Lowy implicated in Israel bank scandal

This is a transcript from PM. The program is broadcast around Australia at 5:10pm on Radio National and 6:10pm on ABC Local Radio.

MARK COLVIN: One of Australia's richest businessmen has been embroiled in a high-level corruption scandal involving the Prime Minister of Israel.

Israeli press reports claim that the billionaire owner of the Westfield Group, Frank Lowy, was involved in the scandal with the Prime Minister Ehud Olmert last year.

They allege that Mr Olmert had a conflict of interest because he advanced Mr Lowy's interests in the privatisation of a major Israeli bank, Bank Leumi.

The Justice Ministry is investigating suspicions that Mr Olmert interfered with the tender to benefit Mr Lowy and another bidder, Daniel Abraham.

There are also allegations of a conflict of interest by the Prime Minister through a law firm that dealt with Mr Lowy's affairs in Israel.

The head of that firm is Ehud Olmert's father-in-law Professor Yossi Gross.

A spokesman for Frank Lowy is rejecting the claims tonight.

Emma Alberici reports

EMMA ALBERICI: Overnight Israel Attorney General confirmed he was investigating claims that Prime Minister Ehud Olmert accepted bribes from two international businessmen.

The bribes have allegedly been paid to help advance their interests during the 2005 privatisation of Israel's Bank Leumi, the country's second biggest bank.

The two businessmen referred to in reports are said to be the Prime Minister's personal friends, one of which was named on the Hebrew language website, News First Class, as Frank Lowy, the Australian billionaire owner of the Westfield group.

Various reports during the tender process last year said the Australian real estate tycoon was in partnership on the Bank Leumi bid with American media and property mogul Mortimer Zuckerman.

The website News First Class, first published the claims two weeks ago, which also say Ehud Olmert never declared a conflict of interest he had during the tender process.

His father-in-law, Yossi Gross heads the law firm, which allegedly deals with Frank Lowy's affairs in Israel.

The tender for Bank Leumi was eventually sold to a company not connected to the Lowy family or to the other man named in the reports.

A spokesman for Frank Lowy tonight rejected the suggestion he'd been involved in any improper activity.

PM is not suggesting that he tried to influence the bid process or that he paid any bribes. A statement e-mailed to PM tonight states that the Lowy family was approached to join a consortium to tender for an interest to Bank Leumi.

The statement says, "After considering the investment, and conducting some preliminary due diligence, it was decided not to proceed with the consortium or with the tender process."

The statement says the Mr Lowy did take part in the tender process, but did not win are categorically wrong and should not be repeated.

Frank Lowy is a Holocaust survivor who immigrated to Israel to fight in the Jewish underground before joining the rest of his family in Australia in 1951.

55 years on, he's the country's second richest businessman, worth $5.5 billion. His $74 million super yacht Ilona is often seen at the (inaudible) docks in Israel.

In March of this year, the Lowy family's LGF Holdings poached two investment bankers at UBS in Tel-Aviv to start a funds management business they called ION Asset Management.

Media reports over the past few years variously link the Lowy family name to the sales of three banks in Israel.

Israel's Attorney General has ordered the probe into claims that Prime Minister Ehud Olmert accepted the bribes while he was Acting Finance Minister.

The allegations come at a time when the Israel Prime Minister is suffering in opinion polls over his handling of the fighting in Lebanon.

Ehud Olmert has been involved in several corruption investigations in recent months, although no formal charges have ever been filed against him.

Among them, are several property deals and appointments made while Trade and Industry Minister in his predecessor Ariel Sharon's government.

Israel's Ministry of Justice last night said, at this stage, no decisions have been taken. No criminal proceedings of any kind are under way in the matter, and police are not involved.

MARK COLVIN: Emma Alberici.

AbcNet