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Crooked at the top

Al-Ahram Weekly – 15 May 2008

Israelis may have noted Prime Minister Ehud Olmert’s unusually dejected demeanour when he gave a televised address to the nation last week on the eve of Israel’s 60th Independence Day celebrations. Most, however, had no way of knowing why Olmert was so downcast. An Israeli judge had slapped a sweeping order to prevent the Israeli media from repeating reports published in American newspapers that Olmert was becoming rapidly ensnared in a corruption scandal.

According to investigators, Olmert is suspected of taking cash bribes worth hundreds of thousands of dollars from an American Jewish businessman, Moshe Talansky, over at least a decade, both as mayor of Jerusalem and as trade and industry minister in Ariel Sharon’s government. He was questioned by the police a fortnight ago, and is likely to face further interrogations after President George W Bush leaves this week.

The allegations are said to be so serious, and the evidence so incriminating, that the Israeli media is already writing Olmert’s political obituary, speculating on when his foreign minister and archrival, Tzipi Livni, will replace him. Polls this week showed 59 per cent of Israelis wanted Olmert to step down immediately.

The investigation is the latest in a series of corruption scandals, many of them unresolved, centring on Olmert, a politician in the Israeli newspaper Haaretz recently referred to as “walking on the edge” of legality throughout his career. The gag order, it was widely assumed, had been imposed to avoid dampening the national mood as Independence Day approached. With the festivities over, the order was partially lifted and Olmert hastily held a press conference at which he denied the allegations. “I never took bribes, I never took a penny for myself,” he said. He did, however, promise to resign should he be indicted.

Meanwhile, it was leaked to the media that under questioning 77-year-old Talansky, nicknamed the “Launderer”, had told Fraud Squad interrogators that he feared the prime minister would send someone to harm him. Additional revelations of links between Olmert and Talansky emerged last weekend when The New York Times reported that the millionaire had paid Olmert’s one-night hotel bill of $4,700 during a trip to Washington in 2005. It appears that Talansky tried to conceal his involvement by paying through a company supplying the hotel with mini-bars.

Olmert’s supporters have been claiming — weakly — that the allegations are part of an attempt by right-wingers to stop him pursuing peace with the Palestinians. But as commentator Uzi Benziman noted, this scenario is highly implausible: “His steps for peace have been superficial and mostly lip service.” Olmert himself has sought to create the impression that the investigation is solely into the role Talansky played in providing financial support for his election campaigns to win the Jerusalem mayoralty in 1999 and a Likud primary in 2002.

Irregularities in campaign funding are a staple of Israeli political life, a consequence in part of the country’s primary system that requires candidates to search for contributions from many sources, including often from American Jews who have no right to vote in the election itself. All Israel’s recent prime ministers have been investigated over such payments, though none has yet been indicted.

So far Olmert’s Kadima Party has stood behind him. Olmert, however, also depends on the support of Barak, his defence minister and leader of the Labour Party. Barak, himself subject to campaign funding investigations during his premiership, is unlikely to bring Olmert down on this issue. He is also in no hurry to force an election and take on the popular leader of Likud, Binyamin Netanyahu.

But, according to leaks from investigators, the prime minister’s account of the allegations he faces is a smokescreen. The police say they are chiefly pursuing Olmert over his contacts with Talansky while he was trade and industry minister in 2005, a period when there were no elections. Sources say Olmert took “envelopes of cash” that cannot be accounted for.

The implication is that Talansky, a fund- raiser who regularly channels money to charities in Israel on behalf of rich American Jews, may have acted as a middleman for businessmen who wanted to bribe Olmert while he was trade minister so that he would create favourable conditions for their business interests. Under questioning while in Israel, Talansky has said that he paid money directly to Olmert, though he thought he was providing campaign contributions for the 2006 election. He admits he does not know how the money was spent.

In the absence of any evidence of what happened to the money, Olmert’s hopes now rest on the shoulders of his two closest advisers and fellow suspects: his former law partner, Uri Messer, and his personal assistant, Shula Zaken. Cracks, however, have started to appear in their defence. At the press conference last week, Olmert claimed that he had passed the money to Messer. In turn Messer says he transferred it to Zaken. She must either account for the money, or Messer and Olmert’s stories crumble.

The chief obstacle to the investigation so far has been Zaken herself, who has refused to testify — presumably because her evidence would implicate the prime minister. An investigator told Haaretz newspaper: “It has been made clear to her [Zaken] that her silence reinforces the suspicions against Olmert.” Zaken is likely to be offered the chance to turn state witness to break her silence.

It is still unclear how quickly the case will be resolved either way. Initially the police said they would bring a case within days, but are now talking of weeks or possibly months. Olmert may hope that he can evade an indictment, as he and many of his predecessors have done in similar cases, by exploiting the political role of the country’s chief law officer, the attorney-general. While the State Prosecution Service, which is independent, prepares cases, the decision to indict rests with the attorney-general, who works for the government.

In one of his first decisions in office, the current incumbent, Menachem Mazuz, closed the so-called “Greek island affair” against Olmert, accepting his claim that his officials took decisions without his knowledge. Several other cases are pending against Olmert, though no action has yet been taken on any of them.

A criminal investigation was launched last year into allegations that Olmert had paid well below the market price for a house in Jerusalem, possibly in exchange for issuing an improper building permit that substantially increased the property’s value for the renovation company.

He is also suspected of having given out patronage jobs while trade and industry minister, and having interfered as finance minister in the privatisation of Bank Leumi on behalf of a tycoon friend.

Olmert’s predecessor, Ariel Sharon, faced a series of corruption scandals too but was never indicted by the attorney-general. However, Sharon’s survival strategy was to persuade Israelis that he was indispensable to supposed peace initiatives such as the Gaza disengagement. After Olmert’s failures during the war on Lebanon in 2006, and given his unpopularity, he may have a harder time riding out the storm.

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