Knesset Moves to Legalize Fraud, Breach of Trust

Israel’s governing coalition announced on Monday that it will advance a controversial bill to repeal the criminal offense of fraud and breach of trust from the penal code, a move that could have far-reaching implications for public integrity law and for the ongoing criminal trial of Benjamin Netanyahu.

The bill is expected to be brought as early as next week to the Ministerial Committee for Legislation, with coalition leaders signaling their intent to move quickly. Netanyahu is currently on trial in three corruption cases, known as Cases 1000, 2000, and 4000, all of which include charges of fraud and breach of trust. Only Case 4000 also includes a bribery charge.

Under Israeli law, the repeal of a criminal offense applies retroactively. Section 4 of the Penal Law states that if an offense is abolished, criminal liability for acts committed under that offense is canceled and any ongoing proceedings must be halted. Legal experts note that if the legislation is passed before Netanyahu’s trial concludes, the fraud and breach of trust charges against him would likely be dismissed.

The bill is being promoted by Coalition Chair Ofir Katz of Likud, Constitution Committee Chair Simcha Rothman of Religious Zionism, and MK Michel Buskila of the National Unity–New Hope faction, a close associate of Foreign Minister Gideon Sa’ar.

In the explanatory notes, the sponsors argue that fraud and breach of trust has become one of the most vague and controversial offenses in Israeli criminal law. They describe it as a “catch-all” provision that lacks clear boundaries, undermines the principle of legality, and grants excessive discretion to prosecutors and law enforcement authorities.

According to the bill’s backers, the offense creates fundamental uncertainty for public officials, who cannot clearly know in advance whether their conduct may later be deemed criminal. They claim that similar conduct has been treated inconsistently by the courts, fueling perceptions of arbitrariness, selective enforcement, and politicized prosecution.

The sponsors further argue that conduct addressed under fraud and breach of trust should instead be handled through clearly defined criminal offenses or through disciplinary and ethical mechanisms, as is common in other democratic systems. They say the proposed reform would be accompanied by new legislation addressing issues such as conflicts of interest involving close relatives and government insider trading, as well as strengthened disciplinary enforcement.

Coalition sources say the legislation is being fast-tracked deliberately, before the Knesset dissolves for elections, and describe the offense as a tool that has been used to “harass elected officials in gray areas of conduct.”

The move has drawn fierce criticism from the opposition, legal experts, and civil society organizations. Opposition Leader Yair Lapid called the bill “a full-scale assault on the rule of law,” vowing to fight it in the Knesset, in the streets, and in the courts. He warned that the proposal would turn Israel into a corrupt and undemocratic state.

Former IDF Chief of Staff Gadi Eisenkot accused the coalition of acting solely to preserve its own power and shield Netanyahu from accountability. Other opposition figures, including Yair Golan, described the move as “mafia-style legislation” designed to normalize corruption at the highest levels of government.

The Movement for Quality Government in Israel warned that repealing the offense would leave a dangerous gap in the legal system, allowing sophisticated forms of corruption that fall short of bribery to go unpunished.

Fraud and breach of trust are codified in Section 284 of the Penal Law and have been a cornerstone of prosecutions involving abuse of public office for decades. While the offense has long been criticized for its breadth, repeated efforts by past attorneys general to narrow or clarify it have failed to gain political traction.

With the bill now moving forward, Israel appears headed toward a legal and constitutional confrontation that could reshape both its criminal justice system and the fate of its sitting prime minister.