Two of the main allegations against Prime Minister Ehud Olmert regarding the tender for the state's controlling interest in Bank Leumi are false and were deliberately leaked to the media in an attempt to harm Olmert, sources close to the bidders told The Jerusalem Post over the weekend. According to these allegations, Olmert tried to tip the balance of the tender in favor of friends after becoming finance minister, and failed to declare that he had a conflict of interest although he was related to a partner in a law firm representing the bidders. According to reports on Channel 10, the Justice Ministry intends to order police to open a full-fledged criminal investigation into the allegations as early as this week.
The blight of corrosive corruption (I) (op-ed)
The blight of corrosive corruption (II) (op-ed)
Bank of Israel Governor Stanley Fischer has said the sale of the bank shares was "solely professional."
Reports in the media have charged that Olmert tried to steer the tender in favor of his friends, US real estate magnate Mort Zuckerman, Brazilian banking tycoon Joseph Safra and Australian billionaire Frank Lowy.
Yoav Yitzhak, editor of the Internet site News First Class, who first reported Olmert's alleged interference in the tender, wrote that the prime minister convened a meeting of top Finance Ministry officials and tried to change the protocols of the tender to favor the three wealthy Jewish businessmen.
Olmert allegedly tried to help Lowy, owner of the Westfield Group, in return for assistance in financing Olmert's Jerusalem mayoral campaign years before.
Sources close to Lowy in Israel deny this, and Lowy, through a statement from his company, has denied any involvement in the Bank Leumi tender beyond a "due diligence examination." He, as well as Zuckerman and Safra, eventually decided to withdraw from the tender.
There are also reports that Olmert was involved in a conflict of interest regarding the law firm that handled Lowy's affairs in Israel, Gross, Kleinhendler, Hodak, Halevy, Greenberg and Co. One of the partners in the firm, Prof. Yosef Gross, is Olmert's son's father-in-law. News First Class charged that Olmert did not acknowledge the connection during the tender process.
Gross would not return calls for comment on this report, but sources in the firm told the Post he was in no way involved in the Bank Leumi tender, that he had retired in August 2005, just as the tender was taking off, and that he was not actively representing anyone involved in the bid at the time.
Gross did not meet with Lowy before the tender and did not serve as his legal counsel on the Bank Leumi privatization tender, the sources said. That job was taken by Gross's protege, David Hodak.
Gross indeed retired from the law firm but he still has an office and an assistant in the office, as part of his retirement package.
"Yossi [Gross] no longer has voting rights at the firm, but he still has an office here and is welcome to come and go as he pleases," a source at the firm told the Post.
According to sources in the law firm, there was no contact between the Israel representative of the foreign bidders group, David Hodak, and Olmert before or during the tender process.
Lowy has been a client of the law firm for the past five years, sources told the Post, and he is represented by Hodak.
The media reports that accuse Olmert of working in favor of Lowy are also unfounded, the sources told the Post. Lowy, through his office, has also denied any business connection to Olmert, Australian media have reported.
"Ehud Olmert is friendly with many important figures in the Jewish world. Everybody knows Ehud and he knows some very important people, that's just the way he is. To say that Frank Lowy contributed to Olmert's Jerusalem mayoral campaign or any other political campaign is wrong," the sources said.
The group of three wealthy businessmen interested in Bank Leumi was represented in New York by Kenneth Bialkin, a well-known and influential lawyer who was brought on board by Zuckerman.
The tender for Bank Leumi was eventually awarded to a company not connected to Lowy.
Many of the players in the tender are shocked at the treatment Lowy has received from the Israeli media, and by those who are leaking information regarding Bank Leumi sale. Lowy is a Holocaust survivor who immigrated to Israel to fight in the Jewish underground before joining the rest of his family in Australia in 1951.
The sources added that since the Bank Leumi tender was conducted out in the open, with so many officials involved, it would have been virtually impossible for Olmert to secretly influence the Finance Ministry's decision one way or the other.