Daily Israel Report

PM´s Bureau Chief Under House Arrest

Prime Minister Ehud Olmert's Bureau Chief is restricted to house arrest, while several others, including her brother, are in custody over a major tax and bribe scandal.
By Hillel Fendel
First Publish: 1/3/2007, 1:06 PM / Last Update: 1/2/2007, 6:13 PM

Shula Zaken, her brother Jerusalem City Councilman (Likud) Yoram Karashi, and others are suspected of involvement in accepting or arranging bribes from political figures and businesspeople in return for tax breaks and other favors.

Olmert’s Bureau Chief was restricted to house arrest for ten days by a Tel Aviv magistrate Tuesday night after being questioned by the fraud squad at its Bat Yam headquarters for more than eight hours. Her brother is also in custody, along with the Director-General of the Israel Tax Authority and a private businessman.

Zaken, who has been Prime Minister Olmert's top aide for many years, was required to post a NIS 50,000 bond to secure her release from custody. She is barred from contacting the Prime Minister's Office for an additional 14 days after the house arrest ends, and her passport was confiscated.

The remand of Zaken's brother, a Likud Central Committee member, was extended for nine days.

Israel Tax Authority Director-General Jack Matza was remanded for six days in the case, while the businessman is to remain in custody for nine days, and the custody of Matza's predecessor was extended by four days. Others were also questioned in the case.

One businessman, a close friend of Olmert’s bureau chief, is being investigated for the second time in a year. He was questioned several months ago regarding allegations of tax evasion.

The National Fraud Investigations Unit raided 30 homes on Tuesday morning, the culmination of a ten-month investigation into allegations of corruption in the Tax Authority.

Zaken has been secretly under investigation for months. Her home telephone was wiretapped, a fact revealed during the trial against former Justice Minister Chaim Ramon. Zaken’s conversations with the IDF commander of Ramon’s accuser are being used as evidence in the case in which Ramon is accused of kissing a woman soldier against her will.

The police claim that the suspects intervened in various appointments in order to attain tax benefits for their associates. Specifically, the former Tax Authority head and a Likud Central Committee member are suspected of an attempt to frame three innocent men, in order to remove them from participating in a public tender they won - and in which the Likud man had a strong interest.

Former Income Tax Commissioner Tali Yaron-Eldar told Army Radio that she believes most of the suspicions will be proven untrue. "I know how things work," she said. "It's very hard for the Tax Authority chief to have any influence on a given tax case." Former Finance Minister Avraham Shochat, however, said that if the suspicions are true, "the public service sector will have reached a low point."

Another top Kadima official under investigation in a separate case is Finance Minister Avraham Hirschson, who is suspected of failing to report a crime. Hirchson was questioned by Israel Police on allegations that he turned a blind eye to embezzlement at the “Nili” association.

Five former employees of the non-profit organization were arrested Tuesday morning on charges of involvement in a theft of some NIS 5.5 million from the association.

The Movement for Quality in Government has demanded that Attorney General Menachem Mazuz and Civil Service Commissioner Shmuel Hollander suspend all the officials who are under investigation.