POLICE REPORTEDLY CLOSE TO RECOMMENDING INDICTMENT

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001579

SIPDIS

E.O. 12958: DECL: 07/17/2019
TAGS: PREL PGOV IS
SUBJECT: POLICE REPORTEDLY CLOSE TO RECOMMENDING INDICTMENT
OF FOREIGN MINISTER LIBERMAN

REF: A. TEL AVIV 01437

B. TEL AVIV 01337

Classified By: DCM Luis G. Moreno for reasons 1.4 (b),(d).


1. (C) SUMMARY. The Israeli press reported on July 15 that
police are nearing a decision to recommend to Attorney
General Menachem Mazuz that he indict Foreign Minister and
Yisrael Beitenu Chairman Avigdor Liberman on money laundering
and fraud charges. Following such a recommendation, we
expect Mazuz to examine the evidence, hold a hearing with
Liberman, and render a decision within a few months. If
indicted Liberman would not be required by law to resign, but
most insiders expect that he would do so. Liberman's
dominance of his party makes it difficult to determine who
would lead the party following his departure, but we expect
he would maintain considerable influence. Prime Minister
Binyamin Netanyahu probably would work to keep Yisrael
Beitenu in his coalition if Liberman resigned, but Israeli
political insiders have predicted for months now that if
Liberman has to give up the foreign affairs portfolio, then
Netanyahu would use the opportunity to try to entice all or
part of Kadima to join his government. End Summary.

POLICE NEARING RECOMMENDATION TO INDICT
--------------


2. (C) Leading Israeli daily Yediot Ahronoth reported on
July 15 that Israeli police investigators within days are
expected to submit to the State Attorney's office a
recommendation to indict Foreign Minister and Yisrael Beitenu
head Liberman. Informed sources confirmed to Embassy
contacts the same day that the police feel very strongly
about the evidence they have built against Liberman. The
Yediot report noted that the police would recommend charges
of money laundering and acquisition through fraudulent means,
but no final decision by the police has been made with regard
to bribery or obstruction of justice charges. A
recommendation from the police does not necessarily mean an
indictment will be issued. The Attorney General after
receiving such a recommendation would review the evidence and
then would be required to hold a hearing with Liberman. Some
legal experts predict it could take as long as six months for
Attorney General Mazuz to make a decision, but he reportedly
plans to leave his post this fall and we anticipate that he
would make a decision on an indictment before stepping down.

PROSPECTS FOR RESIGNATION IF INDICTED
--------------


3. (C) Liberman has not commented publicly on recent
developments in the case, but in the past he has dismissed
the accusations against him and called for an expeditious
termination of the investigation. Furthermore, he has not
indicated what he would do if indicted, as Israel's Basic Law
does not require a Minister to resign under such
circumstances (a Minister would have to resign, however,
following a conviction of a crime involving "moral
turpitude"). The consensus among Israel's political elite is
that having the position of Foreign Minister filled by
someone under indictment would be unacceptable politically,
and they anticipate that Liberman would resign. Some,
including Zalman Shoval, a former Israeli ambassador to the
U.S. and an informal foreign policy adviser to Netanyahu,
have told us they believe that Liberman could resign
following a police recommendation to indict, but before a
formal decision by Mazuz. There is also a scenario described
by some insiders in which Liberman could use a dispute with
Netanyahu as an excuse to resign over principle rather than
being forced out by criminal indictment.

YISRAEL BEITENU WITHOUT LIBERMAN
--------------


4. (SBU) Yisrael Beitenu is unquestionably dominated by
Liberman, and his resignation as a minister (and presumably
as a member of the Knesset) would almost certainly lead to a
leadership vacuum within the party. Because the party has
existed for only a few years, and because Liberman's
leadership has been so thorough and unchallenged, it is
difficult to determine with any confidence how the party's
next leader would be chosen and who would be that leader.
Deputy Foreign Minister Danny Ayalon would seem to be a
suitable candidate to become the party's new leader in the
Knesset, but Liberman could be reluctant to have a potential
political rival lead the party in his absence. In any case,
we would expect Liberman out of office to continue to
exercise considerable influence on the party behind the
scenes.

COALITION SHAKEUP POSSIBLE COULD FOLLOW RESIGNATION

TEL AVIV 00001579 002 OF 002


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5. (C) A Liberman indictment would leave Netanyahu with
several options to maintain a large coalition. Netanyahu
probably would work to keep Yisrael Beitenu in the coalition,
citing a reported agreement he reached with Liberman during
coalition negotiations that if the latter were indicted his
party would remain in the government. Alternatively,
Netanyahu could use a vacated Foreign Minister post to entice
all or part of Kadima to join him. As reported in reftels,
Netanyahu for some time has been working to encourage and
facilitate former Likud Defense Minister Shaul Mofaz to split
off from Kadima with some of his allies. Netanyahu
reportedly enjoys the support of Defense Minister and Labor
Party leader Ehud Barak for his efforts to bring Mofaz into
the coalition. Mofaz appears to have balked thus far due to
the absence of a meaningful ministerial post and Knesset
rules discouraging party splits. Liberman's departure,
combined with legislation expected to pass in the coming
months that would ease party defections, could prompt Mofaz
to switch parties. Netanyahu also could use Liberman's
departure to attempt once again to entice Livni into bringing
all of Kadima into the coalition. An expanded Foreign
Minister portfolio, along with the possible departure of one
or more right-wing parties from the coalition, could provide
Livni with the political cover needed to justify a decision
to join the government, though her poor personal relations
with Netanyahu and her aspirations to become prime minister
weigh heavily against such a decision.

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