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Friday September 13, 1996

Jerusalem mayor faces fraud charges

DAVID LANDAU
Jewish Telegraphic Agency

JERUSALEM -- Israeli Attorney General Michael Ben-Yair has decided to seek an indictment against Jerusalem Mayor and Likud Knesset member Ehud Olmert on charges of fraud and misappropriation in connection with funding for his party in the 1988 Knesset election campaign.

The decision Sunday came after a special hearing, granted in certain cases involving public figures, during which Olmert and his attorney, Yigal Arnon, sought to convince Ben-Yair to drop the charges.

The indictment accuses Olmert of trying to mislead the state comptroller by covering up donations already received by the Likud, in an effort to receive additional state treasury funds for the election campaign, the Israeli daily Ha'aretz reported.

The attorney general said in his written decision that other Likud election campaign officials had been indicted in connection with the same financial irregularities and that charges would be brought against other party officials.

Prosecuting Olmert would prove that all are equal before the law, Ben-Yair wrote.

The attorney general asked the Knesset House Committee to begin deliberations to remove Olmert's parliamentary immunity so that he could be prosecuted.

Arnon said his client was innocent, but that he would fight against the loss of immunity because a legal action could drag on for years.

A draft of the indictment charges Olmert with aggravated fraud, falsifying corporate documents, two violations of the tax code, and violating the Party Funding Law by making a false declaration to the state comptroller. All of the charges relate to the Likud's 1988 election campaign, when Olmert served as party treasurer.

According to the draft indictment, Olmert told Yona Peled -- one of the heads of a nonprofit organization doing fund-raising for the party -- to solicit money from businesses; in exchange, she was told to give them fictitious receipts indicating that the money was spent on advertising. Peled did so, and the Likud thereby raised $304,000.

This scheme violated the law in two ways. First, campaign contributions from businesses are illegal. Second, the fictitious receipts enabled the companies to take tax deductions for the donations as if they were legitimate business expenses.

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