Washington Report on Middle East Affairs, October 2019, pp. 14-16
Special Report
By Grant F. Smith
IF YOU DRIVE JUST SOUTHWEST of Richlands, VA across the Clinch River, and toward the municipal wastewater treatment plant, you’ll quickly stumble into the territory of a secret Israeli project known only to a handful of Tazewell County and state government officials in Richmond. Nearly 120 acres of land on three sides of the plant have been quietly acquired by Dominion Aquaculture, LLC, the U.S. subsidiary of the Israeli fish farming company AquaMaof.
The Virginia Israel Advisory Board (VIAB)—the only state government agency that exists in the United States with the sole mission of delivering preferential market access and massive subsidies exclusively to Israeli companies—has kept nearly all details about the project under wraps since 2014. It is code named “Project Jonah.”
One can almost imagine VIAB board members turning to cast furtive glances over their shoulders to see if any enemies or potential competitors were listening during an Aug. 1, 2013 board meeting. According to its minutes, VIAB summed up the main reason behind all the secrecy. “All board members are asked to refer to the project by this code name. Leaked information could jeopardize funding opportunities from the state.”
To understand Project Jonah, one must first delve into the true nature of VIAB.
VIAB emerged in 1996 under the watchful eye of a Virginia House of Delegates member from the 73rd district named Eric Cantor who later went on to become House Republican Majority Leader in Congress. VIAB’s charter was to “advise the governor on ways to improve economic and cultural links between the Commonwealth and the State of Israel, with a focus on the areas of commerce and trade, art and education, and general government.”
During VIAB’s time advising the governor, 13 of the 29 citizen members of the VIAB board were required to be drawn from four Virginia-based Jewish community federations. Like other such Jewish federations across the nation, Virginia’s are heavily involved in advocating for Israel, fundraising and hosting political candidate forums. In their 2017 tax filings, the four federations raised a combined $20 million in tax-exempt funding. Like other Jewish federations, these charities uniformly claimed to the IRS that they did not engage in any lobbying activities. But the federations overseeing VIAB are extremely politically active.
At a July 26, 2016 meeting at the state capitol, VIAB worked to implement a legislative version of the State of New York’s anti-boycott executive order. The Virginia General Assembly subsequently passed resolution HJ 177, which claimed that the Boycott, Divestment and Sanctions (BDS) movement was hampering peace and preventing negotiations. BDS is a non-violent movement aimed at boycotting Israel over its human rights record, more specifically its military occupation and mistreatment of Palestinians.
Early in 2018, the federations attempted to ram through a series of controversial changes to Virginia K-12 textbooks with the help of an outside Israel advocacy organization called the “Institute for Curriculum Services.” The proposed edits to McGraw Hill, Prentice Hall, National Geographic and other textbooks publishers demanded they teach students that Israel does not occupy any foreign territory and that Arabs alone have been responsible for all crisis initiation in Middle East conflicts, among other dubious claims.
In 2018, upset by Governor Ralph Northam’s administration attempts to influence its selection of a new executive director, VIAB staged a reconstitution. In an intense flurry of lobbying activity, VIAB changed Virginia law to become an agency of the Virginia General Assembly, diluting the governor’s control over its activities. A glance at its website reveals VIAB is clearly no longer an advisory board (if it ever was) but is now fully transformed into an Israel export promotion agency continually tapping deep pools of state and federal funding. According to a confidential VIAB “pipeline” report, it is currently attempting to develop 13 Virginia projects with a combined capital expenditure of $640 million. VIAB involves itself in the minute details.
On Oct. 22, 2013 VIAB organized meetings between AquaMaof and Food City supermarket chain executives headquartered in Abingdon, VA just 50 miles to the south of the Richlands site. Food City was a logical partner for an “offtake agreement” to purchase product from a future fish farm. Founded in 1955, the chain grew to 123 stores in Virginia, Kentucky, Tennessee and Georgia. Food City’s holding company, K-VA-T Food Stores was privately owned, meaning any offtake deal inked with AquaMaof would not leak. K-VA-T owned its own distribution center, so there would be no intermediaries between the Israeli fish farm’s loading dock in Richlands and a distribution network serving Food City outlets.
VIAB introduced Israeli executives to Tazewell County council members who quickly pledged $1 million in tax abatements to the project. VIAB also submitted a loan application to the Virginia Coalfield Economic Development Authority (VECDA) to help finance the project. At the time VIAB estimated it would take $150 million “in public and private equity both from Israel and the U.S., as well as from private/public partnerships in the state and on [the] federal level.”
VIAB needed additional skilled support, so it hired consultant Lala Korall, and paid her company I-Deals LLC $11,788.82 from VIAB’s 2014 budget in “management fees.” Korall could spin out exactly the right business speak and enticing numbers. The Harvard graduate majored in economics and history, and later did an MBA at the Robert H. Smith School of Business at the University of Maryland. Korall assured the VIAB board that “for every job the aquaculture project will bring to the state, seven more are created through ancillary services like trucking, etc.—It is a vertical operation.”
On Dec. 19, 2013 VCEDA announced a loan of $10 million had been earmarked to Project Jonah, conditioned on their raising $137 million in matching funds. VCEDA set Dec. 13, 2014 as the expiration date for the offer, so “team AquaMaof” had to move fast. Korall wasn’t the only one on VIAB’s “Project Jonah” payroll rushing to assemble the financing that would allow the project to take off. VIAB also brought in an academic from Virginia Tech, paying $7,500 for “management services” from its thin $176,000 budget for a thumbs up. Despite the effort, Project Jonah missed its 2014 deadline to meet the VCEDA performance agreement.
In January of 2015 VIAB dispatched a group of Tazewell County officials to visit AquaMaof’s tilapia plant in Poland as part of “due diligence” activities. According to VIAB’s March 24, 2015 meeting minutes: The VIAB took the group for visits including an on-site waste treatment plant that will work well in the Tazewell area as well as greenhouse companies and an aquaculture facility that is similar to the facility that we hope will be built in Virginia. Virginia’s facility will be from 8 to 10 times larger. We also met with prospective venture capitalists.
By Sept. 17, 2015 the Tobacco Region Revitalization Commission, County of Tazewell and Dominion Aquaculture, LLC signed a separate performance agreement for a $1.5 million grant. David Hazut, CEO of AquaMaof International LTD, signed an unconditional guarantee for “any and all obligations of every nature owing by Dominion Aquaculture, LLC.” Lala Korall had moved up in the world, and was now listed in the documents as the contact to receive the $1.5 million at AquaMaof’s U.S. subsidiary Dominion Aquaculture, LLC, housed in a dingy storefront building in Cedar Bluff, VA. But Project Jonah again missed 2015 and 2016 deadlines for the $10 million VCEDA loan.
A pattern of pleas for deadline resets from Project Jonah to VCEDA then commenced. All were quickly and perfunctorily granted. Then Project Jonah started hammering VCEDA to sweeten the terms of the loan. The Chief Operations Officer of Dominion Aquaculture John H. Schiering and Lala Korall, who by August of 2017 was vice president in the Project Jonah venture, demanded and won a reduction of the required private matching funds to $110 million. The pair also demanded that VCEDA agree to convert portions of the loan to outright grants and reduce the interest rate to 0 percent until year three and 2.125 percent thereafter if certain performance benchmarks were met. VCEDA also quickly agreed to this, perhaps not realizing that they would not only forfeit $4.78 million of loan interest and principal repayments, but also only be repaid $6.46 million of their $10 million investment.
Tazewell officials, who already had put at least $1.5 million into Project Jonah, soldiered on. In April of 2019 Country Administrator Eric Young told the Bluefield Daily Telegraph that the facility was still “very much in play…they are very close to having their money in place.” Tazewell County Supervisor Mike Hymes claimed the initial plan was to raise tilapia but may be changed to salmon. In any case, it would be different in that the idea now included “flash freezing” and taking the fish “directly to supermarkets.”
Meanwhile, Project Jonah is hatching alternative plans. In addition to the Richlands wastewater site, AquaMaof purchased an option to buy land adjacent to Southwest Virginia Community College. The company is pressuring the college to sign a memorandum of understanding to train aquaculture technicians for the future plan—paid for by even more state-funded grants! SW has so far balked at signing the MOU, which will become “null and void” if the fish farm does not begin operations by year-end December 2020.
It is no great mystery why VIAB chose to develop an aquaculture project. Blue Ridge Aquaculture (BRA) is located at almost the same latitude—just 166 miles to the east of Project Jonah in Ridgeway, VA. BRA long ago demonstrated “proof of concept.”
BRA, an employee-owned company, emerged in 1993 from a former catfish producer called Blue Ridge Fisheries. It claims on its website to be the largest U.S. producer of tilapia using recirculating aquaculture systems, producing four million pounds of tilapia and shipping 10-20 thousand pounds of live tilapia every day to Asian and Hispanic consumers in Washington, DC, New York, Boston and Toronto who prefer live seafood over the packaged refrigerated or frozen kind. In 1993 BRA began producing tilapia, overcoming severe threats of disease with in-house technology.
VIAB and AquaMaof are fishing for more Virginia state funding through a joint venture with Southwest Virginia Community College. (IRMEP, SEPT. 4)
BRA is socially conscious and believes “recirculating aquaculture systems are the most environmentally friendly beneficial source of protein because of its relatively small ecological footprint.” AquaMaof’s core technology is also recirculating aquaculture.
The end result of AquaMaof’s Virginia launch—if it ever happens—may be a repeat of yet another VIAB pet project, the Sabra Dipping Company LLC factory, located just south of Richmond. Sabra has received (and is due to receive) $1.7 million in support from the Virginia Economic Development Partnership through Fiscal Year 2020, in addition to millions from other levels of government. This influx of government capital allowed the Israeli- and PepsiCo-owned giant to seize the market share of Cedar’s, a family-owned hummus maker launched by Lebanese immigrants operating in New England. According to market tracker Statista, Sabra’s share of the U.S. hummus market jumped from 17.3 percent in 2006 to 60.7 percent in 2015. Over the same period Cedar’s fell from 15.8 percent to 4 percent.
Propelled by secrecy and massive state subsidies, Israeli-owned AquaMaof could soon take out BRA, an innovative, socially conscious competitor much closer to home.
VIAB makes huge claims about how its projects create jobs and generate tax revenues. In 2017 VIAB said it helped create 127 jobs and $426,000 in tax revenue. Todd Patterson Haymore, who served as Virginia’s Secretary of Commerce and Trade, found portions of VIAB’s 2017 report “inflated without merit.”
VIAB’s Chairman of the Board Mel Chaskin refuses to release any substantiation of VIAB’s claims. But it is clear that “churn”—the loss of employment at locally owned enterprises—does not factor into VIAB’s calculations.
Grant F. Smith is the director of the Institute for Research: Middle Eastern Policy in Washington, DC. To view files solicited through the Virginia Freedom of Information Act used to produce this report, visit the Israel Lobby Archive at https://IsraelLobby.org/viab2. To view videos and transcripts about the Virginia Israel Advisory Board presented by the Virginia Coalition for Human Rights at the National Press Club, go to https://www.wrmea.org/ycax#VCHR (pp. 59-66 of the May 2019 issue of the Washington Report).