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(photo credit: AP [file])
State Attorney Eran Shendar on Monday ordered police to launch a criminal investigation against Prime Minister Ehud Olmert on suspicion of bribery.
Olmert allegedly received favorable terms for the purchase of his home on Jerusalem's Cremieux Street in return for helping the contractor who sold it to him.
The affair began on October 12, 2004. Olmert served as mayor of Jerusalem from 1993 to 2003.
This marks the second criminal investigation of Olmert. He is also under investigation by police on suspicion that he tried to tilt a public tender for ownership of core control of Bank Leumi on behalf of a business friend, Australian businessman Frank Lowy, while serving as finance minister.
Monday's decision came four months after State Comptroller Micha Lindenstrauss submitted to Attorney-General Menahem Mazuz the draft of a final report on his investigation into the Cremieux affair and told Mazuz it was up to him to decide whether the facts he had uncovered warranted a criminal investigation.
The story was first uncovered on February 28, 2006, by reporter and editor Yoav Yitzhak, who operates the Internet news site News First Class. Yitzhak then filed complaints with Mazuz and Lindenstrauss.
"After studying the material and hearing the opinions and holding a discussion on the issue, the attorney-general ordered an examination to fill in missing information regarding the appraisals of the value of the home because of arguments raised by Olmert's lawyers and Alumot Co. [the contractor]," Justice Ministry spokesman Moshe Cohen wrote in a statement to the press. "After conducting the supplementary investigations and holding additional discussions, it was decided to open a criminal investigation to look into the suspicions raised in the examination."
According to the findings that Lindenstrauss handed to Mazuz on April 29, Olmert and his wife, Aliza, purchased a home on Cremieux Street in Jerusalem's German Colony for $1.2 million, $480,000 less than its market price. In return, Alumot, according to Yitzhak, allegedly received "fantastic" benefits thanks to Olmert's influence in the Jerusalem Municipality.
The project was a highly complicated one, involving more than doubling the building rights on the lot and moving one of the structures to another location on the lot - all in a preservation area with tight building restrictions.
Following Mazuz's decision, the Prime Minister's Office issued a statement saying that the office was "certain and completely convinced" about the propriety of the sale of the house to the Olmert family.
"We find unfortunate the decision to continue the investigation," the statement said. "This investigation is unnecessary."
Just like Olmert had already responded to the State Comptroller's Office, the statement said, "the purchase of the home did not deviate in the least from the market conditions and the accepted value assessments."
At the same time, the statement said, Olmert would cooperate fully with the investigation to "bring it to a conclusion as quickly as possible. We are certain the investigation's findings will show clearly that the purchase of the home by the Olmert family was clean, ethical and at a proper price."
According to the Justice Ministry statement, Mazuz and Lindenstrauss agreed that the state comptroller would carry out the investigation and that in accordance with the evidence, Mazuz would decide whether to order a criminal investigation.
Lindenstrauss had asked an independent assessor, Levana Eshed, to submit an opinion on the value of the Cremieux Street house. She estimated it at $1.68m.
Lindenstrauss also concluded that some of the facts surrounding the purchase were suspicious. In his letter to Mazuz, he wrote: "The payment [by Olmert and his wife] of $275,000 followed by the payment of the balance for the full price, when the contractor did not have all the rights to the property he was selling or to the apartment itself, that he did not have a building permit, that the design that Olmert and the builder had agreed upon required significant planning changes that needed municipality approval (affecting the detailed zoning plan, the preservation plan and the question of dismantling and rebuilding) raise substantial questions regarding proper administration. We should keep in mind that until then, never before had an entire building been dismantled and reconstructed, and it was only by doing this that the Olmert family could get the apartment they had agreed upon with the contractor."
Lindenstrauss also wrote that senior municipal officials - city engineer Uri Sheetret; Osnat Post, head of the town planning department; and Micha Ben-Nun, head of the permit and supervision department - had "acted directly or indirectly to speed up and approve the complex and complicated procedures to obtain the permits."
According to Shendar's decision, the police were also ordered to investigate the role of various figures in the municipality in the affair.
On May 15, Olmert's lawyers, Eli Zohar and Roy Blecher, responded to some of the allegations included in Lindenstrauss's letter to Mazuz. They argued that the market value of a property was not necessarily the same as its price, citing an appraiser who wrote that the price of a property "may express the will or the personal needs to purchase a property and not necessarily rational and economic ones."
"The price that the Olmert family paid for the apartment was an appropriate one from the point of view of Alumot," according to the lawyers.
Alumot issued a statement on Monday saying it "hopes and believes that when the police investigation ends, the Kafkaesque witch hunt that is taking place around the affair will also end. We are certain that ultimately the truth will come to light and unequivocally show that the company acted impeccably."
Zohar and Blecher presented evidence to prove that Alumot had offered the same property to a potential purchaser, Menahem Eitan, for $100,000 less than Olmert paid.
They also charged that Lindenstrauss had been out to get Olmert and had manipulated facts to pressure Mazuz into ordering a criminal investigation. By refusing to publish the final report of the investigation and only submitting it to Mazuz, Lindenstrauss had violated the Criminal Code and was liable to up to three years in prison, Olmert's lawyers charged.
Their arguments, however, did not persuade Mazuz and Shendar.
Herb Keinon contributed to this report.