- The Washington Times - Thursday, January 9, 2003

JERUSALEM Scandal dragging the ruling Likud party steadily downward in opinion polls has now touched Prime Minister Ariel Sharon himself, causing party leaders to worry about his chances in the Jan. 28 elections.
Police have begun a probe into the circumstances under which Mr. Sharon accepted a $1.5 million loan from a South African businessman, Cyril Kern, last year in apparent violation of Israeli law.
Likud officials expressed concern yesterday about Mr. Sharon's chances, although polls still show him being re-elected handily. Their fear is that additional scandals, if they emerge, could cause a collapse.
The $1.5 million served as collateral for a bank loan taken out by Mr. Sharon's sons, Omri and Gilad, in 1999 that enabled repayment of money spent on Mr. Sharon's election campaign two years earlier. When the bank refused to accept a second mortgage on Mr. Sharon's ranch as collateral, the Sharons turned to Mr. Kern.
Mr. Kern volunteered in 1948 as a soldier in Israel's War of Independence and served under Mr. Sharon, then a platoon leader. The two men remained friends.
The $1.5 million was deposited in an Israeli bank in apparent violation of Israeli law, which prohibits government ministers from accepting money or benefits from abroad. It was reportedly paid back last week with 3 percent interest.
The Israeli State's Attorney's Office has asked the South African Justice Ministry for help in the investigation. Legal experts say the acceptance of a substantial amount of money, even as collateral, could involve criminal charges of bribery if it involved a payback in any way to the donor.
Mr. Kern, reached by Israeli media in South Africa, said he had no business interests in Israel and was merely helping out an old friend.
"I loaned money to a friend and was very happy to do so," Agence France-Presse quoted him as telling the Sapa news agency.
"I am very, very sorry that in Israel everybody is so destabilizing at a time where you should be united. That's the way I feel," he told the Israeli army radio yesterday.
Though the loan circumstances thus far do not point to any personal profit-making by the prime minister, they follow other scandals that have afflicted the Likud party for the past month, including two involving his sons.
Omri, who was chosen last month by the Likud Central Committee as a candidate for the Knesset (parliament), was supported by a committee member with a criminal background. Omri has reportedly described him as "a good friend."


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