Israeli leader faces criminal probe in bank sale

JERUSALEM – Israeli authorities said Tuesday they were opening a criminal investigation into Prime Minister Ehud Olmert’s role in the sale of one of Israel’s largest banks, the latest setback for the increasingly unpopular leader.

Olmert’s public standing has plummeted after last summer’s inconclusive war in Lebanon and a series of corruption scandals involving top officials, but there appeared to be no immediate danger to the stability of his government.

Olmert took another blow early today when the commander of the Israeli military, Lt. Gen. Dan Halutz, abruptly resigned over the admitted failures of the war.

Officials said the investigation would look into the government’s 2005 sale of a controlling interest in Bank Leumi, one of the country’s largest financial institutions. The state comptroller, a government watchdog, has alleged that Olmert favored business associates during the sale. Olmert was finance minister at the time.

Police spokesman Micky Rosenfeld said the police anti-fraud unit would handle the probe.

Olmert, who has been dogged by corruption allegations during his three-decade political career, has denied any wrongdoing in the case. His lawyer, Eli Zohar, said Olmert looked forward to a chance to clear his name.

“I welcome the decision to open an investigation so that once and for all we can end this irrelevant misunderstanding,” Zohar told Israel Radio. “We hope the investigation will be conducted quickly and efficiently so that the witch hunt and criticism will disappear.”

If Olmert is indicted, he would have to step down. But it could be months before a decision is made.

While the investigation proceeds, there should be no threat to Olmert’s coalition government, said Reuven Hazan, a political scientist at Hebrew University in Jerusalem. However, he said it would cause further damage to Olmert’s already dismal standing with the public.

An opinion poll published last week showed Olmert’s approval rating at just 14 percent, and the hard-line Likud Party would win if new elections were held.

Critics accuse Olmert of acting hastily last summer in launching the war immediately after Hezbollah fighters invaded Israel and captured two Israeli soldiers. More than 1,000 people were killed on both sides in the 34-day war, including 159 Israelis, but Israel failed to bring the soldiers home, one of its goals.

Israeli launched a full-scale attack on Lebanese Hezbollah guerrillas after they seized the two men and killed three other soldiers in a cross-border raid July 12.

Halutz has been under pressure to step down since the end of the 34-day war, which also failed to defeat the anti-Israel militant group Hezbollah.

Army Radio reported that Halutz sent his letter of resignation to Olmert, saying that he was taking responsibility for the outcome of the war.