How Chabad attracts wealthy businesspeople in Eastern Europe and in the second world has a lot to do with how Chabad linked up with Vladimir Putin and helped to destroy Russia's democratic opposition – and the wealthy Jews that backed it.
The Israeli business daily Globes has a long – and very flawed – feature article on Chabad's business connections.
Chabad has more central control than Globes realizes, although that control is less than what would exist in a normal organization.
There are other mistakes, as well, the largest being the actual lever that causes wealthy oligarchs to gravitate to Chabad.
What is that lever?
Chabad's deal with Valdimir Putin. Put simply, businessmen who are kind to Chabad get entré to the Kremlin; those who are not supporters of Chabad often do not, and their businesses inside Russia are harassed by Putin's gendarmes and regulators. Some are even arrested on trumped up charges or have their businesses seized.
In other words, Russia is not a true free market and if you are Jewish and don't have Putin's poodle, Chabad's Mafioso Chief Rabbi of Russia Berel Lazar on your side, you are opening yourself up to all kinds of Putin trouble.
What does Putin get in return for this?
He gets Lazar's near-constant endorsement. Lazar tells US Congresspeople and America Jewish leaders that Putin is not a dictator, that he respects religion, that he is good to the Jews and that Putin should not be attacked for incidents – like crackdowns on non-Russian Orthodox Christians. In other words, Lazar provides Putin with diplomatic cover.
Ha'aretz documented much of this almost a decade ago. Here is an excerpt of my post on that Ha'aretz article from December 11, 2005 followed by the Globes piece:
[Oligarch Roman] Abramovich, who had business ties with [Chabad Oligarch Lev] Leviev, recruited the Israeli diamond merchant for a struggle on behalf of Putin and against Gusinsky. In return, Leviev received the support of Putin, who in 2000 was elected president of Russia. That support made it possible for Lazar to receive Russian citizenship in record time and to be recognized in practice as the chief rabbi of Russian Jewry. Shayevich was shunted to the sidelines.
The Jewish "federation" of Lazar and Leviev became the darling of the government. This was clearly manifested when President Putin took part in a resplendent ceremony to dedicate the FEOR center in the Marina Roscha neighborhood in 2001.
A plaque at the entrance to the building lists the donors. They include Leviev, his partner Gaydamak, [Chabad oligarch Vladimir] Slutsker [please see below] and other oligarchs. But at the top of the list is Abramovich. He donated $5 million for the construction of the building. Lazar and FEOR left REK. In 2002 Gusinsky was forced to leave Russia and then to sell his assets there. The authorities launched an investigation against him for tax violations. He based himself in Israel and Europe and invested in the Israeli daily Maariv and in the local Russian press; during the past year he has spent most of his time in the United States. He was replaced as REK president by Leonid Nevzlin, Khodorkovsky's associate. However, a year later, when it became apparent that the Putin government supported FEOR, Nevzlin realized that his place at the head of an organization identified with Gusinsky, who is loathed by the government, was liable to be detrimental to him and to affect Yukos as well. Nevzlin resigned and the deterioration of REK has continued apace ever since.
In contrast, FEOR has flourished in the past five years. The success of Lazar and Leviev can be attributed to the fact that Putin used them in his struggle against Gusinsky and received a Jewish "umbrella" from them in return. But another reason for the close ties between the Putin government and FEOR lies in the promises made by Leviev and Lazar that they would make their connections available to Putin and assist the Kremlin to open doors in the corridors of power in Washington. Most importantly, they let Putin and his aides understand that their influence and lobbying would bring about the abolition of a 1974 Congressional amendment to the Trade Reform Act sponsored by Senator Henry Jackson and Representative Charles Vanik, both Democrats. Putin is deeply distressed by this legislation, which stipulates that countries, such as the former Soviet Union, which restrict freedom of movement and prevent the free emigration of their citizens will not receive special trade benefits from the United States. Even though the Jews of the former Soviet Union, and then Russia, were allowed to leave, the amendment has not been repealed.…
… Rabbi Lazar talks of an organization that has 200 communities across Russia and which provides both spiritual support (sacred articles, religious services, rabbis) and material backing (food, education, health, financial aid) to hundreds of thousands of Jews. "In Moscow alone," he says in an interview, "130,000 Jews have ties with us."
There are some who are skeptical of these figures. Two years ago, when Tzipi Livni, then Israel's immigrant absorption minister, asked FEOR for a list of these Jews, her request was rejected with the slightly peculiar explanation that this would be a violation of privacy.
Gusinsky supported democracy. Putin is a neo-Stalinist. Chabad supported Putin and worked to destroy Gusinsky and the Russian Jewish Congress. Then, late last year they got one of their own oilgarchs, Vladimir Slutsker, elected head of the now-comatose RJC. What was Slutsker's first (and last) big move? He forced out the non-Chabad Chief Rabbi of Moscow:
The conversation with Slutsker took place over a month ago in his luxurious office, which is located in a modern new glass building in the center of Moscow. Even though he was ousted some weeks ago from his position as president of the Russian Jewish Congress (REK), he was in buoyant spirits. Like all the Russian oligarchs, he is surrounded by bodyguards, chauffeurs and young energetic female assistants dressed in tailored suits. Hanging above him on the wall is a photograph of the Lubavitcher Rebbe. "Don't get me wrong," Slutsker emphasizes. "I do not care about money and I am not greedy, because I am a kabbalist [Jewish mystic] and therefore I have added the name Moshe Shlomo. I am not a Chabad member like Leviev, but I recognize the spiritual authority of the Lubavitcher Rebbe."…
Slutsker explains that he has always been drawn to public activity, especially "spiritual religious activity," and therefore he has donated generously from his own pocket to Jewish institutions and organizations in Russia. Under the influence of "my good friend" Rabbi Adin Steinsaltz, he says, he established a yeshiva and a kabbala center called Tree of Life, which according to Slutsker has 200 students. "A year and a half ago I was approached with a request to save the Russian Jewish Congress, which was in a state of collapse and barely functioning," he continues, "I saw this as a challenge and threw myself into the work."…
Slutsker's major and most talked-about dispute is with Rabbi Goldschmidt. At stake is control of a property - the headquarters of the Russian Jewish Congress, located in a building that was transferred to the ownership of the Jewish Community in Moscow, which is headed by Goldschmidt. As a religious organization, the community has a tax-exempt status. "After some time," Slutsker notes, "Rabbi Goldschmidt asked us to pay him rent as though the offices actually belong to him. Naturally, I and the congress refused to pay."
Goldschmidt's confidants say that the request was not for rent, but payments to cover the costs of ongoing maintenance of the structure, such as electricity.
Be that as it may, on September 15, 2005, Slutsker, to his "great surprise," received a fax from a rabbinical court, the Jerusalem Court for Civil Law and Ancestral Law, in which he was notified that he and the congress were being summoned to din Torah, a lawsuit in which judgment is given according to the strict letter of traditional Jewish law. The plaintiff was the "Jewish Community of Moscow." "I did not even bother to answer them," Slutsker says. "I do not recognize the authority of a court in Jerusalem to address a commercial dispute in Moscow. What connection do they have with me?"
Ten days later, in one of those strange coincidences, Goldschmidt was deported from Russia. "There is absolutely no connection," Slutsker states.
Now, here is Globes flawed piece:
Business networking Chabad style
Two of the suitors for Nochi Dankner's troubled IDB put the focus on the financial clout of Chabad affiliated tycoons.
Shlomit Lann • Globes
In the prosaic world of economics, two foreign Jewish tycoons are battling for control of IDB Holding Corp. Ltd. (TASE:IDBH): Eduardo Elsztain from Argentina, and Alexander Granovsky from Ukraine. But this is not how things appear in Shturem.net, one of Chabad's online newspapers. It recently ran a headline, "Indications: The supporter of Wolf Yigbor (error in the original) against the supporter of Greenblatt". In other words, Granovsky, a supporter of the Chabad emissary in Odessa, Rabbi Avraham Wolf, is facing off against Elsztain, who supports the chief Chabad emissary in Argentina Zvi Greenblatt.
For the IDB deal, and with Rabbi Wolf's blessing, Granovsky even set up Chabad 770 BV (for the building number on Eastern Parkway in Brooklyn of the late Lubavitcher Rebbe Menachem Mendel Schneerson, and therefore of special significance for Chabad hassidim), to make money, which would be used for charity. "I assume that something will be left over for himself," said cynically a Chabad source who does not view with favor the use of Chabad's name by the Ukrainian oligarch. Granovsky, for his part, made certain that it was known that he "received the rabbi's blessing" for the acquisition of IDB. He obtained the blessing when he made a pilgrimage to the grave of the Lubavitcher Rebbe, who, physically at least, has not been with us for almost 20 years.
IDB chairman Nochi Dankner, visited New York in early September, where he took time off to lay tefillin at the Lubavitch World Headquarters in Brooklyn. God moves in mysterious ways, and Dankner did not achieve much: on his return to Israel, a recommendation for an indictment by the Israel Securities Authority was waiting for him.
Chabad, known for excellent relations with the authorities in Washington, Moscow, and Jerusalem, is now an organization for global Jewish financial networking, connections, and involvement. The network is open, with no central financial organization, comprising thousands of strings that start in small communities around the world, especially in the former USSR, but also everywhere else, from Katmandu to Buenos Aires, and Mazkeret Batya. This voluntary network, with its near-missionary ideological elements, has moral and spiritual ties with the center in Brooklyn, but no financial or organizational anchors.
Businessmen identified with Chabad to some degree or other include, besides Dankner, Australian tycoon Joseph Gutnick, Israeli venture capital Shlomo Kalish, Shari Arison through the Ted Arison Foundation, Mordechay Zisser, Lev Leviev, and his former business partner Shaya Boymelgreen.
A long list of Russian oligarchs, some of whom were far removed from Judaism before they encountered Chabad, are among its supporters and donors, including Mikhail Mirilashvili of Georgia, Ukrainian billionaire Gennadiy Bogolyubov, and Alexander Mashkevich. Around the world, Chabad supporters include South African billionaire Nathan Kirsh, Starkist Foods co-owner and CEO Michael Mittelman, and American billionaire Ronald Perelman.
Chabad is not always pleased by its supportres. Chabad businessman Avraham Taub, the CEO of Shefa Yamim Ltd. (TASE: SEFA), which has diamonds exploration license in Israel, claims that the late Rebbe Schneerson told him that diamonds would be found in the Kishon River below Mount Carmel. Chabad takes umbrage at the claim, saying that it is an interpretation of one of the rabbi's allegorical remarks.
Adv. Mordechai Tzivin, who is familiar with the world of Jewish philanthropy, emphasizes that he does not speak for Chabad ("I am unworthy"), but who sought its permission to speak with "Globes", says, "Chabad has become a magnet for big donors, without us approaching them. The donors usually come to us at their own initiative."
In contrast, Menachem Friedman the co-author with Samuel Heilman of "The Rebbe: The Life and Afterlife of Menachem Mendel Schneerson", published by The Princeton University Press in 2010, says otherwise. "Chabad definitely functions as a business network," he says. "If an emissary visits a Ukrainian oligarch and says, 'There is a Jew in Israel who is in trouble. I believe in him. Meet him and you will both profit.' The oligarch will say to himself, 'The rabbi's word is good. He won't lie to me, unlike the businessmen I meet, and I have no way to check thoroughly."
Tzivin angrily refutes this, saying, "Chabad does not sell connections for money. Chabad emissaries do not use the argument of connections to get money. A rabbi is completely forbidden to offer such an exchange for a donation. Emissaries are not in business, and they do not offer to open doors. People donate because they identify with Chabad's special approach, which does not seek to bring you back to orthodox Judaism, but to enrich your spiritual life and to connect you with your Jewish heritage."
In every corner of the world
The foundation for Chabad's huge financial activity is its emissaries enterprise, who reach every remote corner of the world, and must use local donations to finance the establishment of the community that were sent to found, as well as its institutions - schools, synagogue, poorhouse, Chabad house, etc. The emissary is a man who completed his studies at a yeshiva, is usually a rabbi, newly married, and is sent to a place, especially since the collapse of the USSR, where there is no Jewish community, but there are some Jews and people who might be Jews.
Unless something unusual happens, the emissary will live in this place for the rest of his life. In the first year, he will receive a basic stipend from the Lubavitch World Headquarters to begin activity, generally $3,000-4,000 a month. Later, he must establish his own financial base. His connection with Headquarters will be spiritual, moral, and if necessary, such as medical problems, Headquarters will use its global network to help him. But there is no regular economic relationship between "the company headquarters" and its "branches".
The Lubavitch World Headquarters has an annual budget of $30 million, reportedly from donations from wealthy men who prefer to donate directly to it rather than to one of the "agencies". Chabad uses the budget for maintenance, publishing, and activities such as an online school for emissaries' children who are far from a Jewish school.
"Chabad has an interesting hierarchal structure," says Rabbi Menachem Brod. "Usually, an organization of this size achieves command and control by paying people. Here, you are not paid, but you have authority in a hierarchy built from the bottom up."
"What is unique to Chabad," says Prof. Friedman, "is that it is a missionary group that takes in all kinds of people, some of whom have made great wealth in the modern financial world. It can do this because even though its people are haredi (ultra-orthodox), they are not typical haredim. They have an education, and maybe more importantly, a great openness to the modern world and the modern business world. On the other hand, these businessmen live with huge risks and terrible anxiety, they are walking over a pit, and when the insecurity builds up, they seek help."
Chabad has a Chinese wall
Chabad's main annual event is its emissaries convention at the Brooklyn headquarters, especially the concluding evening. Participating emissaries, each of whom pays his own way and stays with friends or relatives, is a demonstration of power to which Chabad-associated tycoons from around the world are invited. "The emissaries convention is a kind of multinational company that nearly raises anti-Semitic connotations from the 'Protocols of the Elders of Zion'," says Prof. Friedman.
Rabbi Brod has a different take on the demonstration of power, where emissaries compete to bring the richest and most respectable donors. "Every emissary may bring friends, donors, or people for whom it is important to demonstrate his standing," he says. "Many emissaries come with their donors to strengthen their ties with the local emissary by showing them a complete picture of the organization."
"Globes": What do you think about the IDB drama, in which two businessmen, brought by their rabbis, are starring in, and every scene is depicted as 'Chabad versus Chabad'?
Rabbi Brod: "We've often been asked what is a Chabadnik. It's hard to define. Unlike other communities, Chabad is heterogeneous, even amorphous. Neither Granovsky nor Elsztain are classic Chabadniks, but if a person joins Chabad and feels close to the Lubavitcher Rebbe, who am I to tell him that he is or is not a Chabadnik?"
What about Granovksy's Chabad 770?
"This is not a Chabad charity. It is a private foundation of a private individual. We have a dilemma about this. There are Chabad hassid businessmen who use the name Chabad in their businesses. There have been cases in which people were asked to remove the name. We are not bothered that the company is called Chabad, but we are bothered that people might think that Chabad is acquiring companies."
Have there been requests to change the name?
"I don’t know. If there have been, it obviously has not been through me."
Why shouldn't Chabad, with all its money, not operate as a kind of investment fund to increase its wealth?
"The rebbe made a clear separation of activities. Chabad is not supposed to be engaged in business, and there is a ban against joining business partnerships. There were emissaries who asked the Rebbe about joining kashrut businesses. He told them they should see to that Jews ate kosher. Others would provide them with kosher meat."