Corruption scandals engulfing Israel

JERUSALEM — Israel is awash in corruption allegations, with splashy arrests in a tax-agency scandal and the announcement Tuesday that police will investigate the role of Prime Minister Ehud Olmert in the sale of a major bank while serving as finance minister.

Olmert took another blow early Wednesday when the commander of the Israeli military, Lt. Gen. Dan Halutz, abruptly resigned over the admitted failures of the war.

Officials said the investigation of Olmert would look into the government's 2005 sale of a controlling interest in Bank Leumi, one of the country's largest financial institutions. The state comptroller, a government watchdog, has alleged that Olmert favored business associates during the sale. Olmert was finance minister at the time.

Olmert, a former lawyer and onetime mayor of Jerusalem, previously has been investigated for corruption during a career in politics spanning more than 30 years and was once indicted though never convicted of wrongdoing. Olmert is also facing allegations involving real-estate deals with major contributors.

Several other senior Israeli officials are facing legal problems:

• President Moshe Katsav could be indicted on charges of rape and other serious offenses.

• Former Justice Minister Haim Ramon is on trial for allegedly forcibly kissing a female soldier.

• Finance Minister Avraham Hirchson could be implicated in an embezzlement case from a previous position.

• Most recently, Olmert's longtime office manager was placed under house arrest on suspicion she arranged jobs for political allies in the Tax Authority in exchange for granting tax breaks to her brother and business associates.

His lawyer, Eli Zohar, said Olmert looked forward to a chance to clear his name.

If Olmert is indicted, he would have to step down. But it could be months before a decision is made.

Attorney General Meni Mazuz has removed himself because his sister holds a senior position at the Finance Ministry and took part in the Bank Leumi privatization process.

An opinion poll published last week showed Olmert's approval rating at just 14 percent, and the hard-line Likud Party would win if new elections were held.

Critics accuse Olmert of acting hastily last summer in launching the war immediately after Hezbollah fighters invaded Israel and captured two Israeli soldiers. More than 1,000 people were killed on both sides in the 34-day war.

In its announcement of Halutz's resignation, the military spokesman's office said Halutz had decided to resign now because the dozens of military inquiries into various aspects of the war had been completed. None of the inquiries concluded that he should step aside or be replaced.