According to the current edition of the New Yorker, magazine, Beverly Hills billionaire Haim Saban donated $7 million to the Democratic National Committee for its new headquarters shortly after former president Bill Clinton personally lobbied the president of Brazil to approve a private business deal that netted Saban $1.5 billion in capital gains.
Describing the 2001 sale of Saban’s Fox Family network to Disney, which brought the Egyptian-born Saban — a dual citizen of Israel and the U.S. — $5.3 billion, author Connie Bruck writes:
Because Disney and Fox Family operated internationally, the deal required regulatory approvals from many countries. “Brazil could have been a deal-breaker,” Chernin recalled. In a confidential memorandum written on October 1st, Fox Family’s attorneys in Brazil explained that the deal would have to be reviewed successively by three government bodies; from past experience, the attorneys estimated that the process would take between six and eight months, which would push the deal past the deadline, at the end of October. Disney refused to close without Brazilian approval. Both sides retained counsel for the anticipated litigation.
“Haim said, ‘Let me make a phone call–maybe I can get something done here,’ ” Chernin told me. “He was extremely helpful in getting Clinton to help. Clinton called the President of Brazil.” Matt Krane [Saban’s former laywer and tax adviser] recalled how Saban described to him what had happened: “Saban had called the Fox Family attorney in Brazil and asked, ‘How long will it take?’ It was months. He said he asked the lawyer, ‘Who is your finance minister?’ The attorney understood, and he said, ‘There is no political pull available in this process.’ Saban called Bill Clinton and asked, ‘Can you help me?’ ” Soon afterward, the approval came through.
On October 24, 2001, the Disney-Fox Family deal closed. About a month later, Krane says, Saban gave him the task of devising a tax strategy for a donation of ten million dollars to the D.N.C., toward the construction of its new headquarters. “Of course, you can’t get a deduction for a political contribution,” Krane said. “Our mission was to structure it so he could get a tax benefit. So I got heavily involved, and worked a lot with D.N.C. lawyers to do it.” Via e-mail, Krane and the lawyers discussed possible real-estate strategies. “It started to become clear that any plan was too difficult to implement,” Krane told me. In January, 2002, the resolution was that Saban reduced his donation from ten million to seven million.
It was the sale of Fox Family to Disney, according to Bruck, that also got Saban into serious tax trouble:
But the biggest bill by far that Saban didn’t want to pay was the government’s. In late December, 2000, after Saban had exercised his right to sell his share of Fox Family, Matt Krane said that he received a call from him. “He said, ‘Let me ask a question. What are we doing on taxes on the sale?’
“I said, ‘We’re going to pay the capital-gains tax, like we always discussed.’
” ‘What is it?’
” ‘Like, twenty-seven per cent state and federal, combined.’
” ‘Are you fucking kidding me? Are you fucking crazy?’ He was shouting, ‘I’m not paying that!’ ”
Saban denies Krane’s account of their conversation.
There follows a sordid but riveting tale of tax shelters, alleged kickbacks, lawsuits, Congressional investigations, the works, all in the course of a long feature article about a little-known though immensely powerful player on both the Hollywood and Washington stages.
Read the whole thing.
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