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After five former employees of the National Labor Federation in Eretz-Israel (NLF) were arrested Tuesday, police confirmed they were looking into allegations that Finance Minister Avraham Hirchson turned a blind eye to financial crimes while he was head of the organization starting in 1997.
The NLF is a labor organization that was founded by the Revisionist Movement in 1934 as an alternative to the left-leaning Histadrut.
Police emphasized Tuesday that no investigation had yet been opened against the Kadima minister, but they were checking to see if there was a basis for investigating Hirchson on charges of failure to report a crime.
Hirchson is not suspected of involvement in the embezzlement itself, but rather that he knew that it was occurring and failed to report it to police or governmental oversight organizations. If police decide there is sufficient basis for an investigation, Hirchson is likely to be questioned.
All five of the people arrested Tuesday were former employees of Nili, an organization that operated educational institutions under the umbrella of the federation.
According to a Channel 10 report that was aired last week, Ovadia Cohen, former head of Nili, allegedly embezzled approximately NIS 5.5 million from the organization. Cohen allegedly informed Hirchson of his crimes, and Hirchson fired him, but did not report the crime.
Cohen reportedly stole the money in order to cover debts that he had incurred through black market loans.
Although the embezzlement occurred in 2003, it was only in 2005 that accountants discovered that the money was missing, and reported the matter to the police.