A Blow to Barak's Image

Prime Minister Ehud Barak prides himself on his achievements. He was a brave and fierce soldier. He's an accomplished pianist, a gifted mathematician and, one on one, a charming politician. And with all that talent came integrity, too--or, at least, that was the image Barak put forth to win the nation's leadership from his sleaze-tainted predecessor, Benjamin Netanyahu. But the image became harder to sell last week after the state comptroller issued a blistering report on some of the methods Barak used to fund his election, a system, he said, that "grossly tramples the law."

Comptroller Eliezer Goldberg's report focused on the Barak campaign's practice of channeling donor money through non-profit organizations, which then sponsored Barak-friendly events and projects. For instance, the Association for the Advancement of Taxi Drivers sponsored a pro-Barak rally and sent drivers to Barak appearances after a Barak aide directed $19,000 to the association from two different donors. According to the comptroller, some $595,000 was dispersed in this way. The backdoor funding was meant to circumvent election laws that limit how much parties can spend.

What's more, it aimed to launder campaign donations that are illegal in Israel: gifts from foreigners and large sums from single individuals. In adopting the practice, Barak's workers were imitating a soft-money scheme used in Netanyahu's successful 1996 campaign. In that election, Australian millionaire Yosef Gutnik sponsored a huge campaign around the slogan, borrowing Netanyahu's nickname, "Bibi is good for the Jews."

After the 1996 election, the deputy attorney general produced an opinion that the Gutnik project was kosher because of a legal loophole. Because Israel's campaign financing laws, applying to political parties, were not updated once Israelis began electing their Prime Minister directly in 1996, the limitations, said the attorney general's office, did not apply to the prime ministerial race. "Ehud insisted we work within the law and a safe distance from its margins," said Doron Cohen, Barak's brother-in-law and campaign confidant. "So we checked the borders of the law and understood we could proceed on the safe side."

The comptroller, though, didn't think much of the deputy attorney general's opinion. He hit Barak's Labor Party with an unprecedented fine of $3.4 million. Immediately afterward, the attorney general announced that police were opening a criminal probe into electoral wrongdoings. Five other parties will also be investigated. Of the 15 parties represented in parliament, 12 were cited--including the main opposition Likud, which suffered a $122,000 penalty--for financial improbity. Still, Barak's campaign was by far the worst offender. Goldberg apparently turned up no evidence directly implicating Barak but said the soft-money scheme should have lit up a "red light" for him. The Prime Minister says it didn't. "I didn't know about these groups. I wasn't involved in fund raising," he said, arguing that he was too busy with the rest of the campaign. It was an uncharacteristic defense for a systems analyst, notorious for delegating next to nothing and for absorbing all the details of any project. He was beginning to sound, in fact, like his old rival Netanyahu.