A criminal investigation was ordered yesterday into allegations that Ehud Olmert, the Israeli Prime Minister, bought a luxury home on the cheap in return for political favours.

The latest scandal broke only months after rape accusations forced Moshe Katsav to step down as President when he admitted lesser charges of sexual harassment and obstruction of justice.

Mr Olmert’s office denied that, while Mayor of Jerusalem, he had accepted a “significant discount” on a house in a plush area of the city in return for granting construction permits to the company selling him the property.

“We are certain and convinced that the Olmert family’s purchase of the Cremieux Street home was clean and pure,” a statement issued by the Prime Minister’s office said. “This is a needless investigation.”

The criminal investigation was announced just as Mr Olmert was beginning to regain some standing in opinion polls. His popularity slumped over his leadership during last year’s Lebanon war, when the army failed to crush the Hezbollah guerrilla group, which had kidnapped two Israeli soldiers and killed several more.

Menachem Mazuz, the Attorney-General who pursued the Katsav case, asked police to open the investigation after the State Comptroller found that Mr Olmert acquired the house at $330,000 below market value. In return, he allegedly expedited contracts for the same company to allow the removal of a historic building in Jerusalem, clearing the way for residential development.

The inquiry is one of several scandals involving the Prime Minister, who came to power after Ariel Sharon – himself the focus of investigations into alleged financial wrongdoing – suffered a massive stroke last year. Police are already looking into whether Mr Olmert used his position as Finance Minister to favour friends while privatising Israel’s second-largest bank in 2005. Mr Olmert has denied any culpability in that case too.

Mr Mazuz is contemplating a third investigation into whether Mr Olmer used his position as Trade and Industry Minister in 2003 to appoint cronies to a government-funded business authority and to secure state funding for his former law partner’s business venture.

Public confidence in the Israeli political establishment was already rocked by the rape charges against Mr Katsav this year. Mr Mazuz dropped the charges – the most serious levelled at an Israeli president, and which carried a potential jail sentence of 20 years – after Mr Katsav agreed to a plea bargain that helped him to avoid prison time but forced him to step down.

Even if Mr Olmert weathers the latest scandal, he is expected to face a rough ride next year when a final official report into the conduct of the Lebanon war is released by the Winograd Committee. Critics accuse him of having blundered into the war with no real plan or clear goals.

Fall from grace

Haim Ramon
Israel’s former Justice Minister, is awaiting the verdict of a trial for sexual misconduct. Ramon is accused of having kissed a female soldier against her will while she guarded a Government building. Having initially denied the kiss took place, he now says she initiated it

Moshe Katsav
Israel’s President, faces ongoing questioning on charges of harassment after a former employee accused him of threatening her with dismissal if she refused his sexual advances. Police spokespeople have said he is now also being investigated over allegations of illegal wire tapping

Shula Zaken
Ehud Olmert’s private secretary and political aide, was questioned along with 20 others by police in January over suspicions of involvement in a scheme granting illegal tax breaks to businesses in return for payoffs

Omri Sharon
Son of former Prime Minister Ariel Sharon, was jailed after pleading guilty in 2005 to lying under oath and falsifying financial records to conceal illegal campaign funds raised for his father in 1999

Source: Time archives; Global Integrity

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