JERUSALEM — JERUSALEM -- Cleared of the threat of criminal indictment, Israeli Prime Minister Benjamin Netanyahu today faced the task of shoring up a coalition government shaken by a political corruption scandal.

Israeli prosecutors decided yesterday that there was insufficient evidence to indict the prime minister in the scandal over the short-lived appointment of an attorney general in January. The decision came after a 12-week investigation and a police recommendation that Netanyahu be charged.


A key Likud coalition partner, the party of Trade Minister Natan Sharansky, was meeting with Netanyahu early this morning to discuss conditions for its continued support.

The scandal broke in January when Israel Television alleged that Netanyahu appointed Roni Bar-On at the request of Aryeh Deri, the powerful head of the Shas party. Deri in turn had extracted a promise of a plea bargain in his corruption trial.


While there is a "tangible suspicion" that Netanyahu appointed Bar-On to satisfy Deri, Attorney General Elyakim Rubenstein said, prosecutors concluded that they did not "have enough acceptable evidence to prove -- to the degree required by criminal law -- that any criminal act whatsoever has been carried out by the prime minister."

Prosecutors also declined to indict Justice Minister Tsachi Hanegbi.

Their review, however, found ample evidence to indict Deri on charges of extortion, fraud and obstruction of justice. The prosecutor will make a decision on whether to indict after giving the Shas leader an opportunity to be heard.

The fate of Netanyahu's chief of staff, Avigdor Lieberman, and that of Likud activist David Appel -- also implicated in the scandal -- remains uncertain. Rubenstein said the investigation of their activities will continue.

In a televised address, Netanyahu apologized for any mistakes in judgment but said emphatically: "The bottom line is, I didn't commit any crime, and the attorney general confirmed that."

He said he would name a ministerial commission to review the appointments process. The prime minister blamed the opposition for the allegations that ensnarled his 10-month-old government.

Basic disagreements

"When all is said and done, these attacks on me stem from one central motive, namely to attempt to cause the government to fall because of fundamental disagreements on the part of our rivals with the course that we have chosen to follow," Netanyahu said in his address to the Israeli public.


"In a democracy," he told Israelis, "only you the voters have the prerogative of deciding which course the state will follow."

Netanyahu was meeting early today with Sharansky, whose Yisrael Ba'Aliya party holds seven seats in the Israeli parliament, about the faction's concerns. A spokesman for Sharansky said the attorney general's report was not enough to make the party leave the coalition. But "we think the situation demands from the prime minister ways to improve the activity of the government," the spokesman said. One demand was the resignation of Hanegbi.

Deri's Shas party had threatened to pull its 10 members out of the coalition if Deri was the only one indicted. It was unknown this morning whether the party would make good on the threat.

Public Security Minister Avigdor Kahalani said members of his Third Way party -- with four seats in parliament -- would withhold a decision on whether to stay in the coalition until they read the lengthy report by prosecutors. They alone could not bring down the government, which has 68 seats in the 120-member Knesset.

"If we'll see that it stinks and we can't live with it, we'll leave," said Kahalani, whose group will meet this morning.

Shimon Peres, the head of the opposition Labor Party who lost to Netanyahu by a slim margin in May elections, called on the prime minister to resign.


'The shadow hasn't passed'

"Give the mandate back to the public and let the public elect a prime minister that can be trusted by all the Israeli society," Peres said. "The stain hasn't been removed. And the shadow hasn't passed away."

The prosecutor's report raised serious questions about the conduct of Netanyahu and several close associates. It characterized as "sad" the picture that emerged of the Bar-On appointment.

For example, no one interrogated -- including Netanyahu -- could say who proposed Bar-On as an attorney general candidate. Bar-On was appointed Jan. 10 and resigned two days later amid criticism from the legal community.

"Those interviewed preferred not to remember or they did not remember," Rubenstein said.

The report said evidence showed that Lieberman, Netanyahu's chief of staff, aided Deri in his plan to have Bar-On appointed.


Rubenstein also found disturbing the fact that the indicted head of a political party tried to manipulate a government appointment for his own benefit.

"The use of political power in order to advance the personal interest of someone who has been charged with criminal offense is extremely unacceptable and unconscionable, and should serve as grounds for us to realize that we must set a model as a state based on law rather than one that avoids the implementation of law," Rubenstein said.

Netanyahu conceded that the scandal had harmed his administration.

"Our government now will be more open and more acceptable. Our opponents, too, have to change," he said in his speech. "They have to accept the fact that elections are won at the polls and not on Channel One of Israel TV.

"I also believe that in public life there is no room for personal attacks, for venomous allegations and groundless insinuations. We must improve the level of public debate and political debate in Israel."

The attorney general's decision doesn't necessarily put an end to the Bar-On affair. Political observers predict that the Supreme Court will be asked to review the decision. There is precedent for the court to act if a decision not to indict would undermine the public view of the judicial system.


Pub Date: 4/21/97

Special correspondent Joshua Brilliant contributed to this article.