Kern: Schlaff not behind money transfers

Says in exclusive 'Post' interview: Keep me out of Israel's electioneering.

By YAAKOV KATZ
cyril kern 298.88 (photo credit: Gideon Markowicz)
cyril kern 298.88
(photo credit: Gideon Markowicz)
In an exclusive interview with The Jerusalem Post on Wednesday, Cyril Kern rejected police declarations from a day earlier that money he had transferred to Prime Minister Ariel Sharon was provided by Austrian-Jewish businessman Martin Schlaff. Speaking to the Post from his home in Cape Town, Kern, who is a close friend of Sharon's, said he never gave any money directly to the prime minister, but only to his son Gilad. It could not, therefore, be considered a bribe, he said. "I did not give the prime minister a loan," Kern told the Post in a reference to $1.5 million he gave the Sharon family in 2002. "I gave the loan to his son." While admitting to involvement in the money transfers, Kern said the funds were meant to serve as a loan to repay illegal campaign contributions Sharon received during his 1999 bid for the Likud chairmanship. He refused to comment on the purpose of two subsequent transfers made to the Sharon family amounting to $3m. Kern rejected police suspicions publicized Tuesday that the $3m. from bank accounts he held in Austria belonged to Schlaff and was meant to serve as a bribe to promote Schlaff's interests in Israel, such as the Jericho casino. The investigation, Kern added, was politically motivated. "May I not be involved in the electioneering in Israel?" he asked. "Can I just mind my own life?" Schlaff also rejected the accusations through his media adviser Michael Fink, who told the Post from Austria on Wednesday that the Austrian Jewish businessman had never transferred any money to the Sharon family. "The Schlaff group, including Martin Schlaff and his brother James," Fink said, "know of the so-called Kern affair [only from] the media." On Tuesday, the police's National Fraud Squad submitted an affidavit to the Rishon Lezion Magistrate's Court in which it claimed to have collected evidence indicating that Sharon received a $3m. bribe from Schlaff. The affidavit was submitted in response to a petition filed by James Schlaff's attorney to try to prevent police from reviewing files on two laptop computers they confiscated during Schlaff's visit to Israel two weeks ago. On Wednesday, police said Schlaff rescinded his petition to the court and that they planned to begin reviewing the computers to see if they contained additional evidence that could be used in the Sharon bribery investigation. Former state prosecutor Liora Glatt-Berkovitch, who leaked details of the Kern investigation to the media in 2003, dismissed the importance of the computers seized from James Schlaff and said they most probably did not contain new evidence. "One needs to be very na ve to believe that someone who gave a bribe has that information inside a computer in Israel and they are just waiting for the police to come and get it," Glatt-Berkovitch said. "It is clear to me that all of the evidence was destroyed a long time ago, and therefore I do not believe there is any evidence in the computers." All that was new in the court documents, Glatt-Berkovitch said, was that they contained the first official and public declaration by the police that it had evidence linking the Schlaff brothers to money transfers made to the Sharon family. The investigation against Sharon began following a State Comptroller's Report in 2001 that raised suspicions that Sharon had collected NIS 4.7m. in illegal campaign contributions during the race for the 1999 Likud Party leadership primaries. In 2002, Sharon's son Gilad received a $1.5m. loan originating in Austria from Kern to repay a loan the family had taken out to repay the donations. In November 2002, after Gilad allegedly learned police were tracking the money transfer, he received two additional transfers from the Austrian bank BAWAG totaling close to $3m. In total he received close to $4.5m.