This Week

Black Cloud

Sharon could win election, lose in corruption scandal.

LESLIE SUSSER

Jewish Telegraphic Agency

Jerusalem

E

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.
That 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

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 lim-
its on the size of Israeli campaign
donations, and does not allow dona-
tions of any kind from abroad.

yen if he is re-elected, the
financial scandal dogging
him could spell the end of
Ariel Sharon's political career.
Sharon is accused of taking an ille-
gal loan from a South African friend
to pay off other illegal loans to his past
political campaigns. The prime minis-
ter has not been able to explain away
Money Shuffle
the allegations against him — and
To
repay Annex Research, Sharon's
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. But 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 for-
mer Prime Minister Binyamin
Netanyahu, rather than Labor
Party Chairman Amram
Mitzna.
Polls taken in the wake of the
initial revelations last week
showed Likud plummeting to as
few as 27 seats and Labor
climbing to as many as 24. That
seemed to indicate that what
had once seemed a one-horse
race was now wide open.
Sharon called a news confer-
ence to defend himself against
the allegations, but the chair-
man of the Central Elections
Committee, Supreme Court
Justice Mishael Cheshin, forced
radio and television stations to
Two seminary students in erusalem walk past posters of Labor Party leader Amram Mitzna.
cut Sharon off in mid-sentence
when he judged that Sharon had
veered too far into election
propaganda.
son Gilad secured a bank loan and
induced Likud activists to offer their
That might have rebounded to
support, and the poll results seemed to offered to mortgage the family farm
Sharon's favor. The latest polls, taken
as collateral. When that proved
reflect the Likud's newfound energy.
after Cheshin's action, showed Likud
impossible, Gilad Sharon used a $1.5
The problem for Sharon is that he
rising to 32 seats and Labor falling to
million loan from his godfather,
has yet to answer any of the potential-
20.
ly incriminating questions arising from South African businessman Cyril
Moreover, with a right-wing reli-
Kern, to obtain a loan from a second
the affair.
gious bloc winning an estimated 63
bank
to repay the loan from the first
Briefly,
as
part
of
his
report
on
the
seats in the 120-member Knesset,
bank.
2001 elections that brought Sharon to
Sharon not only would win the elec-
Gilad Sharon paid back Kern's loan
power, the state comptroller located an
tion but would be able to dictate
seven months later, while the out-
illegal contribution of more than $1
coalition terms, according to the polls.

1/17
2003

22

standing 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 to help investigate 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. I helped a good friend,
and I have been paid back. I am
happy I did that," Kern told the
Sunday Times of Johannesburg.
Sharon reportedly tele-
, phoned Kern last week
to apologize that he had
been dragged into the
scandal.
Some questions that
investigators and jour-
nalists are asking:
• Who is involved in
Annex Research, and
why won't Sharon say?
Is Annex Research a
shell company for chan-
neling funds from dubi-
ous 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 prefer-
ential 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