Finance Minister Could Face Probe

By Rebecca Spence

Published January 12, 2007, issue of January 12, 2007.
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Tel Aviv - Adding to Israel’s rapidly ballooning list of politicians mired in scandal, the finance minister is now being dragged into the fray.

The national police are weighing whether to question Finance Minister Avraham Hirchson about his involvement in the cover-up of an embezzlement of $1.3 million from a labor union associated with the right-wing Likud party, the National Workers Association, which Hirchson previously led. The new investigation marks the second time in less than a year that allegations of corruption have swirled around Hirchson, a close ally of Prime Minister Ehud Olmert.

Last June, the state comptroller launched an investigation into Hirchson’s handling of funds from the March of the Living, the iconic Holocaust remembrance program that he founded in 1987 and for which he continues to serve as international chairman.

The latest allegations, first reported by Israel’s Channel 10 news, involve two officers of the organization, Hirchson and Ovadiah Cohen. Cohen recently admitted to siphoning $1.3 million from the National Workers Association when he served as director-general of Nili, an arm of the union that operates child day care centers. According to information gathered by the state comptroller’s office, Hirchson failed to alert authorities in 2003 when, as chairman of the union, he discovered that Cohen had funneled the Nili funds to pay off his brother’s gambling debts.

With new government corruption scandals breaking by the day — this week reaching into the prime minister’s office — the new storm surrounding the finance minister is another indication of how far the allegations of corruption and cronyism have spread among the nation’s top leaders. The recent allegations also focus renewed attention on the leadership of the March of the Living, which has brought more than 150,000 youth from around the world to Poland for an annual 1.5-mile walk from the gates of Auschwitz to the Birkenau extermination camp.

According to a spokesman for the state comptroller’s office, the investigation of the March of the Living, which is still in its early stages, and the Nili investigation, which has been turned over to the police, are being treated as two separate matters. Still, he said, there is overlap in that both involve similar mechanisms of potentially criminal activity.

The players are also the same. Both Hirchson and Cohen served as co-heads of three Israeli not-for-profit organizations that Hirchson established in the late 1980s to manage the March of the Living.

In response to questions from the Forward, a spokesman for Hirchson wrote in an e-mail message that when Hirchson learned of Cohen’s embezzlement several years ago, he instructed the CEO of the union, Isaac Russo, to bring the full force of the law against him. Russo deposed Cohen, the spokesman wrote in the e-mail, and subsequently turned over the investigation to the union’s comptroller. When Hirchson became chairman of the Knesset finance committee, his duties as union chairman were taken over by Anshel Ashkenazi. “If until today the comptroller’s committee has not finished its work with Mr. Russo being in charge, and if no conclusions have been reached, this is certainly serious and it would be appropriate to direct any questions concerning this delay to Mr. Ashkenazi and Mr. Russo,” the spokesman wrote.

The Hirchson spokesman also said that the current allegations and the ongoing probe into the March of the Living were unrelated cases.

Last summer’s March of the Living allegations stemmed from a report published in Seven Days, the weekend magazine of Yediot Aharonot. The article described a complex web of not-for-profits in America and Israel governing the march, and detailed a series of financial and other transactions that appeared to suggest an improper overlap between Hirchson’s role as international leader of the March of the Living and his former political role as a Likud leader. Hirchson has since left Likud to join the centrist Kadima party.

The most serious charge in the Seven Days article related to Hirchson’s Likud primary campaigns in 1996, 1999 and 2002, which the paper said were headquartered in the Tel Aviv offices of the March of the Living not-for-profits.

The article quoted Hirchson’s attorney as suggesting that the two operations might have been housed near each other in a large office building; however, the magazine said, it was a modest, five-story residential building with a single office suite on the ground floor.

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