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Series of Scandals Rock an Unsteady Jerusalem

At a corner bakery in Jerusalem, the television perched over the counter switched from covering the latest corruption arrests of top government officials to the funeral of legendary Jerusalem mayor Teddy Kollek. “The most honest man in the world is dead, and these guys are living it up,” the normally jovial baker commented glumly.

Never mind that the suspects on screen hardly looked like they were enjoying themselves, or that their direct superiors — including Prime Minister Ehud Olmert and Finance Minister Abraham Hirchson — had no reason to celebrate. The baker was summing up what is now a national mood. Once we had giants for leaders, people dedicated to the nation’s good; now we have crooks, in it for themselves. The dirge on the latest scandals by Yediot Aharonot’s chief economic commentator, Sever Plocker, bore the biblical headline “Sodom and Gomorrah” — words that in Hebrew connote greed and a generation gone rotten, rather than sexual perversity.

The historical claim of generational decay is debatable. The chairman of the Knesset law committee, Menahem Ben-Sasson, told me this week that Israel is actually raising its standards as it matures, and it no longer accepts “things we were once forgiving about.” Ben-Sasson was a history professor before entering politics last year, and his claim has some basis. But he’s also member of Kadima, the party most battered by the two scandals lately dominating Israeli news. It requires great optimism for him to hope that “this will strengthen Kadima’s public standing, as a party that eliminates evils.”

The latest scandals could hardly come at a worse time for Olmert. His public standing has been in free fall since last summer’s Lebanon war. His approval rating is in the low 20s, according to a recent poll by the Dahaf Institute. Together with his hapless defense minister and coalition partner, Labor Party chief Amir Peretz, and the embattled military chief of staff, Dan Halutz, he has come to symbolize the country’s sense of rudderlessness.

Worse still, the state prosecution is actively weighing whether to open criminal probes into Olmert himself in several long-running cases, including allegations that he used his position as finance minister to help cronies in the government’s privatization of Bank Leumi in 2005. According to one report this week, a decision on the probe is near. The newest corruption affairs have only deepened the gloom. The main one focuses on the Israel Tax Authority, a body created in 2004 to unify various tax collection agencies. One year ago, when Olmert was finance minister and still in the Likud, he appointed a new tax authority director named Jacky Matza. According to news reports, police suspect that Shula Zaken, Olmert’s long-time bureau chief, pushed the appointment at the request of her brother, Yoram Karashi, a Jerusalem businessman. Karashi is a member of the Likud’s central committee and represents the party on the Jerusalem City Council.

Police reportedly believe that Karashi acted together with a local businessman and Likud activist to “plant” Matza as head of the tax authority. In return for bribes, it is suspected, Matza then appointed an official named Shmuel Bobrov as ITA personnel chief, and Bobrov, it is alleged, planted more pliable officials in top positions.

In turn, those officials allegedly reduced the tax debts of business figures. Matza’s predecessor as tax authority chief, Eitan Rub, allegedly acted as a go-between, linking businessmen and tax officials. Among those suspected of exploiting the system is Simon Tuboul, a Jerusalem contractor and restaurateur, a former member of the central committee and, according to media reports, a supporter of Benjamin Netanyahu until leaving the party to join Ariel Sharon’s Kadima. In ordering Tuboul to be held for questioning last week, a judge wrote that there was “reasonable suspicion… that the suspect used his connections to Yoram Karashi and Shula Zaken” to influence an investigation against him for evading taxes of nearly $3 million.

The first arrests in the case were made January 2, reportedly after 10 months of wiretapping of officials, including Zaken. The allegations against her are an acute blow to Olmert. Zaken started out as his secretary in his private law practice more than 20 years ago. She followed him to the Jerusalem mayor’s office, the Cabinet and the Prime Minister’s Office. Zaken has been put under house arrest for 10 days, and she is barred from the prime minister’s bureau for another two weeks after that.

Olmert is likely to be questioned, though there is no indication that he himself is a suspect. Yet if the allegations prove true, it would mean at a minimum that he let himself unwittingly be manipulated by criminals, hardly a mark of honor. He has the small comfort that his rival, Netanyahu — now Likud chief and preparing another run for prime minister — may be called for questioning, too. Netanyahu was finance minister when the tax authority was established.

Indeed, the case is a reminder that Kadima and Likud are competing wings of the same political camp, which has repeatedly come under investigation. Knesset Member Tzahi Hanegbi, now of Kadima and previously of the Likud, is on trial for illegally appointing cronies to government posts while serving as environment minister. Omri Sharon, son of the former premier and himself an ex-Knesset member, has been convicted of campaign finance violations. Another Likud politician, Naomi Blumenthal, was convicted last year of bribing members of the party’s central committee to secure her slot on the party’s 2003 Knesset ticket. If the newest allegations hold up, it will mean that businessmen active in the Likud-Kadima camp succeeded in penetrating the Prime Minister’s Office and in turning the country’s tax collection body into their puppet. It would mean, too, that the well-connected evaded taxes while the average citizen paid.

And the same day as the tax agency arrests, police also pulled in five former staffers of Nili, an educational arm of the National Workers Association, a Likud-linked labor union. The five are suspects in the embezzlement of more than $1 million at a time when Hirchson — the current finance minister and a top Kadima figure — headed the union. Hirchson himself is expected to be questioned on suspicion of covering up the theft. The suspicions — if proved — would be another blow to trust in the country’s financial management. (See story above.)

On the other hand, if the allegations in the two cases prove to be untrue, it will further damage confidence in the police and state prosecution, said legal scholar Amnon Rubinstein, a former Cabinet minister and onetime dean of Tel Aviv University’s law school. Now president of the Interdisciplinary Center, Herzliya, Rubinstein pointed this week to a long string of heavily publicized corruption investigations that led nowhere. “I’ll give you the most extreme example,” he said. “Every prime minister after Yitzhak Shamir has been under police investigation… and nothing came of it.” Netanyahu, he noted, was investigated in three separate cases that led to dead ends.

Like Ben-Sasson, Rubinstein noted that Israeli standards for clean government have tightened, often becoming stricter than in other Western countries. “I know of many democracies in which political appointments are acceptable,” he said. “In the United States, pork barreling is part of the system.”

In Israel’s earlier years, Rubinstein pointed out, politicians got away with much more. Moshe Dayan was well known for raiding antiquities sites, taking home artifacts that by law belonged to the state. (Former Shin Bet director Yaakov Perry describes in his autobiography how as a young agent, he was once assigned to guard Dayan while the then-defense minister dug illegally in a West Bank village.) “Today, no one would let that by,” Rubinstein said. Dayan, like Teddy Kollek, was a protégé of Israeli founding father David Ben-Gurion and belonged to the generation of heroes that now arouses nostalgia.

For the most part, though, Israel’s early leaders “made a point of living simply,” thus fostering public trust, said Yagil Levy of Ben-Gurion University’s department of public policy. Politicians belonged to highly centralized, ideological parties in which personal connections mattered, but there were no primaries requiring outside financing. Political appointments and deals were a way of life, but private money exerted little influence. In 21st-century Israel, things are both better and worse.

History aside, the daily media barrage of allegations will not help the standing of the already unpopular Olmert. The big political question is who can offer an alternative. Netanyahu is poorly placed to exploit the latest affairs, which began under Likud rule.

To the left, Labor is busy with internal battles in advance of a leadership vote scheduled for May. The weakest candidate is current party chief Amir Peretz, widely considered a failure both as defense minister and as self-styled champion of the workers. Last Sunday, ex-prime minister Ehud Barak announced his candidacy to replace Peretz. Barak is admired as a military man but widely disliked personally. In a poll published last Friday in Yediot, Barak was running behind Knesset Member Ami Ayalon, a former head of the Shin Bet.

The strongest threat to Olmert may come from within his party. In a recent, carefully timed Ha’aretz interview, Foreign Minister Tzipi Livni declared herself “qualified to be prime minister.” She outlined a flexible approach to negotiating with the Palestinians, and criticized the “euphoria” among other leaders at the start of last summer’s Lebanon war. Asked if “wild male hormones” had influenced decisions, she answered, “Sometimes there were boy issues.”

Among party voters, Livni is now much more popular than the “boys.” In a recent poll by the Shvakim Panorama institute, Kadima voters picked Livni as their preferred candidate by a wide margin if elections were held early. In a two-way match, 61% picked Livni to 25% for Olmert.

Those results clearly reflect dissatisfaction over the handling of the war and Olmert’s lack of a diplomatic direction. But it’s also true that the lawyerly Livni has preserved a public reputation as Ms. Clean. That’s one more reason for Olmert to worry while he waits for his summons for police questioning.


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