Global Policy Forum

By Justin Huggler

In Israel, it has become known as the 'Greek Island Affair'. The strange tale of alleged corruption that yesterday threatened to engulf Ariel Sharon, a prime minister so secure until now that he has seemed at times invincible, goes back to the idyllic Greek resort island of Patroklos.

In 1999, David Appel, the millionaire Israeli real estate developer who was yesterday charged with attempting to bribe Mr Sharon, was trying to set up a tourist resort on the island, but was having trouble buying all the land he needed. Around the same time, Mr Sharon was running in the contest for the leadership of the right-wing Likud party, and was in need of funds to finance his expensive campaign. Mr Appel is known to be a powerful backroom broker inside Likud. It was around this time, according to the indictment against him yesterday, that he hired Mr Sharon's son, Gilad, as a marketing adviser for his project on Patroklos. It was a job for which the younger Mr Sharon had no obvious qualifications yet, according to the indictment, he was to be paid handsomely. Israeli newspapers have reported that, under his contract, Gilad Sharon was to receive $400,000 (£220,000) for his services, a monthly payment of $20,000 and two bonus payments of $1.5m. In the end Gilad Sharon received some $100,000, the indictment against Mr Appel says. An additional 2.58m Israeli shekels ($580,000) was transferred by Mr Appel to Mr Sharon's ranch agricultural business in the Negev desert.

Israeli prosecutors are alleging that this money was intended as bribes for Mr Sharon to use his influence as foreign minister to help win Greek government approval for Mr Appel's plan to buy up Patroklos and build his tourist resort, including by hosting an event in honour of the Greek deputy foreign minister at the time. The indictment also alleges that Mr Appel tried to bribe Mr Sharon to use his influence as a minister to have land Mr Appel owned at Ginaton, near the Israeli town of Lod, rezoned so that Mr Appel could develop it commercially.

Prosecutors have come up with no evidence that Mr Sharon knowingly accepted any bribe from Mr Appel, and it was easy for him to ride out calls for his resignation from the Israeli opposition yesterday. But comments from an unnamed source at the Justice Ministry that prosecutors are considering whether to bring charges against Mr Sharon or his son, and will decide in anything from a few weeks to a few months, are more worrying for the Prime Minister.

Mr Appel "gave Gilad the money for his father, there is no doubt about that", Yedioth Ahronoth quoted a "senior police source" as saying, adding: "The problem is to prove that Sharon senior knew he was being bribed." It would be ironic if Mr Sharon, who has survived frequent international condemnation for his handling of the conflict with the Palestinians, easily beaten off a leadership challenge from Benjamin Netanyahu, and crushed the peace candidacy of retired general Amram Mitzna with a massive victory in general elections a year ago, were to be forced out of office by a scandal over a Greek island. But this is not the first corruption scandal to be associated with Mr Sharon. The first details of the "Greek island affair" emerged a year ago, as did allegations of another scandal. The Prime Minister was found guilty of accepting overseas contributions, which are not allowed under Israeli law, for his Likud leadership campaign in 1999 and ordered to pay them back. But it emerged last year that Mr Sharon had received $1.5m - whether as a gift or loan is not clear - from Cyril Kern, a British-born businessman based in South Africa. There were allegations he may have used this to pay off the illegal contributions, and that Mr Kern may have been acting as a conduit for somebody else.

The possible contenders to succeed Mr Sharon if he were forced out have already begun to position themselves. Potential candidates have scheduled more frequent meetings with the Likud central committee, Yedioth Ahronoth reported yesterday. Among them are the Foreign Minister Silvan Shalom, the Education Minister Limor Livnat, and Mr Sharon's old rival, the Finance Minister Benjamin Netanyahu. One man thought of as a possible successor to Mr Sharon who would be unlikely to profit is the deputy Prime Minister, Ehud Olmert - because his name comes up in the indictment against Mr Appel as well. Today Mr Olmert is Mr Sharon's closest ally in the government. But in 1999 Mr Olmert, then mayor of Jerusalem, was also running for the Likud leadership. Mr Appel is charged with providing Mr Olmert with activists and logistics, in an attempt to bribe him to use his influence to help with the Patroklos deal, including by lending his patronage to an event in honour of the mayor of Athens.

The opposition Labour Party was yesterday considering whether to call for a vote of no confidence in Mr Sharon's government, and if he were charged, it is thought likely that his main coalition partner, the secularist Shinui Party, would leave the government. But Mr Sharon's supporters were predicting he would weather the storm - just as he weathered the first corruption allegations against him a year ago, and went on to win a resounding victory in the general election a few weeks later.

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