MIDEAST : Israeli Press Finds Itself in Spotlight : Newspaper executives linked to wiretap scandal. Politicians, security service and reporters had calls illegally taped.

It is the sort of scandal that Israel’s two brash tabloids--Maariv and Yediot Aharonot--normally love to pursue: Someone illegally wiretapped dozens of senior Israeli politicians, top reporters and even the Shin Bet, the nation’s internal security service.

But no one at the newspapers has much stomach for reporting the affair, after police last week locked up Maariv’s publisher and Yediot’s editor in chief for alleged involvement in the scheme.

The affair has entangled private investigators, lawyers and business people, and more arrests are expected soon. Within weeks, the two newspapermen are expected to be charged with commissioning wiretaps.

Already, journalists and legal scholars are fretting about the damage the affair has done to Israeli democracy.

“We think that Israeli journalism is being discredited,” said Sara Friedman, head of the Israeli Press Assn. “It is terrible for the public to think that we are not clean. This is a stain on our history and our reputation.”

Maariv Publisher Ofer Nimrodi’s arrest last Saturday was trumpeted on rival Yediot’s front page the next day. But Monday, Maariv’s front page informed readers that Yediot’s top editor, Moshe Vardi, had joined Nimrodi in jail. By week’s end, both men were released on bail. An Israeli television reporter joked that their release had given the term “a free press” a new meaning.

Also questioned and released was Arnon Moses, publisher of Yediot, who is still under investigation, police said.

All three men insist that they are innocent of any wrongdoing. But the Press Assn., the Israeli journalists union and the Press Council, which deals with issues of ethics and censorship, have called for Nimrodi and Vardi to step down pending resolution of their cases.

Investigators who conducted a yearlong probe say they expect to bring many charges against Nimrodi, who is accused of ordering the bugging of government offices, senior officials and Maariv and Yediot reporters.

Vardi and Moses are under investigation for allegedly ordering the wiretapping of a senior Yediot editor who left the newspaper to join Maariv. At this point, neither is suspected of involvement in the wider wiretapping scheme.

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The case has caused an uproar here because “Israel looks at itself as a fortress of democracy,” said Zeev Segal, a senior law lecturer at Tel Aviv University and the legal commentator for Haaretz, another daily newspaper.

“We are so sensitive about this case because infringing on the right of privacy goes to the core of a person. We are looking at this case as a sort of Watergate--only this time, it is the press doing the bugging,” Segal said.

A lively debate is under way about why the wiretapping was carried out. Some have blamed the fact that Israel’s three largest newspapers--Yediot, Maariv and Haaretz--are owned by three families.

The Moses family owns Yediot and several small local dailies. The Nimrodi family owns Maariv, and the Shocken family owns Haaretz. The media barons wield so much power in a nation addicted to news that they came to believe that they were above the law, proponents of this theory say.

Others say the case shows how far Israel has moved from its socialist roots and toward freewheeling capitalism. As a result, ideological newspapers have been forced to close and remaining papers have been pressured to turn a profit, they say.

“Maybe people now will understand that sales, ratings and money aren’t everything,” Cultural Affairs Minister Shulamit Aloni said. “Maybe now people will understand that some things aren’t allowed.”

Among those whose phones were bugged was Israel’s president, Ezer Weizman. Nimrodi also allegedly ordered wiretaps of his own staff. Amnon Abramovitch, a respected commentator, quit Maariv after police played him a tape they said was made by an illegal wiretap of his phone.

Friedman says that other members of the staff have considered quitting but ruled it out.

“We feel that this is not the right way,” she said. “We feel that the good journalists should stay. It is the bad ones--the ones who are doing bad--who should go.”

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Under Scrutiny

Top executives at two of Israel’s three largest newspapers, Yediot Aharonot and Maariv, have been accused or questioned in the illegal wiretapping of dozens of senior Israeli politicians, reporters and the security service.