Jonathan Cook: the View from Nazareth - www.jonathan-cook.net

Skeletons in the closet

Al-Ahram Weekly – 29 January 2004

Israeli Prime Minister Ariel Sharon should have been celebrating this week the first anniversary of his re-election last January. Instead his mind was concentrated on the more pressing matter of his political survival, as the legal noose drew ever tighter around his neck over a series of corruption scandals.
 
At the forefront is the case of a millionaire Israeli businessman, David Appel, who was charged last week with paying hundreds of thousands of dollars to Sharon’s family in the form of a bribe. According to the charges, he hoped to use Sharon’s influence to secure a huge real estate deal, in what has become known as the “Greek island affair”.
 
The recipients of Appel’s favours — Sharon, one of his sons, Gilad, and the deputy prime minister, Ehud Olmert — have not yet been charged. But the evidence being amassed in the case — and from investigations into related suspect land deals inside Israel and campaign fundraising — is increasing the pressure on prosecutors to pursue Sharon.
 
The police have been building a case over several years against the Sharon family but their hand was effectively dismissed by the former attorney-general, Elyakim Rubinstein, who left office at the end of last year. Rubinstein had refused to recommend charges in any of a spate of corruption allegations against the prime minister.
 
The post of attorney-general is a powerful one in Israel, unhindered by the democratic principle of the separation of powers. He has both definitive judicial and executive roles: as the chief law officer he oversees the prosecution service and has sole authority to decide on indictments; and as the government’s legal adviser he is responsible for determining whether government decisions are legal.
 
One of the most strident voices in pressing for Sharon’s indictment has been the head of the police criminal investigations unit, Moshe Mizrahi. In the autumn Rubinstein launched an enquiry into Mizrahi on allegations of illegally wiretapping a prominent extreme right-wing politician, Avigdor Lieberman. The investigation of Mizrahi was seen by some analysts as an attempt to silence him.
 
Rubinstein’s temporary replacement as attorney- general, Edna Arbel, head of the state prosecution service, has been the other main proponent of bringing Sharon to trial. She is reported to have the backing of most of her staff on the issue.
 
Arbel has used her brief tenure as acting attorney- general to begin a process that may build the necessary momentum to end in Sharon’s indictment.
 
Channel 2 news reported last week that Arbel would recommend indicting Sharon in the next few days. According to Israeli law, were Sharon to be indicted he would be forced to resign pending the outcome of the trial. Sharon is expected to be questioned again by police under caution in the near future.
 
Whether he is actually brought to trial, however, falls to Arbel’s successor, Menachem Mazuz, who was overwhelmingly approved by the cabinet on Sunday as the new attorney-general. After taking advice from Rubinstein, neither Sharon nor Olmert took part in the vote.
 
But Mazuz, Rubinstein’s long-standing deputy, must take a very brave first decision in his new post: to charge a sitting prime minister with corruption for the first time in the country’s history. The fact that senior state prosecutors privately pressed for his main opponent, district judge Uzi Fogelman, may indicate how they think he will respond to the challenge.
 
The indictment issued last week against Appel will, however, make it all the harder for Mazuz to follow Rubinstein’s path. It states that in late 1998 Appel attempted to win the support of Ariel Sharon, then foreign minister, in his bid to build a gambling resort on the tiny Aegean island of Patroklos, in time for this year’s Athens Olympics.
 
He offered Sharon’s son Gilad a lucrative position as adviser to his company, although “Gilad did not provide any services whatsoever to the project.”
 
Appel paid “enormous sums to the son of Ariel Sharon so Ariel Sharon would take action in his capacity as a public official”, says the indictment. In other words, Appel is accused of bribing Sharon to arm-twist Greek government officials on his behalf so that strict planning laws preventing the building of the resort could be circumvented. In the end, the scheme came to nothing.
 
The indictment also says Appel “told Ariel Sharon that Gilad could be expected to make a lot of money”. This contradicts Sharon’s stated position that he knew nothing of the Greek island affair and will add to the pressure on Mazuz to recommend indictment of the prime minister.
 
By February 2000, according to the charges, $100,00 had been deposited in the account of Sycamore Ranch Ltd, Sharon’s huge private farmstead in the Negev which is managed by Gilad. Between July 2000 and June 2001 a further $600,000 was paid.
 
Appel also allegedly enlisted the help of Ehud Olmert, then mayor of Jerusalem, to sweeten the mayor of Athens by inviting him to a banquet in his city. In return, it is said, Appel launched a voter registration drive on behalf of Olmert in the 1999 Likud primaries.
 
Although for most of Sharon’s premiership the Israeli public has shown little interest in the smell of corruption hanging over him, the tide is starting to change. The prime minister’s standing appears to have been dented by the recent airing on Israeli television of a tape showing Appel and Sharon discussing how money from Europe and America would be transferred to one of several front companies Sharon had set up.
 
The tape was made by David Spector, an embittered former campaign aide and private investigator. He told Channel 2: “The Sharon family acts for the good of the Sharon family. That’s how it does things. There is a political agenda and a private agenda. That’s how the work is and how it is divided; one son who deals with the political side and the other son who deals with the business side.”
 
Another tape in police hands apparently shows Gilad Sharon saying that all he is expected to do for his hundreds of thousands of dollars salary from Appel is collect information from the Internet on the tourism habits of retired Europeans.
 
Overshadowed by the Greek island affair is a second charge in the indictment which may in the long run pose an even greater danger to the prime minister because it threatens to connect Sharon to a range of other dubious deals with Appel.
 
According to the charge sheet, Appel offered Sharon bribes before and during his premiership to change the zoning laws covering farmland in the Lod area so that he could build hundreds of millions of dollars worth of residential and commercial property in sight of Tel Aviv. In return Appel, a Likud power broker, promised Sharon help in winning two crucial party primary campaigns.
 
Whereas Appel used Sharon’s influence as foreign minister in the Greek island affair, he was relying on his other role in Binyamin Netanyahu’s government — as national infrastructure minister — to win his battle in the Lod farmland case.
 
The major obstacle to the Lod deal was Avi Drexler, the director of the Israel Lands Administration (ILA), which holds all state lands in trust for the Jewish people. He refused to approve the rezoning of the farmland and Appel turned to Sharon for help. Drexler was forced from his post in unclear circumstances some time later.
 
As Hannah Kim, the veteran commentator for the daily Ha’aretz newspaper, observed: “With the exception of a brief respite when he was in opposition, Ariel Sharon has been responsible for the ILA longer than any other cabinet minister. As minister of agriculture, national infrastructure and housing, and afterward as prime minister he continues to hold the ILA portfolio.”
 
Appel made his fortune from real estate deals that depended on rezoning approval from ILA officials. The threat, according to Kim, is that if the trial of Appel continues, his lawyers may unravel a web of corrupt land deals with the ILA and try to connect them to the Sharon family.
 
Also pressing hard on the heels of the Greek island affair and the Lod incident, are two other connected scandals involving Sharon.
 
In the first, he is accused of using fictitious “front” companies to launder illegal campaign contributions in 1999. According to the 2001 report of the state comptroller, the companies were set up by a group that included Sharon, his two sons, Gilad and Omri, and his chief of staff Dov Weisglass. One of Spector’s tapes ties Appel to the same network of companies.
 
The group is also suspected of having misappropriated Likud Party funds for Sharon’s own personal campaigns for the Likud leadership in 1999 and for prime minister in 2001.
 
Such financial irregularities are not uncommon in Israeli politics and Sharon effectively froze police investigations by claiming ignorance about the funds and paying off the unlawful contributions.
 
But that soon raised questions about where the money used to repay the earlier contributions — some $1.5 million — had come from. Sharon has claimed that he sold property but the money trail unearthed by the police leads elsewhere.
 
Ostensibly, the money arrived as a loan from a South African businessman and friend of Sharon’s, Cyril Kern. But he appears to have acted as a conduit for other shadowy figures assumed to be the original businessmen who paid the illegal campaign contributions.
 
They paid Gilad a total of $3 million, using a bank account in Vienna. So far the Austrian government — faced with threats from Sharon’s government that Israel would single out Austria for especial criticism over the rise of “the new anti-Semitism” in Europe — has blocked Israeli police from questioning bank staff there.
 
This case is likely to flare up again soon, despite stonewalling from the Sharon family. Gilad Sharon, who has been withholding bank documents relating to the case, was held in contempt of court this month by a Tel Aviv magistrate.
 
Recordings made by Spector, which he has handed over to police, are increasing the pressure. Last week Spector said the material proved the prime minister “was involved in everything and was interested in the smallest details”.
 
Most of Sharon’s cabinet colleagues have been remaining fastidiously quiet over the Appel indictment, and the other investigations, suggesting they sense the way the wind is blowing.
 
If Sharon is forced to quit mid-term, his successor will almost certainly be his long-term Likud rival Binyamin Netanyahu. A survey conducted by Ha’aretz last week showed Netanyahu with 59 per cent support among Likud voters as Sharon’s replacement, against the next highest hopeful, Ehud Olmert, at 16 per cent.

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