Jewish Journal

The spy turned big-shot Hollywood producer- read the translated interview with Arnon Milchan!

by Noga Gur-Arieh

December 10, 2013 | 12:55 pm

"I should have said ‘Fuck you! You know what? I did it for my country and I’m proud of it." / screen caption from Uvda..

What you are about to read sounds like a big Hollywood production, but it is the true story of the former life of the very successful film producer, Arnon Milchan, as an Israeli spy...

The popular Israeli news show, Uvda (Fact) opened its 20th season with a revelation of one of the biggest secrets of Hollywood. Arnon Milchan, the Israeli-born businessman who owns New Regency Films and has been a part of an array of blockbusters, confirmed the speculations of his past as an Israeli spy. In an interview with reporter Ilana Dayan on Channel 2’s Keshet Broadcasting Uvda, he detailed his real-life work on numerous operations, including the purchase of technology needed to operate nuclear weapons.


Israelife brings you the parts of the transcript of the show, translated to English, courtesy of Keshet and Uvda. Hollywood stars such as Russell Crow, Robert De Niro and Ben Affleck, as well as significant characters in Milchan’s past and present lives, were interviewed as well, but the parts brought to you here contain solely the interview with Milchan.


“Do you know what it’s like to be a 20-something kid whose country let him be James Bond? That’s action, it’s exciting!” he says to Dayan, as she begins to unveil his story. She then begins tracing Milchan's career from the late '60s and early '70s, when he was a young businessman in the United States. Around that time, he met with Shimon Peres (now the President of Israel) and the two became close. As Peres was in the midst of creating the nuclear reactor in Israel, Milchan assisted with the efforts to acquire equipment and knowledge for Israel’s nuclear project through the secretive agency Lakam, Israel’s Bureau of Scientific Relations.


Milchan: “As a foreigner, I was able to open foreign bank accounts. “

Dayan: “Which is something the country can’t do?”

Milchan: “Which is something the country can’t do. There are all kinds of things that the country can do, but won’t, such as buying things that indicate something else. So it was better if someone else buys them.”


Dayan then mentions that in the 1970s, Milchan begins brokering international deals in the shadows. At the peak of his secret activity, he operated 30 companies in 17 different countries, all being a cover to Lakam’s activity. At the time, the man who ran Lakam was Benjamin Blumberg.


Dayan: “Were there any missions that Blumberg gave you, which up until today no one knows they ever occurred?”

Milchan: “Sure!”

Dayan: “Were there any missions that Blumberg gave you and you replied ‘no way! Not gonna happen’?”

Milchan: “No”

Dayan: “Is there something he asked you to do and you tried and failed?”

Milchan: “Eventually, I succeeded in everything”


Dayan explains how back at the time, Israel was in need for secret plans for a nuclear facility, but no country in the world was willing to sell it.


Milchan: “I knew that if I would be in a certain place at a certain time with certain people, I will get something specific that the country needs.”


Milchan then traveled to Germany, where he managed to convince a German engineer to give him classified documents with plans for a facility, from a safe place where he worked.”


Milchan: “[I was wondering] how to make friends with him? Organically, so that in the end he would help me either as a friend or as someone who understands the problems of my country.”

Dayan: “Not for money?”

Milchan: “No, never. This never works”

Dayan: “If you know that this person, who works in such an eminent position…”

Milchan: “A person at an eminent position does not need money.  A chairman of a big company or something like that, I can’t buy him and the country does not have enough money to ‘buy’ him.”

Dayan: “What is your deal with him?”

Milchan: “Give me some information, I need something. Help me.”


Eventually, that engineer took those classified documents home with him one day, and “left” them on his dining table while leaving the house with his wife. The idea was that someone will come inside, take pictures and leave without a trace.


On September 22, 1979 there was a nuclear flash off the coast of South Africa. That was believed to be an Israeli nuclear test, as part of an alliance with South Africa. As part of that pact, South Africa provided Israel with the Uranium it needed, when in return, Israel produced an international PR campaign for the then Apartheid regime. The team producing the campaign was led by Milchan and Eschel Rhoodie, a propaganda specialist.


Milchan: “It wasn’t about just getting Uranium. It was about helping those who are helping us.”

Dayan: “Did you receive this briefing from Shimon Peres?”

Milchan: “More than Shimon Peres.”

Dayan: “From Benjamin Blumberg?” 

Milchan: “From Benjamin Blumberg and also from the Americans.”

Dayan: “They were also involved in this secret?”

Milchan: “Yes.”


When asked by Dayan how did he shed a bright light on the horrors of the Apartheid regime, he replies: “you do this through connections in television, with newspapers... Even financial support for organizations that decrease the heavy weight of the Apartheid, and I did that with joy and happiness…”


Dayan: “But it even came to purchasing a television station in California, for example.”

Milchan: “That’s right.”


Milchan’s latest film, Dayan mentions, is named “12 years of Slavery,” and tells the story of a black man who is abducted and sold into slavery.


Milchan: “What are you thinking about, Ilana? What is going through your head right now?”

Dayan: “I will tell you: you talked about 12 Years of Slavery and I asked myself if maybe, on a certain
level, it was you trying to make amends  in the story with South Africa, which still probably bothers you?”

Milchan: “Yes, probably. Subconsciously, it is possible that I hadn’t done enough.”

Dayan: “What do you mean?”

Milchan: “I hadn’t fought enough for the injustice of the Apartheid.”


According to Dayan, in the late 70’s, Milchan’s close relationship with the Israeli security system and the Lakam turns him into an important player in the rink. At that time, he brokered deals for hundreds of millions of dollars between Israel and U.S. companies for helicopters, missiles and other equipment.


Milchan: “What are ‘Security Deals?’ let’s say that the US sold missiles for 900 million dollars, the state of Israel paid the US, not me.”


Dayan then revealed that Milchan, as a mediator, took 60% of sales profit as a commission. She asks him what did he do with these profits.


Milchan: “Check, you can check.”

Dayan: “And what will I find?”

Milchan: “First, you’ll find that everything was returned to the state. Second, there were barely any profits.”

Dayan: “So you’re saying that from all the many deals you made for the state of Israel, or in the name of Israel or in favor or Israel, Arnon Milchan did not earn a penny?”

Milchan: “Yes. The state of Israel earned sometimes.”


After leaving a mark in the Israeli film industry with the movie Disengoff 99, Milchan moved to Hollywood. After several small productions, he encounters the script for a romantic comedy about a prostitute and a man who saves her. That film, originally named “3000,” became the major hit film, Pretty Woman.


Even at the top of the entertainment world, Milchan was still involved in several secret missions, including one that he would rather forget. In the early 1980’s, there was an Israeli attempt to smuggle "switches" – equipment that can be used for nuclear weapons manufacture, but can also be used for medical equipment. Behind the attempt was the California-based Milco company, owned by Milchan, with Richard Kelly Smyth as CEO.


Milchan: “I did not know they ordered the “switches.” I didn’t even know what those “switches” were…”


Robert Bonner, the U.S. Attorney in Los Angeles at the time, was interviewed by Dayan and insisted that Milchan knew about the switches. Milchan, on his behalf, denied the accusations.


Milchan: “He [Smyth] received a permission and sent. The fact that he maybe broke the law or not, or maybe received…The entire deal…”

Dayan: “But there’s something here I don’t understand. Even if it required breaking the law, doing things…in the shadows, and you tell me ‘It needed to be done for the state of Israel’…”

Milchan: “Yes.”

Dayan: “So you say that when he told me ‘Milchan knew’, he lied.”

Milchan: “Certainly.”


One of the biggest revelations made by Dayan on the show was that Sydney Pollack, the director of Tootsie and Out of Africa who died in 2008, was Milchan’s business partner and his confidant. Pollack, on his behalf, never confirmed this information.


Milchan: “He was my partner in export, aerospace manufacturing and airplanes, all kinds of things.”

Dayan: “Did Sydney know of the other things you did?”

Milchan: “We were pertners.”

Dayan: “No, but some of the things you did for the country, did you share with him?”

Milchan: “He had to decide what he was willing [to do] and what he wasn’t willing [to do.] To many things he said ‘no.’ To many things he said ‘yes’.”


In 1983, Milchan was involved in an attempt to recruit an American nuclear scientist to assist with the Israeli nuclear plan. Nervous from the meeting with Milchan and a high-ranking Israeli, the scientist turned to the FBI. The massive amount of proof on FBI desks started to pile up by the mid- 1980’s as Milchan himself released what is considered his greatest success of all times: Once Upon a Time in America, starring Robert De Niro. In 1985, the FBI discovered that the “switches” were sent to Israel without a proper license. FBI agents raided Milco and interrogated Smyth. Milchan, on his behalf, boarded the first flight to Israel.


Milchan: “I arrived in Israel, opened the TV and saw my face all over the screen with missiles flying, with Barbra Streisand with Once Upon a Time in America – they put it all together…That was when I called Peres and told him that there was a problem. He said that I should probably refrain from returning to the States in the near future, and I said ‘No way! What did I do? If there’s a problem it is our problem, but I, personally, did not do anything. I asked, they sent.’”


Then things started to get really complicated when the U.S. Attorney in Los Angeles requested a statement under oath from Milchan. In Israel, they realized that if Milchan’s connection would be revealed, there would be serious damage to the Jerusalem- Washington relationship.


Dayan: “You were ordered to completely disconnect with Smyth?”

Milchan: “Not an order, a request.”

Dayan: “And you did.”

Milchan: “Yes.”


Smyth was arrested and released on bail and fled the country soon after, at a critical point of the trial, before supposedly discriminating evidence against Smyth and Milchan was presented. Smyth was declared a fugitive, and according to some reports received assistance and funding from Israel.  In 2001, he was captured in Spain and was brought back to the U.S., where he stood trial and was imprisoned for 40 months.


The FBI began an investigation into Milchan's affairs, yet he has never been charged.  When asked if he has any regrets, he says: “I do have one regret: that I did not realize the significance of the image I created for myself, without even being aware. That I had to struggle and confront with the image that…I cannot use the words…”


Dayan: “Say it.”

Milchan: “The F***ing image of an arms dealer, of a…If people would have known just how I risked my life repeatedly for the country…When I come to Hollywood they say ‘He made his money as an arms dealer’. After 150, how can they still say it?”

Dayan: “But you also say you wish you hadn’t done all of that. You’re being defensive.”

Milchan: “Yes. I should have said ‘Fuck you! You know what? I did it for my country and I’m proud of it’.”


Nowadays, Milchan continues his many Hollywood successes, still a very lovable character in the City of Angels and in here in Israel.

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My name is Noga Gur-Arieh, and I’m an Israeli Journalist, currently studying for my B.A degree in Media and Political Science, at Tel Aviv University.

I am very socially...

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