State Comptroller Micha Lindenstrauss on Wednesday informed the attorney-general that Prime Minister Ehud Olmert may have been guilty of criminal behavior by taking an active part in an Investment Center decision to provide a $10 million grant to a company represented by his close friend, former partner and personal lawyer, Uriel Messer. The letter to Attorney-General Menahem Mazuz came in the wake of a 30-page report released on the same day entitled "Conflict of Interests on the Part of the Minister of Commerce and Industry." The decision to provide the grant to the company represented by Messer was made under the previous government, when Olmert served as minister of commerce and industry.
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In response to the state comptroller's report, Olmert said, "he acted in accordance with
his public responsibilities and prevented a great injustice which could have been caused to an entrepreneur whose only request was to build a factory in Dimona. Former Supreme Court President Meir Shamgar ruled in favor of the entrepreneur and the feet-dragging of the Investment Center led to a situation in which the entrepreneur's application was not handled."
Olmert added that he had no relations with the entrepreneur and that his acquaintanceship with Messer could not prevent him from fulfilling his professional duties as minister. He said he had "no doubt that this 'affair,' like all the others under investigation by the comptroller will end in nothing and evaporate like foam on water."
According to Lindenstrauss, Silicat Industries Inc. applied to the Investment Center in October 2001 for status as an "approved industry," which would enable it to obtain government money to build a Silicat-producing factory in Dimona, at a total investment cost of $48 million.
The file was not discussed until the second half of 2003, when Olmert was already serving as Minister of Commerce and Industry under Prime Minister Ariel Sharon. Within less than six months, the Investment Center granted the approval.
During the negotiations with the Investment Center, Messer represented the company. On July 10, 2003, Olmert hosted a meeting on the company's application in his office.
"Olmert should not have participated in the meeting or intervened in the discussion because of the conflict of interests he was involved in," wrote Lindenstrauss. "This conflict of interests stemmed from the fact that between the company's representative, who asked for benefits from the Investment Center which the minister was in charge of, and Olmert, there had previously been economic ties and there continued to be ties of friendship and a lawyer-client relationship."
The following month, Olmert visited Dimona. During the visit, he reduced the amount of the guarantee the company was to deposit with the government from $15 to $5 million dollars. Olmert also knocked $1 million after the $7.5 million sum the company would have had to pay for infrastructure development, and then reduced it by another $4 million in return for the company's undertaking to develop the land itself.
Lindenstrauss wrote that Olmert's decision to reduce the guarantee by $10 million was "a substantial benefit to a particular entrepreneur, which reduced the guarantees the investors were supposed to provide, thereby increasing the government's risk in investing in the company."
The Investment Center granted the status of an "approved industry" without first seeing to it that the company fulfilled all the conditions that the professional echelon had laid down. Lindenstrauss also charged that Olmert and his aides, Ovad Yehezkel and Doron Shofen, intervened even after the Investment Center granted the company approved status.
In 2004, when the company lodged an appeal, the appeal was heard by the Investment Center, which Olmert controlled, rather than a regular appeals committee. Before the appeal, the Investment Center's internal controller prepared an opinion stating that the company had not fulfilled all of the conditions of its approval and that the technological and marketing risks involved in the project were unreasonably high. It recommended that the center should not provide the grant until the company had carried out a pilot project.
"Given the conflict of interests in which Olmert was involved, one should regard with special gravity the intervention of the minister and his aides in specific actions which were under the responsibility and authority of professionals in the Investment Center and the ministry," wrote Lindenstrauss. "Olmert's connections with the representative of the entrepreneur, Attorney Uriel Messer, his decisive involvement in various matters connected to the advancement of the project despite the fact that he was involved in a conflict of interests, all these arouse suspicions of corruption."