Will corruption scandals cause Ariel Sharon to resign

JERUSALEM — At the height of his powers, skillfully conducting a complex process of negotiation with the Palestinians and enjoying widespread popularity, Prime Minister Ariel Sharon could be forced to resign over a string of financial scandals in which he and his sons are principal players.

That, at least, is the view of many Israeli pundits and politicians, some of whom already are gearing up for a post-Sharon era.

What suddenly has telescoped the process and given it a more urgent time frame is Attorney General Elyakim Rubinstein's decision to leave office next January. Before he does, he is expected to issue a comprehensive report on the Sharon affairs.

Even if there is no criminal prosecution, Rubinstein's condemnation of Sharon's ethical conduct is likely to be so devastating that pressure will intensify on Sharon to resign, observers say.

Sharon and his sons have been named or investigated in four cases of suspected misdemeanor or felony:

*A mysterious loan from an Austrian bank.

*The so-called "Greek island affair," in which Sharon's son Gilad was paid huge sums of money by a leading Likud activist when Sharon was foreign minister and, later, a candidate for party leader.

*Building permits for that same activist in the town of Lod.

*The proposed rezoning of agricultural land in the center of the country, where the Sharons have a second farm.

Criticism has grown over the past few weeks as Gilad Sharon twice invoked the right to remain silent under police interrogation.

Last December Sharon fired Naomi Blumenthal, the deputy infrastructure minister, after she kept silent during an investigation of bribery allegations in the Likud Party primaries.

The right to silence is not something to which elected officials should resort, Sharon declared at the time. Though Gilad Sharon does not hold public office, legal experts say his silence in affairs involving his father is tantamount to a public figure remaining silent.

Even Likud Knesset members were outraged at Sharon's perceived double standard.

"If the prime minister of Israel doesn't urge his sons to cooperate with the police, what will ordinary citizens say?" asked Michael Eitan, chairman of the Knesset's Law Committee.

Rubinstein publicly castigated Gilad Sharon's silence and his refusal to hand over key documents, knowing that the prime minister's parliamentary immunity kept the family farm off-limits to a police search.

Pressure on Sharon escalated when Austrian law enforcement officials last week turned down an Israeli police request to pursue their inquiries in Vienna.

Coming just days after Israel and Austria restored diplomatic ties, the Austrian decision led to speculation that Sharon had agreed to restore ties if Austria blocked further investigation of the transfer of a controversial $1.49 million loan from Vienna's Bawag Bank to a Tel Aviv bank account run by the prime ministers sons.

Some leading politicians see a strong chance of Sharon being forced to resign. Shimon Peres, chairman of the opposition Labor Party, urged party colleagues to be ready for a change at the top.

In the Likud, two prime ministerial aspirants — Finance Minister Benjamin Netanyahu and Foreign Minister Silvan Shalom — discussed a possible alliance to head off potential leadership bids by Defense Minister Shaul Mofaz and Trade and Industry Minister Ehud Olmert if Sharon leaves office.

The Austrian loan affair goes back to Sharon's 1999 campaign for Likud leadership. After the campaign, Sharon's elder son, Omri, now a Knesset member, was questioned by police about whether he illegally used shell companies to raise campaign funds.

As part of an effort to return an illicit contribution from a company called Annex Research, Cyril Kern, a family friend based in South Africa, transferred $1.49 million through an Austrian bank to the Sharon brothers. They then used the money as collateral for an Israeli bank loan to repay an earlier loan that had been used to repay Annex.

Police are investigating why the repayment process was so circuitous; whether Kern's loan could be considered a gift that officeholders are forbidden to accept; whether the source of the money really was Kern or whether it was the same people behind Annex Research, who Sharon was supposed to be paying back, and how Gilad Sharon was able to repay all the loans within the space of a few months.

Sharon has not addressed the issue beyond a news conference he gave during the last Knesset elections. The news conference was blacked out after Sharon launched an attack on his Labor Party challenger, running afoul of Israel's election propaganda laws.

In the "Greek island" and Lod affairs, the common denominator is Likud activist and land developer David Appel.

In the late 1990s, Appel, who was trying to lease the Greek island of Patroklos for a tourism project, hired Gilad Sharon as a consultant. At the same time, he allegedly was seeking the intercession of Ariel Sharon — then the foreign minister — with Greek authorities.

Appel allegedly paid Gilad Sharon, a young economist with no experience in tourism, $25,000 a month for marketing, a down payment of $300,000 and a promise of $3 million if the deal went through — which it never did.

As prime minister, Sharon allegedly intervened to promote plans to develop areas to the east of Lod — where Appel owns land — despite objections by municipal and planning authorities. The move raised suspicions of a payoff.

In the land-zoning affair, Sharon was severely chastised by both the attorney general and the state comptroller for taking an active part in a 2002 decision that affected family-owned land in Moshav Kfar Malal, where Sharon was born.

Rubinstein closed the case on the grounds that there was no evidence of criminality, though he blasted Sharon's conduct.

In a signed editorial, Israel's Yediot Achronot newspaper suggested that the Israeli right — which feels threatened by the "road map" peace plan — would not be overly saddened to see Sharon embroiled in legal complications as a result of the investigations.

Eitan Haber, former bureau chief to former Prime Minister Yitzhak Rabin and one of the paper's top journalists, wrote that Sharon's strongest supporters now are on the left because they know he is the only Israeli leader with sufficient standing to produce a peace agreement with the Palestinians and make it stick.

"If Sharon is truly bent on peace, on establishing a Palestinian state and uprooting Jewish settlements, there are many on the right who will dance on the rooftops if and when the attorney general decides to implicate Sharon in his sons' affairs," Haber asserts. "But for people on the left, it would be a tragedy of historic dimensions.''

Sharon's resignation would not necessarily spark new elections; the Likud simply could choose a new leader, who would take over as prime minister if he is confirmed by a majority of the Knesset.

If so, that new leader could adopt policies toward the Palestinians that are very different from Sharon's, whose positions are too conciliatory for much of his party.