For months Israeli Prime Minister Ariel Sharon’s bitterest opponents have gleefully speculated on the nature of his downfall. Would he be toppled by the ”Greek island affair” allegedly involving millions of dollars in bribes and plans to build an exotic casino on a tiny island in the Aegean Sea? Or would he be felled by the very scheming that helped bring him to power, using front companies to launder illegal campaign contributions?
For a while, the money was on the investigation of the ”Cyril Kern affair”, allegedly involving bribery and more illegal money in an attempt to bury the earlier scandal.
At times Sharon’s critics wearily confessed that they thought he might ride the storm, buoyed by a public that revered him for hitting back hard against the Palestinians. They cared little for the complex details of grubby corruption investigations.
But this week the betting was back on the Greek island affair to spell the prime minister’s political doom, after a wealthy businessman and leading power broker in his Likud Party, David Appel, was indicted for allegedly paying bribes to Sharon and his youngest son, Gilad.
Opposition politicians clamoured for the prime minister’s head, and the Labour Party prepared a motion of no confidence in the government that will go before Parliament next week.
Sharon’s office brushed aside what one of his opponents called a ”political earthquake” as proving nothing against the prime minister. But the charges are likely to shake even indifferent Israeli voters.
The indictment alleges that five years ago Appel paid hundreds of thousands of dollars to Sharon, who was then Israel’s foreign minister, and to one of his sons. In return, Sharon was to put pressure on the Greek government to grant planning permission for a sprawling resort and casino on the island of Patroklos.
The indictment claims that Appel agreed to pay Gilad Sharon more than $3-million as a ”marketing adviser”, which the younger Sharon characterised as a large amount of money to find out the tourism habits of European retirees.
Ariel Sharon did help to try to win Greek approval for Appel’s plan, but it collapsed. Nonetheless, the indictment says that Gilad Sharon was still paid $100 000, and another $580 000 was transferred to Ariel Sharon’s ranch in the Negev desert.
All parties deny the accusations. But the indictment is a serious blow to Sharon’s credibility. Even some of his allies today wonder how he can persuade the public and his own party that he knew nothing about Appel’s money, or any of the other millions of dollars paid out in two other alleged frauds under investigation.
The other investigations are into unlawful campaign contributions and an alleged attempt to use a new batch of illegal funds to repay them.
Last week a former campaign strategist for the Israeli prime minister released an audio recording that may suggest Sharon lied when he said he had no knowledge of the illicit campaign contributions.
The investigation is focusing on a series of front companies created in 1999 to launder illegal overseas funds for Sharon’s campaign to win the leadership of Likud, which was a certain stepping stone to the premiership.
A report by the state comptroller in 2001 raised suspicions of criminal behaviour by the prime minister, his sons and top political aides, including his chief of staff, Dov Weisglass.
Several months later, the police fraud squad was reported by the Israeli press to be ready to indict Sharon’s eldest son, Omri, but said that further investigation was required of the other players.
Then Israel’s international crimes department discovered the transfer of millions of dollars from an Austrian bank to Gilad Sharon’s account in Israel.
Fraud investigators suspected that the money was used by the prime minister to fulfil an order by the state comptroller to repay the illegal campaign contributions.
But the new money was itself unlawful, and if it was used as the police suspected, it would mean Sharon lied when he claimed to have repaid the earlier contributions by selling property. Both are criminal offences.
At the heart of the campaign funds affair is Cyril Kern, a British-born businessman living in South Africa, who transferred $1,5-million to Gilad Sharon.
Kern and Ariel Sharon are old comrades from Israel’s 1948 war of independence, and have maintained close contacts since.
Kern said the money was a loan to Gilad Sharon, and that the prime minister knew nothing about it. But the Sharon family is refusing to hand over bank records that would reveal the origins of the cash, and that investigators suspect may have come not from Kern but the same men who provided the first round of illegal money, and would also show where it ended up.
Sharon’s sons claimed immunity from orders seizing bank statements and other documents on the grounds that they live on their father’s estate and, as prime minister, he is protected from search-and-seizure by the police.
When the High Court ruled that such protection was limited to the prime minister himself, Gilad Sharon attempted to withhold the documents on the grounds of his right to avoid self-incrimination. However, the police successfully argued that the bank statements would not incriminate Gilad but his father.
Gilad handed over some documents, but last week a Tel Aviv magistrate ruled that he was in contempt of a high court order and had lied when he said he had no more paperwork. The police believe he has stashed bank statements and other papers overseas.
The Israeli police investigation has also been hindered by the refusal of the Austrian government to allow questioning of bank staff in Vienna responsible for transferring funds to Sharon family accounts.
Ariel Sharon has consistently insisted that he does not handle the money and that he left the campaign contributions and loans to his sons, particularly Gilad.
But Sharon is finding it difficult to persuade the public that two close friends gave millions of dollars to his sons in payments or loans and no one involved — neither his children nor his old war comrade — ever mentioned it to him.
That position was dealt a serious blow last week when a former campaign aide, David Spector, gave a tape to an Israeli television station on which he and Sharon are heard discussing money transfers from Europe and the United States into one of the front companies.
”The Sharon family acts for the good of the Sharon family,” Spector told Israel’s Channel 2 television. ”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. It is a very united family.”
Sharon’s backers said the tape proved nothing because, although the discussion referred to funds going through a front company, called Peace with Jerusalem, that particular firm was cleared by the state comptroller of funnelling illegal campaign funds.
None the less, the tape proved enormously damaging with the public and has led to renewed calls for Sharon’s resignation.
”As long as he remains in office, Israel is a banana republic,” said Ophir Pines-Paz, a leading opposition politician, after hearing the tape.
”Sharon bought his power with money, and now it is obvious that the story prime minister Sharon told the state comptroller and the media — that he knew nothing and his sons did everything — was proven to be a lie.”
Another MP, Ran Cohen, said Sharon’s credibility was collapsing.
”Sharon’s government borders on illegitimacy,” he said. ”If Sharon has an ethical bone in his body, he will step down from the premiership, pick up his sons and vanish for ever from public life.” — Â