ISRAEL’S embattled prime minister, Ariel Sharon, is facing questioning by the police over a controversial loan that helped his rise to power, writes Uzi Mahnaimi.

The police are attempting to untangle a series of transactions connected to a $1.5m (£920,000) loan given in January 2002 to Sharon’s younger son, Gilad. During an investigation that began four months later it emerged that Cyril Kern, a British businessman living in South Africa and a long-time friend of Sharon, had transferred the money through an Austrian bank to a Tel Aviv account controlled by Gilad.

Investigators say the money served as a guarantee for $1m (£620,000) that Gilad and his elder brother Omri borrowed from a local bank to repay a donation Sharon was said to have received for the elections that assured his rise to the prime minister’s office — the Likud party primaries of 1999.

The police investigation was kept secret until late last year, when Sharon was preparing for his successful return to power in the general elections of January 2003. A state attorney, Liora Glatt-Berkovich, who was involved in the investigation, thought the attorney-general was being slow about taking it foward. In a move uncharacteristic of an Israeli civil servant, she leaked the information about Kern to a local newspaper. She was suspended from her job and is awaiting trial.

In a further twist, police investigators are now asking whether Kern could have afforded the loan. They are looking at new evidence suggesting that the money might have been given to Gilad by another, as yet unnamed, Austrian businessman with interests in Israel.

So far Israeli police requests to the Austrian government to investigate the bank account from which the $1.5m was paid to the Sharon family have been refused. Gilad has repaid the loan.

Diplomatic relations between the two countries were downgraded in February 2000 when the extreme right-wing Freedom party of Jorg Haider joined the Austrian coalition government, but they have now been restored.

In an interview with the Austrian daily Die Presse, the Austrian foreign minister, Benita Maria Ferrero-Waldner, admitted an association between Sharon’s sons and “a major Austrian businessman” had played some part in securing an improvement in the relationship between the two countries.

An Austrian business delegation recently visited Sharon at his ranch. The investigators are asking if there is a link between Sharon’s decision to renew relations with a country widely disliked in Israel, and the fact that they are still barred from making inquiries about bank accounts in Austria.

A Ma’ariv poll on Friday showed 37% of Sharon’s voters believe the prime minister is involved in corruption, and 52% said he will have to leave office if he is shown to have behaved illegally.

Omri Sharon will be questioned by police this week, and Gilad is already under investigation.

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