Daily Israel Report

Police Investigation into Olmert´s Bank Leumi Behavior

The Finance Ministry's Yaron Zelikha, who filed the complaint against Prime Minister Olmert regarding the privatization of Bank Leumi, submitted testimony to the police for eight hours.
By Hillel Fendel
First Publish: 1/31/2007, 2:35 PM / Last Update: 1/31/2007, 11:51 AM

Zelikha, the Finance Ministry's Accountant-General, filed a complaint against Olmert with State Comptroller Micha Lindenstrauss last October. After a preliminary review, Judge Lindenstrauss recommended a criminal police investigation into the matter.

Attorney General Menachem Mazuz is now considering doing so.

Zelikha's testimony was submitted on Monday at the Police Fraud Investigation headquarters in Bat Yam.

Olmert is suspected of acting out of conflict of interest to promote the interests of two of his good friends, rich donors from the U.S. and Australia, respectively, during the privatization of Bank Leumi.

The suspicion against Olmert is that in 2005, when he served as Acting Finance Minister, he tailored the terms for the privatization of one of the State of Israel's largest assets, Bank Leumi, to suit his friends.

Though one of the men in question was not only OImert's good friend, but was also represented legally by Olmert's father-in-law's company, Olmert did not disqualify himself from taking part in the legal proceedings. Moreover, it is alleged that he actively attempted to serve his friend's interest.

Investigative reporter Yoav Yitzchak, who first broke the story, wrote, "It is true that in the end, Abrams and Louie [Olmert's two friends] did not succeed in participating in acquiring controlling interest in the bank, but at the stages in question, they did participate. Olmert acted on their behalf, causing great damage to the State of Israel."

Louie's lawyer allegedly complained to Olmert that the proposed terms were not sufficiently attractive for his client. Olmert is suspected, Yitzchak writes, of taking quick action to remedy this, including the following:

* determining that an investor who wants controlling interest should be preferred over financial investors, in contrast with the original plan which was to create competition between them;
* determining that dividends might be provided by the bank even in the first years following the sale, to pay for the sale - essentially paying for the acquisition with the bank's money;
* deciding on a 10% discount on additional shares that would be acquired during the implementation of the option;
* ordering more generous benefits to Bank Leumi employees so that they would not block the tender. The employees were represented by Atty. Ram Caspi, another friend of Olmert.

Zelikha was incensed by Olmert's behavior in overruling the Ministry clerks and the Tenders Council, but was told, "You only recommend; I decide."