Scandal Could End Sharons Career

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.
The prime minister has not been able to explain away the allegations against
him, and more potentially embarrassing details keep surfacing.

The latest polls indicate that Sharon’s Likud Party may be
able to hold its lead over Labor in the Jan. 28 election. However, if
additional revelations about how Sharon and his sons raised funds catch up with
him later and force him to resign, the beneficiary might well be former Prime
Minister Benjamin Netanyahu, rather than Labor Party Chairman Amram Mitzna.

Polls taken in the wake of the initial revelations showed
Likud plummeting to as few as 27 seats and Labor climbing to as many as 24.
That appeared to indicate that what had once seemed a one-horse race is now
wide open.

Sharon called a news conference to defend himself against
the allegations, but the chairman of the Central Elections Committee, Supreme
Court Justice Mishael Cheshin, forced radio and television stations to cut Sharon
off in midsentence when he judged that Sharon had veered too far into election
propaganda.

That might have rebounded to Sharon’s favor. The latest
polls, taken after Cheshin’s action, showed Likud rising again to 32 seats and
Labor falling to 20. Moreover, with a right-wing religious bloc winning an
estimated 63 seats in the 120-member Knesset, Sharon not only would win the
election but would be able to dictate coalition terms, according to the polls.

Some pundits accused Sharon and his advisers of deliberately
forcing Cheshin’s hand by switching from a response to the allegations to a
clear political attack on Labor and Mitzna. The tactic, they said, allowed
Sharon to portray himself as a victim of Labor, the left-wing media and the
liberal-leaning judge, while avoiding the need to answer tough questions.

Whether it was a deliberate strategy or not, events worked
in Sharon’s favor. “Sharon was able to rekindle the Likud tribe’s fire,” as one
pundit wrote. The public slighting of Sharon induced Likud activists to offer
their support, and the polls’ results seemed to reflect Likud’s newfound
energy.

The problem for Sharon is that he has yet to answer any of
the potentially incriminating questions arising from the affair.

Briefly, the facts of the case are these: 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.

For his part, Kern said the money was a personal gift, not a
political donation. “I can do what I like with my money,” Kern told the Sunday
Times of Johannesburg. “I helped a good friend, and I have been paid back. I am
happy I did that.”

Sharon reportedly telephoned Kern last week to apologize
that he had been dragged into the scandal.

Some questions in the case 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?

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 is 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 Sharon mislead the Israeli public when he said he
didn’t know how his sons had repaid Annex Research?

Ma’ariv newspaper added a new twist this week, claiming that
Kern had tried to interest Israeli businessmen in huge gold and diamond deals
in South Africa and had kept Gilad Sharon informed. That might imply that Kern
has business interests in Israel, making his financial aid to the Sharons
suspect.

There is a precedent for such suspicions: One of the main
reasons for President Ezer Weizman’s resignation in mid-2000 was the revelation
that his benefactor, Edouard Saroussi, a French businessman, had business
interests in Israel.

The Labor Party is campaigning heavily on the corruption
issue. Ironically, though, if Sharon wins the election but ultimately is forced
to step down because of the scandal, it’s not Labor that will benefit.

Under the recently abandoned system of direct election of
the prime minister, the prime minister’s resignation would have sparked new
elections. However, under the current system of voting only for parties, Sharon
would simply be replaced by another Likud member who has the confidence of the
Knesset — such as his party rival Netanyahu, for example.

Exchanging Sharon for Netanyahu, who is more hard-line and
less inclined to cooperate with Labor, would be a net loss from the point of
view of the left. From a purely partisan point of view, then, Labor’s
corruption-based campaign against Sharon and his sons may prove to be
counterproductive.