By Yuval Yoaz, Haaretz Correspondent Last update - 00:48 17/01/2007
State Prosecutor Eran Shendar on Tuesday instructed the Israel Police to open a criminal investigation against Prime Minister Ehud Olmert over his involvement in the state's sale of a controlling interest in Bank Leumi.
The investigation will focus on suspicions that during his tenure as finance minister, Olmert tried to steer the tender for the sale of Bank Leumi in order to help Australian real estate baron Frank Lowy, a close personal associate.
The prime minister received notice of the prosecution's order on Tuesday afternoon. He was unsurprised by the decision, his associates told the Israel Radio Tuesday evening.
Olmert's associates told the radio that the prime minsiter was proud of his involvement in the privatization of Bank Leumi and saw no fault in his behavior. They added that the sale was made in coordination with officials and legal advisers from the Finance Ministry.
Police opened an unofficial "inspection" into the suspicions two months ago. The Justice Ministry statement said a preliminary investigation of the allegations raised in a report by the state comptroller about the bank sale "led to the conclusion that a foundation of evidence has been built that would justify opening a criminal investigation."
Once the investigation is completed, findings will be turned over to the attorney general's office, which has the final say on whether to file an indictment. The process is likely to take months.
The National Fraud Investigation Unit will take part in the investigation, according to a decision reached Tuesday in discussions with Police Commissioner Moshe Karadi.
Attorney General Menachem Mazuz has removed himself from the case because his sister holds a senior position at the Finance Ministry and took part in the Bank Leumi privatization process.
Suspicions that Olmert was improperly involved in the Leumi sale first came to light in a report by State Comptroller Micha Lindenstrauss. The main evidence against him is apparently the testimony of Accountant General Yaron Zelekha.
As first reported in Haaretz, an opinion prepared by attorney Michael Karshan of the Justice Ministry recommended a criminal investigation against Olmert in the Leumi affair, on suspicion of fraud, breach of trust and other crimes. However, Shendar then decided that more information was needed, and asked the police to carry out certain inquiries as part of the process of deciding whether to open a formal investigation.
Opposition MKs call for new elections
The prosecution's decision to open a criminal probe of the prime minister's involvement in the affair drew angry reactions across the board, as well as calls for early elections.
MK Ami Ayalon, who is running for the Labor Party leadership, said the circumstances necessitated preparing for the possibility of early elections, to focus on battling corruption and restoring public faith in the political system.
MK Danny Yatom, also running for Labor leadership,said "the decision [to investigate Olmert] brings the end of this cabinet closer. Therefore, the Labor primaries will be based on the candidate's ability to restore [the party] and lead the elections."
MK Shelly Yachimovitch (Labor) said that the prosecution took a brave step when announcing the investigation, because it proved that all citizens are treated equal before the law.
Meretz Chairman Yossi Beilin called on the prime minister to suspend himself from office, saying, "He [Olmert] is in a place where all that interests him is protecting himself. He can't even deal with state matters."
MK Ran Cohen(Meretz) complimented State Prosecutor Eran Shendar for deciding to open the investigation. "The highest ofcompliments to State Prosecutor Shendar on his decision to strike down and show the rest of the rank and file that there will be no refuge for corrupters."
MK Yuval Steinitz (Likud) said the affair reflected the need for new elections. "The failure of the government and the harm to the purity of values necessitate elections," he said.
MK Ophir Pines Paz (Labor) said, "The citizens of Israel are worthy of leaders who don't make it to the investigation room."
The Movement for Quality Government said, "When another ruling prime minister is investigated, it is a black day for democracy."
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