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January 17, 2003/Shevat 14 5763, Vol. 55, No. 21
Sharon may pay for scandal
LESLIE SUSSER
Jewish Telegraphic Agency
JERUSALEM - Even if he is reelected, the financial scandal dogging him could spell the end of Ariel Sharon's political career.
Sharon is accused of taking an illegal loan from a South African friend to pay off other illegal loans to his past political campaigns.
As part of his report on the 2001 elections that brought Sharon to power, the state comptroller located an illegal contribution of more than $1 million to Sharon's 1999 campaign for Likud leadership.
Rather than face a fine of four times that amount, Sharon undertook to pay the money back to the donor, an American-based company called Annex Research. It should be noted that Israeli election law sets strict limits on the size of Israeli campaign donations, and does not allow donations of any kind from abroad.
To repay Annex Research, Sharon's son Gilad secured a bank loan and offered to mortgage the family farm as collateral. When that proved impossible, Gilad Sharon used a $1.5 million loan from his godfather, South African businessman Cyril Kern, to raise a loan from a second bank to repay the loan from the first bank.
Gilad Sharon paid back Kern's loan seven months later, while the outstanding loan from the second bank is due on April 30.
On the basis of these facts, police opened an investigation of Sharon and his sons on suspicion of bribery, fraud and breach of trust. The state prosecution asked South African authorities for cooperation in investigating Kern.
Some questions that investigators and journalists are asking:
- Who is involved in Annex Research, and why won't Sharon say? Is Annex Research a shell company for channeling funds from dubious sources?
- Why did Gilad Sharon use Kern's money to raise a loan from a second bank to pay off the first bank, rather than using it as collateral or capital for the first bank?
- Why was the Kern money transferred to Israel via banks in Austria and the United States? Did Kern really make the loan, or was he a conduit for funds from more dubious sources?
- Was the use of the Kern loan a case of using one illegal donation to pay back another?
- Does Kern have business interests in Israel, in which case the loan could be seen as a possible bribe for preferential treatment?
- What collateral remains for the second bank loan after Gilad Sharon repaid Kern's money? And how did Gilad Sharon make enough money in seven months to repay the loans, when his business had been suffering from cash flow problems and the Israeli economy was going through a period of deep recession?
- Did the prime minister mislead Israeli authorities when, as part of the investigation, he failed to mention the money from Kern? Did he mislead the Israeli public when he said he didn't know how his sons had repaid Annex Research?
Leslie Susser is the diplomatic correspondent for the Jerusalem Report. JTA correspondent Moira Schneider in Cape Town contributed to this report.
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