netanyahu gifts in return for favors.
The investigation is one of two graft probes into Mr. Netanyahu that threaten his long tenure as Israel’s leader.
Mr. Netanyahu has denied wrongdoing. “It is allowed, according to the law, to accept presents from friends,” the prime minister said in response to questions at a January session of Israel’s parliament, after the probes were first reported publicly.
A spokesman for Mr. Milchan, who heads Los Angeles-based New Regency Productions Inc., said, “We have been careful not to respond on the subject for obvious reasons, whether the information is true or false and unrealistic.”
Mr. Milchan has had connections with several Israeli politicians over the years. Ehud Olmert, who later served as Israel’s prime minister, came up with “Pretty Woman” as the title for the 1990 film produced by Mr. Milchan, according to a 2011 biography, “Confidential: The Life of Secret Agent Turned Hollywood Tycoon Arnon Milchan.”
A spokesman for Mr. Kerry said it is “not uncommon for foreign counterparts to raise such issues with [State] Department officials, including the Secretary.” The 10-year visa was later issued, the former U.S. officials said.
Police also have said they are separately investigating Mr. Netanyahu about whether he tried to negotiate favorable coverage in an Israeli newspaper in return for weakening the influence of another daily. Mr. Netanyahu denies the allegations.
Ari Harow, the prime minister’s former chief of staff and longtime confidant, has turned state witness in the probes, police have said. Polls have shown that more than half of Israelis believe Mr. Netanyahu should resign if he is indicted.
Mr. Milchan’s New Regency is a subsidiary of Netherlands-based Monarchy Enterprises Holdings B.V., in which U.S.-based 21st Century Fox Inc. owns a 20% interest, according to financial reports and corporate records. 21st Century Fox shares common ownership with News Corp , which owns The Wall Street Journal.
21st Century Fox also sold a stake in Channel 10, an Israeli television station, to a company owned by Mr. Milchan in 2013, according to a spokesman for 21st Century Fox.
Mr. Milchan was recruited as an intelligence officer in the 1960s by Shimon Peres, who was deputy defense minister at the time, according to the 2011 biography and an interview Mr. Milchan gave to the Israeli television program Uvda in 2013. Mr. Peres went on to serve as Israel’s prime minister and president.
In his role as an Israeli agent, Mr. Milchan helped procure equipment from the U.S. for Israel’s secret nuclear program, according to the biography, which said Mr. Milchan served as an officer for Israel’s now-defunct Bureau of Scientific Relations.
Mr. Milchan’s business partner in the U.S., Richard Kelly Smyth, was charged in 1985 with smuggling materials to Israel that could be used for nuclear purposes. Mr. Smyth was charged with breaking U.S. export laws and spent 16 years on the run before being convicted in 2002 and sentenced to 40 months in prison. Mr. Milchan wasn’t accused of any wrongdoing.
Mr. Smyth, who pleaded not guilty to the charges, died of a stroke last month, according to his wife, Emilie Smyth. She said he maintained his innocence until his death.
In the interview with Uvda, Mr. Milchan said the episode “didn’t get me into big trouble. Almost.”
In recent years, Mr. Milchan offered to assist Mr. Kerry in his efforts to achieve peace between Israelis and Palestinians, according to former U.S. officials and Israeli politicians. In 2015, Mr. Milchan encouraged Mr. Netanyahu and opposition politician and then-Zionist Union and Labor party leader Isaac Herzog to form a national unity government of right- and left-wing parties that would signal to Palestinian and Arab leaders that Israel was willing to make compromises for peace, the people said.
Mr. Kerry had hoped such a government could then negotiate with leaders from Egypt, Jordan and Saudi Arabia as part of a regional peace initiative he was eager to launch, although the then-secretary of state didn’t directly intervene in the Israeli government negotiations, the former U.S. officials and Israeli politicians said. Messrs. Netanyahu and Herzog negotiated for months but never agreed on the details of such a government, they added.