Jerusalem - Israel’s finance minister, Avraham Hirchson, was interrogated by police for eight hours straight this week about the apparent transfer of more than $1 million to his personal accounts from a labor union he once ran, and of another sum, which is undisclosed, from the March of the Living, the international Holocaust education program that he founded and heads.
The March 27 session at the national police financial crimes unit was Hirchson’s second interrogation in the space of a week, and reportedly it will not be his last. In addition to clear signals that the police are planning another interview soon, the Israeli media is reporting that the New York attorney general’s office is looking into the matter.
Hirchson, one of Prime Minister Ehud Olmert’s closest political allies, has denied all the allegations against him, charging that he has been set up by political opponents. As the evidence and the questioning increase, however, so does the pressure for him to resign.
The state attorney general, Menachem Mazuz, said in an unusually frank television interview this week that while a setup is theoretically possible, “as more evidence is collected, the statistical possibility of that happening is unlikely.”
Hirchson has not been asked by Olmert to leave his post, and he continues running the Treasury day to day. But local media accounts, all quoting unnamed sources, say that his days as finance minister are numbered and that he is expected to leave of his own volition.
Indeed, someone has already announced plans to take his place. The Labor Party chairman, Defense Minister Amir Peretz, who is fighting for his own political life against internal party challengers, told a campaign rally this week that if he wins his party’s May 28 leadership primary, he will reopen his coalition agreement with Olmert and demand the finance job.
The police have refused to comment on the ongoing investigation. According to local media reports, Hirchson is suspected of embezzling $1.3 million from the National Workers’ Organization, a right-wing labor union, and of taking further sums from the March of the Living.
The daily newspaper Yediot Aharonot reported Wednesday that the New York attorney general may open an investigation into allegations of mishandling and misappropriation of funds in the New York office of the March of the Living.
A spokesman at the Attorney General’s office contacted by the Forward would not comment on whether the March of the Living was being investigated. “At this time we are not going to confirm or discuss any investigative matter about this charity,” he said. When asked if he could say there was no investigation taking place, the spokesman answered, “No, I cannot.”
Yediot reported last June on alleged mismanagement at the March of the Living, citing mishandled funds there totaling at least $1.6 million. That report led to an investigation by the state comptroller’s office.
Police opened their own investigation this past January, initially focusing on the National Workers’ Organization. Spokesmen for Hirchson told the Forward at that time that the union and March of the Living cases were unrelated.
According to Yediot, the police succeeded last week in getting a key witness to testify after searching for her at length. A Filipino woman who had worked as a home health aide to the Hirchsons came to Israel from the Philippines to testify about receiving envelopes of cash, which she had given to Hirchson. The woman had cared for Hirchson’s ill wife, who later died. The aide stayed on at the Hirchson home until the immigration authorities deported her.
Police sources told Channel 1 News after Tuesday’s questioning that although the minister was cooperative, the evidence against him is immense. Among other things, he needs to explain why he failed to alert authorities in 2003 when he discovered, as chairman of the union, that his colleague Ovadiah Cohen was siphoning off funds, and where the money went. Cohen recently admitted to taking $1.3 million when he served as director general of Nili, an arm of the union that operates child day care centers, in order to pay off his brother’s gambling debts.
Further investigations, however, have reportedly found that monies from Nili were transferred to Hirchson’s accounts or directly to his home in envelopes of cash. Police reportedly believe that Hirchson’s son Ofer received some of the cash to cover his own debts. He is being interrogated, as well.
Hirchson and his colleagues are also suspected of receiving funds intended for the March of the Living, an organization that Hirchson founded in 1987 and continues to lead as international chairman. The police began interrogating him about this for the first time Tuesday after receiving the file from the state comptroller, according to published reports.
The March of the Living is an iconic Holocaust education program that brings youth from around the world to visit Poland and Israel each year for two weeks. In Poland, the teens walk 1.5 miles from the gates of Auschwitz to the Birkenau extermination camp, usually with Hirchson marching at the head.
The program is partly supported by money coming from the Conference on Jewish Material Claims Against Germany — specifically from the 20% of the proceeds from the unclaimed Jewish properties in the former East Germany allocated for programs dealing with Holocaust education research and documentation. According to Yediot, some of that money was deposited to a not-for-profit established in Israel called the “Fund for Deepening Jewish Knowledge.”
The other main source of support for the program is participant fees, which were channeled to a Tel Aviv-based non-for-profit operating under the name March of the Living. The police reportedly believe that the not-for-profit accumulated millions of dollars over the years. Yet participants pay more than $2,000 each and stay in low-cost two-star hotels and youth hostels, leaving substantial amounts of money unaccounted for.
The state comptroller’s office investigated the cases of Nili and the March separately. But according to Oron Meiri, a Yediot reporter who broke the March of the Living scandal, the two cases are related.
“The connection between them is that the heads of the two nonprofits are the same people,” Meiri, who continues to investigate the March of the Living case, told the Forward.
According to Yediot, money was siphoned off from the Fund for Deepening Jewish Knowledge, as well as from the March of the Living not-for-profit itself. Shlomo Hervas, an employee of the National Workers’ Organization, allegedly took money from the Jewish Knowledge fund and transferred it into accounts belonging to Hirchson and others close to him. Yet the fund’s financial reports do not list any removal of its monies.
Responsibility for operating the March was later transferred from the fund to a company called Gesher, which is headed by Nachman Kedar, reportedly a close friend of Hirchson and former March chairman Shmuel Rosenman. The police, according to Yediot, are also checking whether the union transferred large amounts of money to Rosenman.
“This is a complicated case because it goes in circles,” Meiri said. “Each person transfers money to another in order to not to show where the money came from.”
Hirchson has claimed since the first accusations were made that he has been framed. Last June, days after the first Yediot story appeared, Hirchson told an audience that there were elements out to get him and that he had received personal threats because of the economic reforms he was trying to implement.
Mazuz said in his Channel 1 television interview this week that despite written requests to the finance minister, his office had never received any information about the threats. He said it was possible, but not likely, that Hirchson was framed.
In his unusually wide-ranging interview, Mazuz discussed the Hirchson case in the context of the spreading phenomenon of corruption charges against ranking Israeli political figures. Former Likud lawmaker Naomi Blumenthal is set to enter prison in the near future after the Supreme Court last week rejected her appeal on charges of vote-buying during a primary campaign. Current Kadima lawmaker Tzachi Hanegbi, chairman of the Knesset Foreign Affairs & Defense Committee, went on trial this week on charges of political cronyism in civil service appointments when he served as environmental affairs minister.
Olmert himself is the subject of several investigations, none of which has yet led to criminal charges. The investigations involve cronyism in political appointments, an investment scheme and a suspicious real estate deal.
Mazuz refused to say whether or not Olmert will face charges, but he said that one “gets a wider picture when we put all these related things together.”
Most corruption cases in Israel are political, Mazuz said. “Most of the corruption cases we are investigating are related to the parties’ central committees,” he explained. “People want to get something in exchange for their votes.”
“There is no doubt that various groups are uncomfortable with a reality where there is an assertive, uncompromising struggle against the phenomena of corruption,” Mazuz said. He acknowledged that the investigation of so many top officials will likely have a negative effect on the country and its ability to run properly.
“There are no wonder drugs,” Mazuz warned. “There is a price Israeli society will pay by conducting investigations against sitting officials. There is a bigger cost to Israeli society, in my opinion, in not conducting those investigations.”
“I think we are conducting a battle for Israel’s image,” Mazuz noted, “and if we lose we will plummet to a state of a Third World country.”