The $180-million question: Who should profit from the Dead Sea?

Israel was blessed with natural resources in the Dead Sea which sell for over 2.5 billion dollars annually. While the Dead Sea Works, which extract the resources, was founded as a government-owned corporation, it was gradually privatized in the 90s within a larger group – Israel Chemicals (ICL). Eventually, ICL was taken over by the Ofer family – one of the richest and most powerful business groups in the country.

The Ofer family has had what you might call a “problematic track record” regarding taxes due from the Dead Sea Works. In 2011, following several concerns regarding payment of government royalties, the Israeli government filed a lawsuit against Israel Chemicals (ICL), which led – after eight years of litigation – to a payment of over 1 billion shekels by ICL to the Israeli government coffers.

In 2013, then Finance Minister Yair Lapid created the 2^nd Sheshinski committee to investigate the government’s share in the Dead Sea profits. The committee’s report, supported by the International Monetary Fund, was clear: while most governments receive around 50% of the profits, the Israeli government received around half that. Sheshinski proposed a new tax, which would increase taxes by 400 million NIS annually.

What followed was an intense lobbying campaign by ICL, who are experts in recruiting top former executives, right after these regulators were in charge of supervising ICL. These former regulators are expert in the ‘fine print’ of the regulations, as well as having extensive connections within government bodies. The lobbying also involved an intense media campaign, supported by the fact the Ofer Group controlled popular TV channels.

Fortunately, and partially thanks to efforts of non-profits such as Lobby 99 working behind the scenes, the Ofer lobbyists failed: in 2015 a law was passed with multi-partisan support, creating a special fund to promote the employment in the Negev. Millions of shekels were expected to start flowing to the special fund beginning in 2017.

Had they indeed failed?

2017 passed, and no money entered the new public fund.

2018 as well.

And now, following the publication of ICL’s annual report for 2019, we see that last year was the same: no money for the public fund. This, despite sales of over $5.2 billion globally, and over $2.8 billion from Israeli natural resources.

The Ofer family on the other hand, and particularly Idan Ofer, thrived. His share of the profits amounted, according to our calculations, to 100.1$ million – down from ~$260 million during 2018. He must be looking back at the struggle in 2015 to pass the new natural resources tax not as a failure for his lobbyists, but as a stunning success.

There is reason for hope. The ICL annual report admits that their non-payment of the natural resources tax was based on their accounting calculations, which may be disputed and result in an imposition of $180 million in back-taxes. Fortunately, the Israeli Tax Authority declared last December that it does not accept ICL’s calculations, and will take action to impose the tax.

The downside is that we’ve already ‘seen that film’: ICL goes to courts, and the debate drags on for years and even decades before the public sees a single shekel.

That’s why Lobby 99 and other activists and NGOs are determined to stop this. If the Ofer family is repeatedly (allegedly) procrastinating and delaying payment of the rightful taxes owed the public, change is necessary. In the next few years, it will be determined how the future lease of the Dead Sea Works will look, as the ICL lease on the Dead Sea Works ends in 2030.

That’s why now we must raise awareness to ICL’s actions, and demand clearly from our political leaders: stop the abuse of the public natural treasures. Lobby 99 is calling to change the terms of the lease such that we will see increased taxes; ensure transparency; and implement stronger environmental regulations.

Want to help take the Dead Sea back for the public? Join Lobby 99 today.