Israel’s Para-state Institutions Operating in the United States

Israel’s Para-state Institutions Operating in the United States Photo: BADIL

Co authored by Joseph Schechla

The Jewish National Fund (JNF), a.k.a. Keren Keyemeth le Israel, Inc. (KKL), has a long and obscure legal existence in the United States that occasionally has come to light in open court.  This article addresses the history of selective U.S. legal and diplomatic action concerning the JNF. The JNF’s U.S. arm defines itself as a charitable organization, thus claiming and enjoying tax exemption with its associated para-state organizations, only once effectively challenged since 1926. The context and arguments of domestic U.S. jurisprudence now may suggest a new direction for U.S. federal courts to reconcile some of the related legal contradictions that also having grave consequences for US foreign policy towards the Middle East, but primarily for the direct victims of Israel’s para-state institutions.

 

The JNF, as an authorized agent of the State of Israel—like sister para-state organizations, the World Zionist Organization/Jewish Agency (WZO/JA) —historically have sought public law status since their initial registration in England, as those organizations formed the Jewish colony’s shadow government in the British Mandate period in Palestine preceding the proclamation of the State of Israel. The JNF is organically linked with the State, as affirmed in Israeli legislation, and shares with it deeper antecedents of Zionist ideology based on racialist criteria enshrined in the JNF’s Memorandum of Association (charter).

The first beneficiary of Palestinian lands, homes and properties appropriated from the 1947–48 ethnic cleansing, the JNF today claims to possess 13% of the lands of Israel, which it claims to have “redeemed” and to hold “in perpetuity” for people “of Jewish race or descendency.” Uncharacteristic of a bona fide charitable institution, the JNF’s and WZO/JA’s unlawful, self acclaimed tenure and discretion over the disposition of Palestinian assets form the principal engine of the cruel, violent and costly conflict over Palestine, with regional and global consequences. The para-state organizations’ continued illicit possession of those stolen properties perpetuates the dispossession of the indigenous people of the country, while those institutions remain Israel’s principal development agencies delivering material benefits exclusively to “Jewish nationals,” who hold that superior status in rights and privileges over other (non-Jewish) citizens of Israel.

The New York Secretary of State website lists the organization “Jewish National Fund (Keren Keyemeth le Israel), Inc.,” founded on 3 February 1926, prior to the proclamation of Israel, as a domestic U.S. nonprofit organization. Until 2003, no other legal entity was registered as the JNF in the U.S. separate from the JNF/KKL. The KKL in Israel succeeds the entity originally charted in the United States.

Recently, disputes have arisen between the Jerusalem-based KKL and its international branches. In light of encroaching legal and popular scrutiny of their operations, the U.S. and UK affiliates have sought at least a rhetorical hedge against exposure of an association with the KKL that would cause them to lose nonprofit status in their host countries. The U.S. entity finally registered itself in New York State as a separate entity in 2003. The New York Secretary of State website lists “KKL-USA, INC,” founded 15 May 2003, as a nonprofit association. Information resurfacing shows that the U.S. affiliate is actually not separate from the KKL-Israel, as indeed it never has been. Donations to the U.S. arm of the JNF have historically formed the largest source of cash contributions to the KKL-Israel.

JNF, an Unregistered Foreign Agent of the Government and State of Israel?

While the JNF came into existence in the U.S. well prior to the Proclamation of the State of Israel, it played a well-known and crucial role in the pre-state period of Israel in the planning and implementation of the ethnic cleansing of Palestine.1

After Israel’s War of Conquest, the JNF then became formalized as part of the State of Israel with the 1953 KKL Status Law. Despite its formal para-state status under the KKL Law, the U.S. bureaus mostly continued the recognition of the JNF’s putative nonprofit status as unchallenged before and after the establishment of Israel.

Tax exemption for its institutions and donors has long served as a valuable asset for Israel and its Zionist project of colonizing Palestine, however, that status is vulnerable to challenge in the United States. In 1956, Israel refused to abide by President Dwight D. Eisenhower’s ultimatum to withdraw from the Sinai and, only when President Eisenhower threatened to end tax exemption on the donations that Israel receives from the United States, did Israeli Prime Minister David Ben-Gurion agree to withdraw his forces.2

Recent research has revived dormant arguments and legal analysis such as that of the late U.S. attorney and legal scholar W. Thomas Mallison.3 Petitioning on behalf of the American Council for Judaism (ACJ) in 1968, Prof. Mallison successfully advocated in a D.C. Superior Court to normalize the status of the JNF’s parent organizations WZO/JA in the United States as foreign agents. He prevailed in his argument that: “It must be doubted that the same fund-raising institutions can be public and governmental in Israel and private and philanthropic in the United States.”4

Given that the State of Israel has incorporated this racialist WZO/JA and JNF-authored notion of “Jewish nationality” and elevated it to a materially superior status over mere “citizens” of Israel. These para-state institutions serve the State’s Jewish only development on Palestinian land and property in historic Palestine, but also serve to mobilize Jews in the colonialist transfer of persons and money from some 50 other countries. There, they carry out those functions that would constitute grave diplomatic breaches were official Israeli diplomatic missions to do so formally and overtly in other States’ sovereign jurisdiction. This functional distinction between official/nonofficial roles in the colonial project remains ambiguous, even moot, especially considering that JNF and WZO/JA officials also carry Israeli diplomatic passports and enjoy diplomatic immunity while carrying out their activities abroad.

As early as 1964, the ACJ also obtained a U.S. State Department ruling that rejected a fundamental claim and ideological premise grounding the three main Zionist para-state institutions and their operations in the U.S., and elsewhere. In that year, U.S. State Department Legal Advisor Phillips Talbot affirmed that the United States does not recognize “Jewish nationality” as a concept of international law.5 This remains significant, given that the WZO/JA and JNF launched the concept and formal status of “Jewish nationality” as an expression of neocolonial notions of a separate Jewish “race” that are enshrined in the JNF charter (Article 3, para. 3). Moreover, what concerned the U.S. Government directly was that the para-state institutions continue to apply this separate “nationality” status to people of Jewish faith who are citizens of other countries, including the US, recruiting those citizens to colonize Palestine and/or collecting their tax-exempt monetary contributions dedicated (wittingly or unwittingly) for the Zionist population-transfer effort.

Since reregistering in the United States after a claimed “restructuring” following the staggering blow of its 1968 DC courtroom defeat, the WZO/JA and its sister JNF still enjoy U.S. federal recognition as nonprofit, tax-exempt entities in the United States.

In addition to being regarded as charitable organizations, the WZO/JA and JNF benefit from a unique U.S. law that grants tax-exemption on donations from U.S. citizens to any Israeli institution already exempted from taxes within Israel. This would serve as an alternate tax-exempt channel for funding Israel’s Zionist project, including the WZO/JA and JNF, in the event that their U.S. operations were found not to be properly entitled to nonprofit status under U.S. law, since they operate as agents of the Government of Israel. That obscure law also allows the Zionist organizations to conceal the tax exempt funding from the United States for affiliates of the JNF inside Israel, including Hemanutah, which carry out settlement building on Palestinian lands with funding from the United States in violation of U.S. and public international law.

Political science professor David Newman at Ben Gurion University has revealed further how Israel has used private U.S. donations, secured under the tax-exempt status of its key para-state organizations, to develop settler colonies in the occupied Palestinian territories.6 The record shows that, through a variety of methods, including “government subsidies, shadowy land deals, loopholes in military spending, and an unaudited bait-and-switch in which U.S. aid was used to free up billions of dollars for spending on the settlements formally opposed by the U.S.,”7 the current network of colonies that house approximately 500,000 Jewish settlers is primarily funded by U.S. charitable contributions also in violation of U.S. and international law.

No significant challenge of the federal tax exempt status of the JNF and its affiliated para-state entities has taken place in the United States since the 1985 dismissal of a 1983 lawsuit challenging the tax exempt status of six Zionist organizations in the Federal District Court in Washington DC. In Kareem Khalaf, et al v. Donald Regan, et al.,8 ten Palestinians, five U.S. citizens and one Israeli brought a suit against six Zionist organizations in the U.S. Federal Court in Washington DC. The petitioners called on the Secretary of the U.S. Department of Treasury and the Commissioner of Internal Revenue to revoke the tax-exempt status of the WZO (American Section), the Jewish Agency (American Section), the United Israel Appeal, the Jewish National Fund and Americans for a Safe Israel. The tax exempt status is an indispensable incentive for American Zionists to donate millions of dollars yearly to those organizations, and without which tax exemption would substantially curtail donations. These six organizations alone account for at least $750 million sent yearly to Israel from private U.S. donors.

The Palestinian plaintiffs in Khalaf v. Regan, including five elected mayors whom Israeli authorities had recently deposed, claimed that they had lost their lands and crucial water sources as a result of actions by the Israeli occupying forces in the occupied territories. Those actions, in turn, were enabled by substantial funding from the tax-exempt Israeli para-state organizations.

In addition to the violations that the Arab defendants endured, the suit also details accounts by the U.S. citizens, including one who served as the executive director of the Washington Regional Office of the JNF, about the misuse of funds collected in U.S. donations. Pursuant to 26 US Code Section 501(c)(3), which strictly confines the actions of “charities” to those pursuing religious, charitable or educational purposes, the claimants asserted that these organizations are merely conduits through which tax-exempt funds intended for charitable purposes flow from the U.S. directly to “components of the State of Israel.” Further, the claimants argued that the function of these organizations “…supports, financially and politically, the confiscation of land on the West Bank owned by Palestinian Arabs [converting it] for the establishment of exclusively Jewish settlements….[which] contravene the state foreign policy of the United States… [and] the public policy…in that the settlements are discriminatory on the basis of race and national origin.”Despite weighty evidence offered by the plaintiffs, particularly the former executive director of the JNF’s regional office, government lawyers convinced the judge to dismiss the case on procedural grounds, unwilling even to hear the substantive arguments, finding that the plaintiffs had no standing under U.S. law to challenge the Israeli State agencies’ tax-exempt status.

In a 1999 municipal court case in New York, a JNF affiliate was denied nonprofit registration. In that case, the JNF had submitted an application to the municipal court in Nassau County for tax-exemption of its affiliate office in Long Island. The JNF claimed that its affiliate was eligible for exemption, because it was an organization whose purposes are religious, charitable and welfare related. The Nassau district attorney objected to the claim, saying that “the JNF was a political, discriminatory and racist arm of the state of Israel, and was in no way an organization whose purposes were religious, charitable or welfare related.”

That frank decision provides some basis for a renewed challenge to the unlawful federal recognition of nonprofit status of the JNF, WZO/JA and their affiliates. Furthermore, a recent UN refusal to recognize the JNF-US as a nongovernmental organization eligible for consultative status with the UN through the Economic and Social Council (ECOSOC).

Despite its disqualifying features, the JNF-US sought consultative status with ECOSOC in 2007 that arguably would legitimize the JNF internationally as (1) a nongovernmental organization (2) upholding the UN Charter. On both counts, and despite a facile and highly ideological letter of support from Sen. Hillary Clinton and other members of Congress, the JNF failed in its bid, following a close vote of ECOSOC’s NGO Committee.

Subsequently, rumors abounded in Geneva diplomatic circles that the U.S. delegation was planning to table a resolution at the summer 2007 ECOSOC session to recognize the JNF as an NGO in consultative status, thereby over-riding the NGO Committee’s rejection. (The U.S. delegation had taken similar action earlier to restore consultative status of the conservative organization Freedom House, overturning Cuba and China’s successful suasion in the NGO Committee.) Apparently realizing that an ensuing ECOSOC debate on the merits only would lead to more harm than good for the JNF’s standing, the U.S. delegation demurred. After a three-year hiatus, the JNF will be eligible to reapply in 2010.

Ironically, the strongest basis for challenging the JNF’s nonprofit status in the United States may come from the recent court decisions terminating the nonprofit status of numerous Muslim charities in the United States. For example, in a case from the U.S. District Court in Massachusetts, United States v. Mubayyid and Muntasser,9 the court denied a motion to dismiss an indictment against the founders of Care International alleged as having fraudulently obtained a charitable exemption under IRS section 501(c)(3). In seeking dismissal of the indictment, the defendants argued that they were being treated differently from non-Muslim organizations, including the Jewish National Fund.

The court said:

To establish discriminatory effect, defendants must prove that similarly situated individuals of a different religion could have been prosecuted, but were not.10 A similarly situated person is “one who engaged in the same type of conduct, which means that the comparator committed the same basic crime in substantially the same manner as the defendant.”11

In their motion to dismiss, the defendants contended that non-Muslim charities engaged in (and continue to engage in) activities similar to those conducted by Care. As an example, the defendants pointed to the Jewish National Fund which, they contended, has promoted information on its website about Israel’s military successes and promoted the interests of Israeli soldiers.

Defendants also suggested that certain Jewish charities have conducted emergency appeals to provide aid to the victims of the conflict between Israel and Lebanon. Defendants also pointed to the activities of Catholic and Protestant groups in Ireland.

The court determined, however, that the defendants failed to show that those other religiously affiliated organizations had committed acts in substantially the same way as the defendants. They had not proved that any of these groups fraudulently obtained tax exemptions by making materially false statements, or by concealing information regarding their activities or relationships with other groups, including foreign governments. Nor had defendants demonstrated that these non-Muslim charities filed fraudulent tax returns or conspired to defraud the United States. Absent such evidence, the defendants could not establish discriminatory effect.

After having been granted tax exempt status in 1993, Care subsequently lost that status and the court found them fraudulent in 2007.

This illustrative decision by a U.S. federal district court indicates that no court has determined one way or the other the issues of whether the JNF’s charitable organization status in the United States was fraudulently obtained, but the case demonstrates that the simple granting of charitable status by the Internal Revenue Service (IRS) to JNF and WZO/JA does not establish that the grant was proper, absent court determination of the issue.

Political and Ideological Interference with the Law

As in many countries, political and ideological pronouncements influence the court’s perceptions in the United States. In 2007, the JNF-US also obtained Pennsylvania Senator Bob Casey and Arizona Senator Jon Kyl’s assistance to petition the United Nations to recognize the JNF-US as a “global environmental leader.” The senators’ communication to the ECOSOC NGO Committee cited the JNF’s standard self-description as dedicated to six major development areas in Israel: ecology and forestation; water; community development within the 4 June 1967 boundaries; research and development; tourism and recreation; and education.12

The senators did not distinguish these seemingly innocuous functions from their actual purpose. More informed readers would appreciate that these JNF-US functions are consistent with the organization’s illegitimate geographical scope of its activities or the inherent colonial and population transfer objectives, not benign development functions. In their present phase, the JNF and JNF-USA appear to seek bona fide—this time, under private law—as mere environmental service providers, serving also in third countries (other than United States and Israel/Palestine). Nonetheless, the WZO/JA and JNF core purpose remains illegal, no matter by which direct or indirect ways they pursue it.

While WZO and Jewish Agency operate and report more discretely for the Jewish community, the arguments remain the same for them as for the JNF. The JNF, for various practical and ideological reasons, is the relatively more visible organization, with its little blue collection boxes in every functionally Zionist household in the 50 or so countries of its operation. That distinction may explain the more public posture of JNF over its parent institutions. The debate over the JNF, as vital as it is to Israeli and Zionist colonial interests, also serves as a bell-weather for Zionist ideologues and strategists in order for them to gauge the level of opposition to formerly unchallenged Zionist organizations’ off-shore operations.

Recent research on the subject provides substantial evidence on the roles of the JNF and WZO/JA’s in acts of ethnic cleansing in violation of U.S. and international law, purposely concealed its associations with its affiliates engaged in illegal colonizing activity, has illegally redirected U.S. charitable contributions to the construction of prohibited settler colonies in violation of express domestic law and stated foreign policy, and has otherwise engaged in conduct sufficient for the defendants in the Mubayyid case to demonstrate discriminatory effect under the Court’s analysis above.

The context and arguments of domestic U.S. jurisprudence may suggest a possible new legal correction in which U.S. federal courts could and should review the self-acclaimed nonprofit, tax-exempt status of such organizations that constitutionally violate the law. Such organizations subject to such a review would include those promoting or using violence and/or, in this case, pursuing racially oriented colonial-settler operations that also carry out population transfer while programmatically seeking to influence and undermine U.S. foreign policy. Exceptionally among bona fide charities, the JNF and WZO/JA not only engage in such activities that contradict their charitable status claims, but also the JNF-USA functions as an organ of KKL-Israel, qualifying it as the agent of a foreign state.

This legal past may be prologue.

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Endnotes
1.       Ilan Pappe, The Ethnic Cleansing of Palestine (London and New York: Oneworld, 2006), among others.
2.       Curtiss, Richard, “U.S. Aid to Israel: The Subject No One Mentions,” The Link, Vol. 30, Issue 4 (September–October 1997.
3.       W. Thomas Mallison, “The Zionist-Israel Juridical Claims to Constitute “the Jewish People” Nationality Entity and to Confer Membership in It: Appraisal in Public International Law,” 32 George Washington Law Review (1964), 983–1075.
4.       Ibid.
5.       Reprinted in Mallison, op cit., Appendix B, P. 1075.
6.       David Newman, Population, Settlement and Conflict: Israel and the West Bank (1991, Cambridge University Press).
7.       Associated Press, “No one knows full cost of Israel’s settlements ambitions” USA Today (14 August 2008), at: http://www.usatoday.com/news/world/2005-08-14-israelsettlercosts_x.htm.
8.       U.S. Dist. LEXIS 23631,85–1 U.S. Tax Cas. (CCH) P9269; 55 A.F.T.R.2d (RIA) 647.
9.       476 F.Supp. 2d 46 (D.C. Mass. 2007).
12.    Casey Leads Bipartisan Effort To Urge U.N. To Accept Jewish National Fund For Consultative Status,” 9 May 2007, Robert P. Casey Jr. website, at: http://casey.senate.gov/newsroom/press/release/?id=dab879ea-e8c4-4a24-877e-b5d486c7f2b2 

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* Karen H. Pennington is a lawyer in Dallas, Texas who represents numerous Palestinian clients in immigration and refugee cases in the immigration and federal courts of the United States.
* Joseph Schechla is coordinator of the Habitat International Coalition’s Housing and Land Rights Network (HIC-HLRN), supporting Member organizations in their development, advocacy and various struggles to realize the human right to adequate housing and equitable access to land in the Middle East/North Africa and other regions across the globe (www.hrn.org and
www.hic-mena.org).