The Schlaff Saga / Probe finds Austrian billionaire helped Lieberman fund his party

Contact Gidi Weitz at investigations@haaretz.co.il

VIENNA - Austrian billionaire Martin Schlaff helped his confidant Avigdor Lieberman finance his party, Yisrael Beiteinu, by gaining a $1 million guarantee from Vienna-based Erste Bank to set up the party in 1999.

	Foreign Minister Avigdor Lieberman speaking at Yisrael Beiteinu’s Rosh Hashanah toast in Jerusalem on Sept. 7, 2010.
	Photo by: Michal Fattal

For the full Schlaff Saga Special Report click here

Schlaff secured the guarantee to get a $1 million credit line for Lieberman from an Israeli bank, the decade-long police investigation into Lieberman's affairs found.

"I spoke to Bobby and it left the place in Vienna on Friday," Schlaff told Lieberman in fluent Hebrew, a source involved in the investigation said. "Talk to your schmuck at the bank and tell him you've had confirmation that it went out on Friday."

"Bobby" is Robert Nowikovsky, a Viennese businessman close to Schlaff, whose name has been mentioned in a number of media reports about trade between Eastern and Western Europe.

The investigation raised the suspicion that Schlaff was behind the guarantee and was using Nowikovsky as a front.

Schlaff and Lieberman gave the police an identical version regarding Schlaff's role in transferring the money. Schlaff and Lieberman both said that Schlaff served as a translator between the two, the source said.

This was the only time Schlaff had met with Israeli police detectives. The case against Lieberman was closed for lack of evidence.

At the end of 1997, Lieberman made some $3.3 million when he was hired as a special consultant to Bank Austria. The bank was looking at losses of hundreds of millions of dollars following speculative deals in the Russian financial derivatives market. Lieberman was allegedly supposed to see to the appreciation of the Russian ruble just before the futures expired, thus decreasing Bank Austria's losses.

The contract between Lieberman and the Austrians was written on a napkin, and Lieberman received the money shortly afterward. Police investigated the possibility that Schlaff was involved in this deal and mediated between the bank and Lieberman, a senior source involved in the probe said. This case too was closed for lack of evidence.

This story, as well as other intelligence reports, led the police to open a covert investigation against Lieberman. Lieberman had founded Yisrael Beiteinu and was planning to run for the Knesset for the first time. The police found that Lieberman had forged close ties with Schlaff, who opened a casino in Jericho in 1998 and was well connected to senior figures in the Palestinian Authority.

Schlaff offered his services to Lieberman at the beginning of 1999 in enlisting Shimon Sheves, once a confidant of prime minister Yitzhak Rabin, to Yisrael Beiteinu's Knesset list.

Surveys showed that Amnon Lipkin-Shahak was the most popular candidate in Israel, Schlaff said at the beginning of 1999 to a senior political figure, suggesting that if Lipkin-Shahak's party joined forces with Labor it could win the elections. He said he wanted to enlist his friends Haim Ramon and Uzi Baram - both then in the Labor Party - to this project.

Lipkin-Shahak told Haaretz he was not aware of Schlaff's political activity at all.

In private conversations at the time, Schlaff said he could guarantee Shas' (then headed by his friend Arye Deri ) support for the party headed at the time by Lipkin-Shahak.