Scandal charges reach Sharon

JERUSALEM -- Prime Minister Ariel Sharon was linked to corruption allegations for the first time Tuesday, widening a scandal that has eroded support for his Likud Party as campaigning for the Jan. 28 election hit high gear.

Citing a document obtained from Israel's Justice Ministry, the Haaretz daily said Sharon and his son Gilad are suspected of receiving bribes, committing breach of trust, fraud and deceiving the police and Israel's state comptroller.

Sharon adviser Eyal Arad denied wrongdoing and warned against "an attempt to bring down a prime minister and change the regime in Israel by means of a campaign of leaks, lies and disinformation."

Sharon is the front-runner over Labor Party candidate Amram Mitzna, but Likud has lost about a quarter of its support in the polls amid allegations of vote-buying and organized crime involvement in last month's party primary.

The Haaretz story centered on a reported $1.5-million money transfer a year ago by South African Cyril Kern to the prime minister's sons Gilad and Omri.

The case dates to October 2001, when the state comptroller found Omri Sharon had raised money outside Israel for a previous political campaign of his father's through a company called Annex Research. Although there was no suspicion of criminal wrongdoing, the comptroller asked Sharon to reimburse the company $980,000 it paid to his campaign advisers.

Sharon repaid $104,000 shortly thereafter, and Omri and Gilad Sharon secured a bank loan for the difference, using Sharon's Sycamore Ranch in the Negev Desert as collateral, Haaretz said. But the bank called off the loan after learning Sharon did not own but leased the land from the state, it said.

In January, three months after the state comptroller's report, Kern transferred $1.5-million to Gilad and Omri Sharon, and the money served as collateral for a loan the Sharon family obtained from a different Israeli bank to repay Annex, the newspaper said.

"Despite this, when Sharon was asked by the police how he organized the large payment to Annex, he replied that the payment was made possible as a result of mortgaging the ranch," Haaretz said.

Sharon attorney Yoram Rabed said Kern was a family friend and the money was transferred without the prime minister's knowledge.

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