Opinion: Gantz, criminal fraud and his failed company Fifth Dimension

A competent police investigation will demonstrate whether Gantz and other senior personnel in the company participated in any alleged wrongdoing.

By Avi Bell, JNS

A little more than a week ago, Israel’s State Attorney Dan Eldar announced a criminal probe into Fifth Dimension, a company that Benny Gantz, leader of Israel’s Blue and White Party, nominally headed (as chairman of the board) during 2015 to 2018.

Coverage of the scandal has been confusing, leaving the public unclear on what alleged crimes were committed and why a probe is necessary.

Here is a roadmap.

The publicly available information, including a 2019 report by Israel’s comptroller, suggests that Fifth Dimension criminally defrauded the Israeli Police of NIS 4 million (nearly $1.2 million) and valuable intellectual property in a no-bid contract in 2017.

According to the comptroller, Fifth Dimension obtained the 2017 contract through a highly irregular procedure (without competitive bidding or any examination of competitors’ products), based on lies about Fifth Dimension’s abilities and track record. The comptroller also reported that Fifth Dimension would have extracted another NIS 50 million ($14 million) from the apparent fraud had Israeli Finance Ministry officials not raised questions about the refusal to look at alternative suppliers.

The comptroller report notes that Gantz was personally involved in some of the irregular procedures leading to the contract (including an apparently improper meeting with then-police chief Roni Alshech), although the report does not directly charge Gantz with fraud.

As in any criminal case, further investigation may change the picture.

Perhaps the comptroller was mistaken in concluding that the no-bid contract was the result of Fifth Dimension’s lies. More likely, a competent police investigation will uncover which members of Fifth Dimension were involved in deception, and demonstrate whether Gantz and other senior personnel in the company participated in any alleged wrongdoing.

Indeed, there is a chance that a police investigation could uncover other infractions. The background of the company encourages a closer look at their operations.

Fifth Dimension had a brief and unsuccessful history. It was founded in 2014 by Doron Cohen (formerly of the Mossad) and Guy Caspi; it closed its doors in December 2018. At its peak, Fifth Dimension had raised $40 million and had 100 employees. But despite numerous apparently false claims by multiple clients in Israel and abroad, the company appears never to have had any business other than its single no-bid contract with the Israeli Police.

Given that the company never requested the required regulatory clearance to negotiate with foreign buyers, it is possible that it was lying when it claimed advanced negotiations with several potential foreign clients.

Owners of Fifth Dimension announced that they tried to sell the company but couldn’t find a buyer. They also claimed to be interested in selling the company’s tech for pennies on the dollar, even though there was no reported interest in the market. Gantz and other senior figures in Fifth Dimension say they failed to sell the company because one of the investors was Viktor Vekselberg, a controversial Russian businessman under U.S. sanctions.

Curiously, Fifth Dimension is one of two companies created by Doron Cohen and Guy Caspi (and others) in 2014 that sold essentially the same product—artificial intelligence software and data analysis that could analyze big data and predict police/security threats. The other company, Deep Instinct, is still around and apparently has real clients and real revenue.

From the reports, it’s unclear whether Fifth Dimension ever developed a product. The comptroller’s report says that while the company was still working on development, it falsely claimed to the Israel Police that the product was finished. By contrast, Deep Instinct appears to have a fully developed product.

This background leads to a host of questions with criminal implications. Was Fifth Dimension created just in order to get the single no-bid contract with the Israel Police? Was it used to funnel Israel Police data and intellectual property to Deep Instinct? Was it just a vehicle for getting data and money that Caspi and Doron needed to finish developing their software for Deep Instinct? Did it negotiate with foreign buyers without regulatory oversight?

Gantz’s role in this potential scandal cannot and should not be taken for granted. Of course, it’s possible that he knew nothing of the alleged crimes. Reports of his work there suggest that Gantz lacked the business and technology acumen to comprehend the dealings of the company, and that he was hired solely to lend the company his own well-known and respected name.

Attorney-General refused to investigate

Gantz has dismissed the timing of the announced investigation as political, and he’s not wrong. Since the comptroller’s report of nearly a year ago, Israel’s Attorney General Avichai Mandelblit has stubbornly refused to investigate the apparent criminal fraud, despite repeated requests from senior government officials, including Minister of Internal Security Gilad Erdan. It’s difficult to avoid the impression that what has held back a police investigation for the past year was the desire to avoid embarrassing Gantz during his run for the prime ministership.

Yair Lapid, Gantz’s partner in Blue and White, has been even more dismissive of the investigation, charging that Fifth Dimension’s apparent fraud is nothing more than a “a business transaction that didn’t work well” to be contrasted with the “real crimes” of media outlets attempting to influence decision-makers with flattering coverage. The latter, of course, is at the center of an unprecedented effort by Mandelblit to prosecute Israeli Prime Minister Benjamin Netanyahu for violating a newly created crime of soliciting positive media coverage as a bribe.

Lapid has things exactly reversed. A well-functioning law-enforcement system would zealously pursue fraud cases as opposed to seeking to punish media news coverage the prosecutors consider ill-motivated. One hopes that the launching of the investigation into the Fifth Dimension shows that Israel’s law enforcement is finally getting its priorities right. The progress of the investigation will tell.

Avi Bell is a professor of law at Bar-Ilan University and the University of San Diego, and a senior fellow at the Kohelet Policy Forum.

Avichai MandelblitBenny Gantz