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 Monday, 13 January, 2003, 17:30 GMT
S Africa investigates Sharon loan claim
Ariel Sharon during his controversial news conference
Sharon rejects any suggestion of wrongdoing
South Africa is to investigate damaging allegations that a local businessman loaned $1.5m to Israeli Prime Minister Ariel Sharon.

Cyril Kern is reported to have lent Mr Sharon, a personal friend, the money to help him pay back illegal campaign contributions in 1999.

It will also be our country's objective to ensure that no money laundering took place during the course of this transaction

Paul Setsetse, justice department
Since Israeli newspaper Ha'aretz revealed that Israel's attorney general was investigating the allegations, Mr Sharon has seen support for his Likud Party take a nosedive ahead of a January 28 election.

Mr Sharon has firmly rejected any suggestion that he has been involved in any wrongdoing.

"The South African Justice Minister Penuell Maduna has acceded to a request from the Israel authorities for assistance and an investigation into the donation made by Mr Cyril Kern to Mr Ariel Sharon," justice spokesman Paul Setsetse said in a statement.

Scorpion's sting

Mr Setsetse said the South African police and a special investigating unit, the Scorpions, who are similar to America's Federal Bureau of Investigation, will work in tandem with Israeli police investigating the allegations.

A woman walks past election posters
Sharon is battling for re-election

"At the same time the South African investigators will be interested to determine whether any South African law, particularly our Foreign Exchange Act was violated in the process or not," Mr Setsetse said.

"Indeed it will also be our country's objective to ensure that no money laundering took place during the course of this transaction," he added.

Mr Kern has admitted making the payment, which went to an account managed by Mr Sharon's two sons, but rejects any notion of corruption.

He said that the loan had been fully repaid with interest.

Foreign donations

Mr Setsetse said that the investigation would give Israeli police the chance to get a statement from Mr Kern.

"A magistrate in Cape Town will be requested to cause Mr Kern to be subpoenaed for purposes of being examined," Mr Setsetse said.

Israeli media says that Mr Sharon and his sons secured the loan to cover debts caused by illegal campaign contributions to Likud in a 1999 primary campaign.

Under Israeli law election funding from abroad is banned.

TV blackout

The scandal has hit Mr Sharon hard as he sets about trying to get re-elected on 28 January.

On Sunday Israeli election officials rejected a complaint by Mr Sharon over a controversial decision to cut off his live television broadcast on Thursday.

The head of Central Election Committee (CEC), Judge Mishael Cheshin, says he was forced to act because Mr Sharon was engaged in "political propaganda".

The prime minister had called a news conference to rebut allegations of financial malpractice and corruption, but was taken off the air after about 10 minutes.


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12 Jan 03 | Middle East
10 Jan 03 | Media reports
10 Jan 03 | Middle East
09 Jan 03 | Middle East
08 Jan 03 | Middle East
28 Nov 02 | Middle East
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