Sharon to Be Investigated on Finances

Israel’s attorney general late Wednesday ordered a criminal inquiry into Prime Minister Ariel Sharon for alleged violations of political fund-raising laws.

The police investigation follows a scathing report from Israel’s comptroller’s office, released Sept. 30, that documented widespread abuse of campaign and political party financing laws by an array of parties. Since the mid-1990s, when Israeli politics took on an American-style veneer, politicians in Israel have repeatedly been accused of skirting the rules and taking advantage of loopholes when it comes to fund-raising.

But no significant reform has ever been enacted, nor has any probe led to punishment of guilty individuals or groups.

Sharon and his son and close confidant, Omri, will be expected to answer questions about a sum of about $1.5 million that was allegedly funneled through a straw corporation into Sharon’s 1999 campaign for head of his Likud Party, according to the comptroller’s report. The company, Annex Research Ltd., was allegedly set up by one of Sharon’s attorneys and run by his son.

State Comptroller Eliezer Goldberg, who authored the report, transferred his findings to Atty. Gen. Elyakim Rubinstein, who late Wednesday, after meetings with numerous Justice Ministry officials, ordered police to open the probe.

Sharon, in a statement issued by his office Wednesday night, welcomed the investigation.

“I have full confidence in the judicial system, and I accept all that shall be decided,” he said.

Sharon had been given a draft of the comptroller’s report earlier this year. In an Aug. 27 letter to Goldberg, the prime minister said he first learned of the existence of the Annex company when he read the draft, and he agreed to return about $1 million that the comptroller ruled had been spent illegally in the Likud leadership race.

Sharon’s predecessor, Ehud Barak, also faced a criminal investigation over finance practices in his 1999 campaign for prime minister. Barak defeated Benjamin Netanyahu then, but lost to Sharon in elections called earlier this year in the midst of the intifada.

Barak’s aides were accused of setting up dummy nonprofit organizations that channeled money from abroad into the election campaign. Barak and his aides were questioned by police, but no charges were filed. The investigation remains open.

Under Israeli law, non-Israelis are not allowed to donate money to candidates or parties in election campaigns. Barak’s operation was accused of taking money from foreigners, then laundering it through organizations that ostensibly did nonpartisan work.

The allegations against Sharon are very similar, with the alleged vehicle being a corporation instead of a nonprofit organization.

“No doubt, there are loopholes in the legislation that must be amended,” Justice Minister Meir Sheetrit said to television news interviewers Wednesday night. “These matters come up time and again, and are not taken care of.”

Authorities “are indifferent in the face of political corruption,” said legal affairs analyst Moshe Negbi. “This is a worrying road sign on the slope from a law-observing state to a banana republic, where the government isn’t subjected to the law, and where it is dependent on money.”

In his report, comptroller Goldberg fined both Likud and Barak’s Labor Party for campaign fund-raising violations.

Elections in Israel used to be relatively modest affairs. But after a new law created the direct election of the prime minister starting in 1996, and parties began holding primaries to choose their leaders, election campaigns became expensive and highly orchestrated events. The law providing for the direct election of the prime minister has since been rescinded.