JERUSALEM — When candidate Ehud Barak navigated the art-bedecked hallways of entertainment mogul Haim Saban's Beverly Hills mansion nearly a year ago, the future Israeli prime minister was stepping unmistakably into the world of high-stakes politics and big bucks.
As many Israeli politicians did elsewhere, Barak appeared at the fund-raiser and spoke about his views to a small gathering of Hollywood producers and elite political activists, Israelis and Americans. Checkbooks would be drawn, and money would flow toward Israel.
"For a Special Evening Honoring Ehud Barak, Chairman, Israel Labor Party," the invitation enticed. "Make checks payable to The Shefa Fund."
Ultimately the money was used, among other things, to fly Barak's expatriate Israeli supporters to Israel to vote. And so the Saban fund-raiser became one more piece in a gigantic puzzle that illustrates how Americans influence Israeli elections--not by breaking laws but by working within a vast gray area that has sparked new controversy here and abroad.
Barak's appearance at the Saban event also raises questions about his personal role in fund-raising, which he has sought to minimize after an Israeli government investigation into improper campaign financing.
American Jews have been contributing uncounted millions of dollars to Israeli election campaigns for years, sometimes directly, sometimes indirectly through charities, but often in contravention of the spirit, if not the letter, of Israeli law.
The practice is coming under new scrutiny after the government inquiry turned up widespread abuse of campaign funding laws by Barak's One Israel/Labor Party coalition, which scored a landslide victory in last year's national election. The Likud Party of former Prime Minister Benjamin Netanyahu was also targeted, among others.
The scandal dealt a major blow to Barak's credibility and clean-government image, just as he attempts to handle delicate peace negotiations with Arab leaders. And it has sent jitters through the American Jewish community, for which giving to Israel can be a moral, religious and sometimes political obligation.
The vast majority of donations go to legitimate charity or developmental work. At issue in the Israeli investigation is money that goes into election politics--and the questions that raises about the propriety of U.S. citizens bankrolling a foreign nation's election campaigns.
"The possibilities of abuse are almost unlimited," said Abraham Foxman, national U.S. director of the Anti-Defamation League and an outspoken critic of the donation practice. "What is at stake is the sovereignty of the Israeli voting public."
"I can think of nothing more corrosive to Israeli democracy than the buying of votes" by non-Israelis, said David Clayman, the American Jewish Congress' director in Israel.
Under a 1994 law, Israeli political parties and candidates can accept donations only from Israeli citizens who are eligible to vote in Israeli elections; donations from foreigners are strictly prohibited. In some cases, the donations may also have broken U.S. laws, because tax-deductible gifts may not be used for political work.
And yet, through the years, and especially in two elections since 1996, money from U.S. donors has poured into campaigns or into nonprofit organizations that indirectly or directly supported a candidate or political party. No one tracks it carefully, but political scientists estimate the amount at $10 million to $15 million in a single election year--a lot for a small country like Israel.
In a damning report released last month, Israel's state comptroller determined that huge sums of money--some of it from foreign donors--were funneled through sham nonprofit foundations to bankroll Barak's election victory. His coalition was fined $3.2 million, and a criminal investigation is underway.
Barak initially denied wrongdoing and said he was not involved in fund-raising. He adjusted his denial later, saying that any mistakes that occurred were made without criminal intent.
Undisputed is that Barak attended fund-raisers held in the United States, including the one given by Saban on March 25. Neither Saban nor the Shefa Fund, a Philadelphia-based nonprofit, tax-exempt foundation, are cited in the Israeli comptroller's report. And there is no indication that they are under investigation or that the donations collected for Shefa were illegal. Barak's campaign, however, did benefit.
Saban, who is chairman and chief executive of Fox Kids Worldwide, a television company he co-owns with Rupert Murdoch's media conglomerate News Corp., made his mark--and personal fortune--as a producer of such hits as "Teenage Mutant Ninja Turtles" and "Mighty Morphin Power Rangers." And he is one of California's most prolific campaign contributors, a well-known patron of such Democrats as President Clinton, Gov. Gray Davis and, most recently, Senate hopeful Hillary Rodham Clinton.