Olmert charged for graft in Holyland Affair

Former PM, 15 others charged in real estate corruption scandal dubbed one of the largest in Israel's history.

Former prime minister Ehud Olmert with lawyer in court 311 (photo credit: Marc Israel Sellem)
Former prime minister Ehud Olmert with lawyer in court 311
(photo credit: Marc Israel Sellem)
In a new twist to the Ehud Olmert corruption saga, the former prime minister and 12 others were indicted on Thursday on allegations of giving and receiving bribes in one of the largest corruption scandals in the state’s history.
The 112-page indictment, filed in the Tel Aviv District Court, charges that Holyland real-estate developers paid tens of millions of shekels to public employees and elected officials to advance its project in Jerusalem, including substantially shortening planning times, smoothing over planning objections, rezoning land, extending tax breaks and increasing the size of the permitted construction.
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During the time the Holyland and Salt Industries affairs allegedly took place, Olmert was mayor of Jerusalem and then minister of industry, trade and labor.
Those indicted along with Olmert include Uri Lupolianski, former Jerusalem mayor and former chairman of the Jerusalem Municipality’s Planning and Construction Committee; former deputy mayor and city councilman Eliezer Shamhiof; Olmert’s former bureau chief Shula Zaken; former city councilman Avraham Finer; and former city engineer Uri Sheetrit.
Also charged are businessman Hillel Cherny, who owned rights to the land used in the Holyland project, former Polar Investments CEO Avigdor Kelner, who owns a stake in Holyland, Polar Investments manager Amnon Safran, Shimon Galon, the CEO of Kardan Real Estate, which also owned a stake in the project, and Jerusalem entrepreneur Meir Rabin.
Three companies are named on the indictment: Holyland Tayerut Ltd, which is owned by Polar Investments, Holyland Park Ltd and Holyland Leisure Services Ltd, for which Cherny serves as director.
The indictment includes charges against Dan Dankner, former chairman of Bank Hapoalim and Israel Salt Industries; and former Israel Lands Authority head Yaakov Efrati, for allegedly giving and receiving bribes to rezone salt flats in Atlit and Eilat.
There are also charges relating to alleged bribes that took place in other parts of the country, including the promotion of Polar Investments’ real estate interests in Yavor Farm, Shalem Farm and Mevchur Farm north of Kiryat Gat.
State prosecutors filed a request that the case be tried before a panel of three judges, rather than a single judge.
Later on Thursday, the Tel Aviv District Court agreed to an additional prosecution request to impose a gag order preventing the publication of any identifying detail relating to the central state witness, a businessman who allegedly acted as a middleman for the bribes.
According to the indictment, in the 1990s Cherny decided to acquire residential building rights in order to create a large neighborhood in place of the former 100-room Holyland Hotel, by changing the land’s zoning status from a hotel to a residential area.
He did so, the indictment charges, to increase the amount of construction permitted on the land, and to reduce his costs in establishing the real estate project.
Together with a real estate entrepreneur, known only as “S.D.,” Cherny is alleged to have devised a multi-stage scheme to have the zoning changed. To gain approval for his plans, Cherny knew he would need the full support of elected officials, senior Jerusalem municipal employees and the planning authorities, the indictment alleges.
Between 1994 and 2007, Cherny and S.D. allegedly collaborated with Jerusalem entrepreneur Rabin to provide financial and other benefits to those officials responsible for promoting construction and planning processes, in return for advancing their real estate project.
By 1999, after bribing officials, most of the land was rezoned from hotel to residential use, the indictment charges, and Cherny sold part of the land to Kelner and Safran from Polar Investments, and to Galon from Kardan Real Estate.
The indictment charges that between 2003 and 2007, millions of shekels were given in bribes to a long list of elected and public officials in the Jerusalem Municipality, including Lupolianski, Sheetrit, Olmert and Zaken, in order to continue to promote the Holyland project.
A separate charge relates to Olmert’s tenure as minister of industry, trade and labor. The indictment alleges that Kelner, Safran and Rabin also acted to advance projects in the Shalem, Yavor and Mevchur farms by providing financial benefits to Olmert and his then-bureau chief, Zaken.
Between 2002 and 2005, Kelner and Safran allegedly transferred NIS 1.7 million via their management companies to S.D. and Rabin, to be used as bribes to promote improvements on the land.
Olmert and Zaken are alleged to have taken financial and other bribes worth around NIS 200,000, knowing the money was meant to advance the interests of Kelner and Safran.
The third charge relates to Dankner and his company, Israel Salt Industries.
According to the indictment, starting in the mid-’90s, Dankner acted to advance a land settlement signed between Israel Salt Industries and the Israel Lands Authority, to rezone land in Atlit and Eilat for residential and tourism use, and to provide his company with rights to the land after the rezoning.
Dankner and Rabin are alleged to have bribed then- ILA chief Efrati, who is charged with taking around NIS 45,000 in handouts to advance the rezoning.
According to the Justice Ministry, the investigation into the Holyland affair involved 150 investigators from the police’s Lahav 433 National Fraud Unit and the Tax Authority.
In April 2010, after the police went undercover, it began an overt probe, and by August 2010 transferred the case to state prosecutors. In March 2011, the prosecution sent summonses to most of the suspects to pre-indictment hearings, most of which were concluded by August 2011.
Meanwhile, later on Thursday, the former prime minister’s media adviser Amir Dan slammed the state prosecutor for filing the indictment without granting Olmert a hearing, and during his trial in the Jerusalem District Court for several other corruption charges.
“Serving the indictment at this time, while Olmert is already standing trial, runs contrary to the ethics of basic decency and is a scandal in itself,” Dan said. “In our view, this is an improper attempt to influence the court at a time when it it faced with making decisions about Olmert’s case.”
The former prime minister had “stated clearly that he never took bribes, either directly or indirectly, and this indictment does not alter that fact,” Dan said.
He also denounced the prosecution for refusing to reveal the terms of the agreement signed with the main prosecution witness, which he said was done “in a dark corner, hidden from public view.”
“The indictment is based on ‘Arabian Nights’ fairy tales dreamed up by the state witness, who in the past has been criticized in the courts, including for his tendency to tell lies,” Dan said. “That man did not hesitate to conceal from the police and from the prosecution the fact that he tried to blackmail various people, whom he later denounced as suspects.”
Dan added that Olmert, during his tenure as mayor of Jerusalem (1993-2003), had supported the original Holyland project “in the belief that, at a time when many people were abandoning the capital, it would help the secular population remain in the city by catering to their needs.”
Dankner, according to his lawyer Navot Tel-Tzur, “strongly rejects the allegations against him in the indictment. Dankner has never bribed anyone, and the claims that he has are untenable, and have absolutely no evidential basis.
“We regret that charges have been brought that trample the dignity of a person, without a shred of evidence, and based on the questionable testimony of a state witness who has been revealed to be a blackmailer,” Tel-Tzur said. “Dankner acted in good faith, with transparency and in accordance with the law. We take with great seriousness the fact that the indictment was served without... examining all the substantive arguments raised at [Dankner’s pre-indictment] hearing.”
Assailing the hearing as a “set-up,” Tel-Tzur added that it “harmed public trust in the concept of a hearing, and in the discretion of the prosecutor, who ‘made sure’ to inform Dankner about its decision in this matter, as in other matters, via the media.”