Zaken convicted of fraud in Tax Authority Affair

Former Olmert aide abused her position in PMO, treasury to advance brother's interests.

By
February 26, 2012 11:19
3 minute read.
Shula Zaken

Shula Zaken 390. (photo credit: Ariel Jerozolimski)

 
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The Jerusalem Magistrate’s Court convicted Shula Zaken on Sunday of fraud and breach of trust offenses in regard to the Tax Authority affair, one of the most serious cases of public-sector corruption in Israeli history.

The scandal broke in 2007 after the National Fraud Squad gathered sufficient evidence in a covert operation, including by wiretapping suspects, in 2006.

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The court found Zaken guilty of abusing her position as bureau chief in the office of then-finance minister Ehud Olmert between October 2005 and March 2006 by brokering bribes to advance the personal interests of her brother, Yoram Karshi.

Her trial was held separately from that of the other defendants in the affair. Three have already been sentenced to prison terms by the Central District Court in Petah Tikva.

Former Tax Authority head Jackie Matza was convicted under a plea bargain in January 2011 on four counts of fraud and breach of trust, and one count of being an accessory to a bribe, and was sentenced to a year in prison and another year’s suspended sentence.

Karshi was sentenced to seven months in prison, and Yigal Saar, the former Tax Authority representative in the US, was sentenced to five months in prison and a 12-month suspended sentence.

Saar was accused of asking Karshi and another businessman, Yaakov Ben-Gur, to help him become deputy Tax Authority head. Karshi contacted Matza, who promised to appoint Saar, but later reneged on that promise. Karshi then asked Zaken not to schedule a meeting between Matza and Olmert, where Matza planned to pass on the names of candidates he wanted to appoint to various posts. She did as her brother asked.

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Ben-Gur was handed down a sixmonth community-service sentence after his lawyers agreed to a plea bargain with the state.

Shmuel Bobrov, the former Tax Authority deputy director-general for administration, was convicted of four counts of fraud and breach of trust, also under a plea bargain, and sentenced to six months of community service.

In convicting Zaken on Sunday, Judge Haim Li-Ran said her testimony before the court and statements to police had been “packed with inaccuracies” and that her version of events did “not hold water.”

The judge noted that Zaken had argued, among other things, that she tried to make an appointment for Matza with the finance minister, but that the meeting had been delayed because of Olmert’s schedule.

She also testified that she did not know of any connection between Matza and her brother, even though she told police that she had known about a long-standing relationship between the two.

Zaken also testified that her brother did not know anything about her work even though she also testified that she had consulted with him about it on various matters.

Li-Ran said these were examples of a “pattern” that Zaken had exhibited in her testimony during the trial.

He also criticized Zaken for abusing her position of “gatekeeper” in the Finance Minister’s Office, adding that she had done so for “extraneous and improper reasons that had nothing to do with her role in order to hinder the promotion of government operations.”

“[Zaken] ‘handed over’ to her brother a central and important facet of her authority and entrusted him with the ‘key’ to the Minister’s Office, something that should have been wielded by her alone; at least so far as the appointment of the deputy director of the Tax Authority,” the judge said.

After the verdict was read, Zaken’s lawyer, Micha Fettman, said he was “disappointed.”

“We must respect the court’s decision, and that is what we are doing,” he said. “However, we do not accept it. We will study the verdict, and then we will consider our options accordingly.”

Following the verdict, Li-Ran ruled that the court would hear sentencing arguments for Zaken on April 24. The penal code calls for a maximum punishment of three years in prison for the offense of fraud and breach of trust.

In response to Zaken’s conviction, a spokesman for the Labor Party said “it has been made clear today that Zaken is a criminal offender who operated while serving as Olmert’s bureau chief.

In convicting her, the court has made an important further step in the campaign to eradicate government corruption.”

Zaken faces charges in two other corruption cases. She is currently standing trial alongside Olmert in the Jerusalem District Court where she has been indicted in connection with the Rishon Tours and Talansky affairs. That trial is in its summing-up phase.

Zaken was also indicted in connection with the Holyland real estate corruption scandal, which opened this month in the Tel Aviv District Court.

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