Daily Kos
Political analysis and other daily rants on the state of the nation

Wednesday | January 08, 2003



Interesting things have been happening in Israel, our closest Middle Eastern ally and potential applicant for admission as the 51st state.

Israeli journalists, who actually have to work for a living, have been hot on the trail of Israeli Prime Minister Ariel Sharon and his two sons, Omri and Gilad, for their involvement in a metastasizing political scandal that is eating its way through the Likud, Israel's counterpart to the Republican Party.

That comparison isn't quite correct, since the Likud, like 99.999% of the non-U.S. world, is way to the left of the GOP on economic issues. But the two parties do share some close connections -- including several top officials at the Pentagon and in Vice President Cheney's office -- and are pretty much joined at the hip these days on matters of Middle East policy.

I'm not sure it's fair to say the political system is more corrupt in Israel than it is here, but it is corrupt in different ways. It's less formal -- more the old-fashioned guys-in-hotel-rooms-counting-unmarked-$100-bills kind of corruption, rather than the modern PAC-soft money-501(c)4-affiliated-organization kind of corruption. There's also been a big influx of Russian mafia types into the country over the past decade, which hasn't helped the political culture one bit.

This became apparent during the recent Likud leadership campaign, when Sharon defeated former prime minister Ben Netanyahu to keep his job as Likud chairman (or secretary general, or whatever.) The nominating convention was apparently a very interesting affair, with plenty of former cocktail waitresses and Slavic bouncers dressed in shiny Italian suits showing up as Likud delegates.

(This would be like the RNC holding a meeting and finding it suddenly had a bunch of new members with names like Vinnie the Greek and Joey Bananas. )

Anyway, it soon became apparent various people had been purchasing votes retail and wholesale back in the 'hood (Israel is filled with little "development" towns where the Likud machine runs things in ways that would make your average Chicago ward boss blush.) Israeli prosecutors -- who can be as aggressive at Ken Starr, but are less willing to function as the armed wing of a right-wing political campaign -- are on the case, and various high-level Likud officials may be heading for the slammer.

But now the story has taken an even more ominous turn for the embattled Likudniks. Prosecutors are also investigating Sharon and his two sons for their intimate involvement in some financial transactions that make Whitewater look like a minor Arkansas real estate deal. (Wait, Whitewater was a minor Arkansas real estate deal. But you know what I mean.)

Anyway, this murky business stems from the last Likud leadership knock down, back in 1999, when Sharon first unseated Netanyahu. It seems that during the campaign, Sharon and his sons channeled extremely large sums of cash through the usual obscure shell company (set up by Papa Sharon's personal attorney) to be spent on various campaign projects in ways that were not, if you will forgive the expression, strictly kosher.

When the state comptroller published his report in October 2001, the Israeli political establishment was duly shocked, shocked , but as you recall everybody had their minds on more important things at the time (no, not the cost of John Kerry's haircuts, but that other business in Afghanistan). Sharon was ordered to repay the shell company some 5 million shekels (about $1.5 million) and the whole thing kind of blew over.

But it didn't go away. The need to repay the money put Sharon and sons in a bit of a pickle, because they didn't have that kind of cash. So they tried to borrow it from an Israeli bank, using the family ranch as collateral. They got the loan, but then, whoops, the bank found out the Sharons technically didn't own the land they had just mortgaged. And by technically, I mean "fraudulently." The ranch (like most land in the land of milk and honey) is actually owned by the State of Israel. The Sharon family just has a 99-year lease on it.

These things happen. I'm sure the last time you took out a mortgage on a very expensive piece of real estate, you also had a tough time remembering if you had bought it, or only leased it. But it was still embarrassing, and it left the Sharons in a fix: Now they didn't have the money to pay back the loan they'd used to pay back the money they didn't have to begin with. With me so far? Good. Confused? Too bad.

Now Sharon could have called up the then-governor of Texas and asked for his advice (the governor having arranged some creative bridge financing of his own for his purchase of a part interest in the Texas Rangers baseball team.) But I don't think the two men were as well acquainted then as they later became. So instead Sharon and his sons went to another Israeli bank and arranged another loan to pay back the loan they'd used to pay back the money they didn't have to begin with.

I know this is starting to sound like the Old Lady Who Swallowed the Fly, but bear with me here.

The second bank also demanded, as banks have a tendency to do, some collateral. But the Sharons, having run out of leased ranches to mortgage, didn't have any. So they had to go find some. They did this by taking out yet another loan from a mysterious South African businessman whom nobody seems to know very much about, but who is now on the speed dial list of a great number of Israeli investigative reporters.

Why borrow money to use as collateral to borrow more money? Inquiring minds (prosecutorial minds) want to know. Could it be, perhaps, because the Sharons thought the source of the collateral would not have to be publicly disclosed? Only the Sharons know for sure. But it is interesting to note that when a bank manager informed one of the Sharon boys (name of Gilad) that he would, in fact, have to sign a form disclosing the source of the collateral (i.e. the South African connection) little Gilad suddenly remembered a very pressing appointment and left the building, saying he would sign the document "later." (And by later, he meant "never.")

Well, eventually the authorities unraveled the money trail and asked Gilad about the missing signature ("Document? Oh, that document. I was supposed to sign that?") Pretty soon leaks were spouting like whales from the prosecutor's office, and, well, the Sharons were having lots of bad hair days.

The Prime Minister, like strong leaders everywhere, blamed somebody else: his son (the other one, name of Omri). Omri, called in to have a little chat with the investigators, abruptly lost his powers of speech. When the Prime Minister was asked about this eloquent silence, his response was, "Look, Omri's a big boy; he needs to decide by himself."

And yes, I am making this up. (Just kidding. Here's the link.)

And what about that mysterious South African businessman? At first, there was some suspicion he was actually a ficticious off-shore shell company (which would have made him a great candidate for a top post in the Bush Administation). But as it turns out, he's actually a guy named Cyril Kern, who may or may not be an Israeli citizen. (I'm still not clear on that.)

According to the Prime Minister's office, Kern is actually an old army buddy of Sharon's who no doubt loaned the Prime Minister the $1.5 million "for old time's sake." ("Remember that night with the girls in Tel Aviv, Cyril?")

Whatever the motive, the loan was probably illegal. Israeli law strictly forbids campaign contributions from foreign sources, even if those sources are old army buddies of the Prime Minister. You gotta draw the line somewhere.

There's also the unsolved mystery of what happened to the money the Sharons raised with their first loan -- the one secured by other people's real estate. The Sharons say they gave it back to the shell company, which is what they were supposed to do in the first place. (Remember?)

But what did the shell company do with it? Did it -- oh, just to take a wild guess -- give it back to the mysterious South African businessman, so he could loan it to the Sharons, thus completing a perfect loop of illegality? Again, inquiring minds want to know. And apparently, they're pretty close to finding out.

So there you have it: allegations of fraud, obstruction of justice, campaign finance violations, possible perjury -- the works. Yesterday, with the Israeli press's scandal juices in full flow, one of Sharon's mouthpieces announced the Prime Minister has ordered his Attorney General to launch a through and sweeping investigation . . . of the prosecutors office, and will not rest until . . . the leakers are caught and punished.

Maybe Sharon has been talking to the former Texas governor, who has some experience in that line as well.

OK. Here you have a major, major scandal breaking -- one week before an Israeli general election, and just as the United States prepares to throw itself into an invasion of Israel's most implacable enemy, thereby completely overturning the geopolitical order in the Middle East.

Have you read anything about this on the front page of the New York Times? How about the Washington Post? Seen anything on CBS, NBC, ABC? How about Time and Newsweek?

No. There seems to be something of a media blackout on this story, due no doubt to its relative unimportance. ("Well, it's a small country that not too many Americans care about, in a pretty obscure corner of the world. Let's go with that color story on Bill Frist's medical skills.")

Why is this? Could it be because Sharon is now an honorary Republican, and carries the same get-out-of-scandal-free card that Shrub does? Only the media whores know for sure.

Posted January 08, 2003 10:37 AM | Comments (34)


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