The police department's National Fraud Unit on Tuesday questioned Prime Minister Ehud Olmert as a witness in an ongoing corruption investigation focusing on the National Tax Authority.


Police spokesman Micky Rosenfeld said that Prime Minister Olmert "gave testimony for four hours in the fraud investigation in the Tax Authority scandal." Rosenfeld noted that the Prime Minister was not a suspect in this case, in which tax officials are suspected of peddling in-house appointments and tax breaks in exchange for bribes from

The high-profile scandal involves allegations of graft against a close assistant to the Prime Minister.

businessmen.


One aspect of the high-profile scandal involves allegations of graft against a long-time close assistant to the Prime Minister, Shula Zaken, during Olmert's term as Minister of Finance in the Sharon administration.  According to police suspicions, Zaken used her influence to obtain certain positions within the Tax Authority for people who could, in exchange, assure tax breaks for one of her relatives. Zaken, who has been arrested along with several Tax Authority officials, has been temporarily suspended from her official position while the investigation proceeds.


Among other issues, police questioned Olmert regarding his appointment of former Tax Authority Chairman Jacky Matza. Olmert allegedly settled on Matza based upon a recommendation by Shula Zaken. Police suspect that Zaken then used her leverage with Matza to promote those individuals from whom she sought to gain benefit within the Tax Authority.


Regarding his term as Finance Minister, Prime Minister Olmert is directly under investigation by the State Comptroller in what is known as the Bank Leumi privatization affair. The suspicion is that in 2005, Olmert tailored the terms for the privatization of one of Israel's largest assets, Bank Leumi, to suit the needs of his personal confidantes. In addition, the Comptroller is investigating the unusual terms of purchase of Olmert's Jerusalem apartment, under the suspicion that the property was obtained from the contractor at a very low price in exchange for government influence.


In February, Israel TV's Channel 10 news claimed to have obtained documents exposing the ways in which Olmert and his staff used their power to help various Likud Central Committee members in return for their political support. The two-year-old documents list 115 members of the Central Committee during the period when Olmert was Minister of Industry, Labor and Trade.


Later this month, the government-appointed Winograd Commission is slated to deliver interim conclusions in its report on the functioning of the government and military during last summer's war in Lebanon. According to leaks surrounding the commission, Olmert and Defense Minister Amir Peretz are likely to be directly and personally criticized for their functioning during the crisis.