Supreme Court: Two Holyland Affair Suspects to Remain in Jail

Lupolianski released to house arrest; suspected of accepting more than NIS 3m in bribes.

The Supreme Court on Sunday denied appeals filed by businessman Hillel Charney and Avigdor Kelner to be released from prison, after the two were arrested a week ago over suspicions of involvement in the alleged Holyland bribery affair.

Supreme Court Justice Uzi Fogelman said that the two should not be released to house arrest as "there is reason to believe that the suspects could attempt to obstruct the police investigation if released now."

Charney, the former director of the Holyland residential project in Jerusalem, is suspected of paying the bribe to the Jerusalem's chief engineer Uri Shitrit and to the mediator, legal attorney Uri Messer. Charney was arrested on suspicion of paying hundreds of thousands of shekels to Jerusalem municipality officials.

The Rishon Letzion Magistrate's Court released former Jerusalem mayor Uri Lupolianski to house arrest on Sunday.

Lupolianski was arrested Wednesday on suspicion of accepting more than NIS 3 million (approximately $750,000) in bribes during the construction of the contentious Holyland project in the capital.

On Friday, the Petah Tikva District Court rejected an appeal submitted by Lupolianski, requesting to abort his five-day remand for alleged involvement in the Holyland case.

Lupolianski, who served as deputy mayor under Ehud Olmert before being voted mayor, rejected the allegations against him, saying that "this was 20 years ago, I don't know why everyone suddenly remembers now. A deputy mayor has no responsibility, it's merely a title, so that it will be nice for him."

The prosecution in the Holyland affair informed the Supreme Court that hundreds of more witnesses are expected to be investigated.

At the center of the corruption probe is former prime minister Ehud Olmert, who is suspected of taking bribes in exchange for furthering development of the Holyland luxury housing project in Jerusalem.

The lawyer presiding over the prosecution, Liat Ben-Ari, said that an enormous amount of evidence has been collected thus far, and that the police have been instructed to wrap up the investigation as early as possible.

Meanwhile, Haaretz has learned that the investigation into the Holyland affair will continue for another six weeks, with 140 investigators focusing on it. This means that all other activities of the National Fraud Squad will be put on hold.

Haaretz learned that the office of State Comptroller Micha Lindenstrauss has given the police information on investigations into Olmert, including the Holyland affair, a former adviser to the comptroller said.

"As part of the process of relaying information ... in the various Olmert affairs, we also delivered to the police material on the Holyland affair, where former city engineer Uri Sheetrit, and a former associate of Olmert, attorney Uri Messer, and [Olmert's] office manager, Shula Zaken, were involved," Yaakov Borovsky, a former adviser to the state comptroller on combating corruption, told Haaretz over the weekend.

"We also received material regarding additional suspicions in connection with Olmert regarding various projects in Jerusalem and the receipt of funds for paying for election campaigns."

But he says the material was insufficient for basing a criminal case against the former prime minister.

Borovsky said that the suspicions against the people involved in the Holyland affair revolved around "unreasonable and unclear advantages in the Holyland project, which raised suspicions of flawed management and criminal violations."

The intensity of the work schedule was decided by State Prosecutor Moshe Lador and the chief of investigations at the police, Yoav Segalovich.

A senior law enforcement source told Haaretz that despite Olmert's efforts during his television appearance Thursday to blame Lupolianski, who succeeded him as mayor in Jerusalem, suspicions against Olmert are well founded.

The source said the evidence against Olmert is not only based on a state witness but also on documents and other testimony the police hold. If the police and the prosecution did not agree on this point, Jerusalem District Attorney Eli Abarbanel would not have asked the District Court to put on hold the proceedings against Olmert, the source says.

Even though the state has a major witness whose identity remains under a gag order, the police and the prosecution are trying to secure another state witness.

As far as law enforcement is concerned, Eli Hasson, the accountant for the Holyland project during the past 15 years and responsible for managing the company's funds, is the person who could serve as a state's witness. Hasson is suspected of keeping records and taking part in the transfer of bribes, mostly from Hillel Charney, owner of the property.

A source familiar with the investigation said this weekend that Hasson had not paid any bribes and did not receive any, but he is well versed in the system used to transfer money and cover up the money trail.

The source said the police and prosecution see Zaken as a potential state's witness. She is involved in various court cases against Olmert, and now also the Holyland affair. Her only way out may be to cooperate with the law-enforcement authorities, the source said.

More suspects in the case are expected to be interviewed by the police. One of these suspects is a senior figure who has chaired the Jerusalem District Planning and Building Committee. Another is a senior figure in the Israel Lands Administration.