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Israeli Foundation in W. Germany Charged with Laundering Money

An Israeli foundation, the Keren Fritz Naphtali, has been exposed as part of a money-laundering operation used to illegally finance political activities of the opposition Social Democratic Party. Although it has been under investigation for two years, the federal prosecutor appears to have finally substantiated and documented charges against the institution, which is close to […]

August 15, 1989
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An Israeli foundation, the Keren Fritz Naphtali, has been exposed as part of a money-laundering operation used to illegally finance political activities of the opposition Social Democratic Party.

Although it has been under investigation for two years, the federal prosecutor appears to have finally substantiated and documented charges against the institution, which is close to Israel’s Labor Party.

But there are no plans to charge Israeli employees at the Naphtali foundation or seek their extradition, a prosecution spokesman said Monday.

According to investigators, the West German foundation Friedrich Ebert Stiftung, which is close to the SPD, transferred large sums of money to the Naphtali foundation for alleged educational activities.

Part of those funds were used to promote education programs. But part was transferred to a Zurich bank account for laundering, the prosecution contends, before being sent back to West Germany to help finance SPD campaigns and facilities.

Foundations like the Ebert Stiftung receive both taxpayers’ money and donations for cultural and other activities at home and abroad.

But it is illegal to use those monies to finance political activities.

The magazine Der Spiegel reported Monday that the prosecution traced a secret SPD office to which the Naphtali foundation funneled money by way of the Zurich account.

The office, called “Institution for International Contacts,” was run by a high-ranking official of the Ebert Stiftung foundation.

The prosecution has begun proceedings against two former Ebert Stiftung managers, Guenter Grundwald and Walter Hesselbach. Hesselbach, a banker, is one of Israel’s most devoted friends in SPD circles.

The two will be charged with complicity to evade taxes.

It is assumed here that the money, laundered by the Naphtali foundation, came from private donors and was processed by the Ebert foundation to make it tax-deductible.

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