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Former finance minister Abraham Hirchson admitted yesterday that he did receive funds from the National Workers Organization during his 1998-2005 term as head of the union, but argued that the money was to come out of his retirement package.

The admission was made in a written response to his indictment. The Kadima MK has been charged in the Tel Aviv District Court with stealing approximately NIS 2.5 million from the union and an associated nonprofit organization, Nili, which operates educational and social services.

The charges against Hirchson include embezzlement, aggravated fraud, corporate fraud, breach of trust, money laundering and the falsification of corporate documents. According to the indictment, Hirchson conspired with union and Nili officials to embezzle funds for their own private use. Hirchson is accused of receiving the following amounts:

b NIS 25,000 a month in cash for "expenses" - totaling about NIS 1.2 million.

b NIS 10,000 to NIS 30,000 in "holiday bonuses" twice a year - totaling NIS 160,000.

b NIS 500,000 to NIS 750,000 in travel expenses.

b Approximately NIS 600,000 to fund his primary campaigns in 1998 and 2002.

The other defendants in the case are former union director general Yitzhak Russo, former union accountant Amatzia Bonner, and Zion Cohen, a former employee of the union's pension fund. An additional indictment names Zion Cohen's brother Ovadia Cohen, former chief of the union's financial department, as well as a third brother, David Cohen, a former courier for Nili, and Ronit Gerti, a former employee in the union's accounting department. Ovadia Cohen allegedly stole NIS 12.3 million, giving NIS 6.5 million to his brother David to cover his gambling debts and about NIS 2.5 million to Hirchson.

In his response to the court, Hirchson argued that the indictment mistakenly tied together two separate cases - the embezzlement of union money, and the monthly payments of NIS 25,000 that Hirchson received from the union. Hirchson's attorney, Jacob Weinroth, claimed that because of the way the indictment is worded, "the reader is liable to think, mistakenly, that Mr. Hirchson was involved in some way in the embezzlement affair, whereas a thorough examination of the indictment shows that Mr. Hirchson is not connected to that affair."

Hirchson wrote that he left the union in the wake of a 1996 amendment to the law governing Knesset members' parliamentary immunity, which barred MKs from holding additional jobs. He also said he received only the minimum severance pay dictated by law, even though employees of his seniority and standing generally receive much more.

After another amendment to the law permitted an MK to head a union, but without salary, he returned as head of the National Workers Organization.

According to Hirchson, when he asked the union for his full retirement benefits, a senior official convinced him to instead accept an arrangement whereby he would receive a monthly cash payment from the union, which would eventually be deducted from his final retirement package. In that way, he would preserve his seniority at the organization in the event that he ever returned to work there.