Wild parties, mafia-style hits and high-ranking government and defense officials engaged in illicit activities: These were just some of the things touched on by a young MK named Ehud Olmert when testifying before a panel on organized crime in late 1977. The commission of inquiry, headed by former state prosecutor Erwin Shimron, met behind closed doors in Jerusalem, but its proceedings were recently opened up to the public following a Haaretz request. The committee members included a former chief of the Shin Bet security service, Yosef Harmelin, and a retired major general from the Israel Police, Matityahu Sela, among others. Its task was to answer a particularly explosive question: Is there organized crime in Israel?

Five years before the Shimron committee convened, another committee, headed by then-Attorney General Meir Shamgar, determined that Israel did not have organized crime.

Open gallery view Former PM Ehud Olmert in 1977 Credit: Aliza Orbach

But a series of articles that ran in Haaretz starting in 1976 rocked the country by outlining the structure and modus operandi of the Israeli mafia. That series, along with vigorous activity by young legislators, who uncovered suspicious ties between police intelligence targets and key figures among Israel's elite, led Menachem Begin's government to appoint another public committee of inquiry. Many of the senior office holders in the country appeared before the committee: Attorney General Aharon Barak, the top brass of the police and State Prosecutor's Office, Knesset members and government ministers. Several weeks ago, Cabinet Secretary Zvi Hauser and the Israel State Archives granted a request from Haaretz to make the committee's discussions public for the first time.

Among the multitude of testimonies that were heard in the small meeting room in Beit Agron, in Jerusalem, that of Ehud Olmert is the most riveting. He was 32 years old at the time, a young lawyer who was just getting started as a member of Knesset, who stood out for activity that was aimed at exposing links between high-level suspects and senior police officers and politicians.

"I viewed criminal activity as a subject that as a public figure I must address in particular," Olmert said at the beginning of his testimony, explaining what had prompted him to deal with the delicate matter. "I encountered this subject at the time in the context of the Knesset Sports Committee. When we began looking ... we learned that elements that have been identified as criminal elements and offenders are involved in the matter."

Olmert spoke about the social pressure on him to keep quiet: "All of the stories about Gandhi [Rehavam Ze'evi] and about Abrasha [Avraham] Tamir have been known for a long time. I got a call from a very senior man in the defense establishment and he said to me: 'How can you kill, hit a major general.' I replied: 'Everything I said is nothing compared to what you've told me all these years.' So he said: 'That's another matter...' All of these facts are known. I could descend to the level of gossip. I don't want to. About wild parties, how they would photograph generals in the act, before the act and after the act ... There's no end to these stories. And there are extremely serious aspects to them." Olmert, a die-hard sports fan, explained to the panel that underworld figures created social legitmacy for themselves by operating through the sports world, which netted them several ancillary benefits.

Open gallery view Top row, from left: Avraham ("Abrasha") Tamir, Rehavam ("Gandhi") Ze'evi, Binyamin Ziegel. Bottom row, from left: Oshri Tuvia, Bezalel Mizrahi, Rahamim ("Gumadi") Aharoni, Micha ("Pepe") Rockenstein Credit: Aliza Orbach, Uzi Keren, IPPA and Eliyahu Harati

"You get written about, you're asked for your reaction, you turn into a commentator," he said. "For example I learned that around the Hapoel Tel Aviv soccer team, which is a highly respected team, there are people who are known to the police as criminals. There are people who have filled important roles on teams. There used to be a man named Yosef Mizrahi, 'Yosskeh,' who was the manager of the Hakoah team and was murdered in the middle of the street. It is not in dispute that he was one of the heads of organized crime. One of the allegations was that he was connected in some way to the hit on Ezra Shem Tov Mizrahi, who was one of the biggest drug dealers, and he was purportedly one of the bodyguards on the other side, and for that he was punished and rubbed out. And he was the manager of a soccer team."

Further on in his testimony, Olmert highlighted for the committee several other fields controlled by Israeli organized crime: diamond smuggling, extortion and protection rackets, drug trafficking and the systematic theft of goods from the state's emergency warehouses.

According to Olmert, an investigation by the state into the warehouses operation met a brick wall after one of the witnesses claimed that he would be killed if he divulged any details.

A sit-down with Gandhi

More than a year before that testimony, at the beginning of 1976, Olmert gave a press interview in which he said: "There are very serious elements whose goal is to reach positions of control in the underworld. Among the members of the new group are ones with an illustrious military past, some belonged to elite units, including officers with not inconsiderable ranks."

Olmert did not name names, but almost anyone could understand that in referring to "a respected hotelier" and "a senior officer" who were involved with underworld leaders, he meant Bezalel Mizrahi and Rehavam Ze'evi, respectively. Ze'evi, a general who had pursued terrorists in the Jordan Valley and whose resemblance to the late Indian leader had earned him the nickname "Gandhi," was serving at that time as Prime Minister Yitzhak Rabin's anti-terror adviser.

Mizrahi, a successful businessman, would soon star in a police document that purported to profile the luminaries of the Israeli crime world: "The list of 11."

The list, put together by police intelligence officers in 1977, contained the names of 11 figures, including respectable businesspeople with close ties to government circles. Heading the list was Mordechai ("Mentesch" ) Zarfati, a darling of ministers in Mapai (the precursor to the Labor Party ) and the friend of senior police and military officers; in second place was Mizrahi. Next to these names was intelligence information that had accumulated, casting suspicion on them for, among other things, financing drug deals and engaging in trans-Atlantic trafficking in stolen diamonds. Right below them on the list came the criminal duo Rahamim ("Gumadi" ) Aharoni and Tuvia Oshri, the leaders of the Kerem Hatemanim Gang, who were suspected of being Mizrahi and Mentesch's strong arms.

Ze'evi and Mizrahi were incensed at the things Olmert had said in the interview, and invited him for a clarification chat at the Shalom Hotel in Jerusalem. Olmert brought along his close friend, attorney Uri Messer.

At the start of the meeting, Ze'evi demanded that Olmert issue a retraction that would clear him and Mizrahi of the insinuated accusations Olmert had leveled at them. "If the Israel Defense Forces isn't inflamed or isn't warmed up yet, I can get it warmed up to demand this of you," Ze'evi made clear, without realizing that his words were being taped by Olmert. "I promise you that I will get into this war with all my strength, with all of my imagination, all my tricks."

When Olmert asked whether Ze'evi intended to sue him, Ze'evi replied, "I can assure you that that is not the way that is being contemplated, there are more effective ways."

Speaking before the panel at Beit Agron, Olmert reconstructed the rest of the meeting. "At the meeting Gandhi said to me that he's a major general with all the access and prestige that entails: 'Who do you think you're hurting?! You think that he [Mizrahi] is an underworld figure? You're hurting a man who was a stellar soldier, a soldier I commanded for 25 years. He was running around with a machine gun before you were even born.' And then I look into it, and it turns out that the man is an IDF deserter, never did reserve duty in twenty-some years, and even worse - the one who relieved him of reserve duty is Gandhi. And not only did he relieve him, but in connection with that there was a Military Police investigation and the military advocate general ruled that Gandhi should be reprimanded."

Olmert gave the committee information regarding the Mizrahi-Ze'evi relationship: "There is another element that is extremely serious, concerning South America, and which I also pointed out to Prime Minister Rabin. A man who is an adviser on intelligence and war affairs [Ze'evi] also in countries where Israel is not all that loved, every door is open to him. And the man gallivants about the world beyond any proportion, and who comes with him on all his tours, magically? His friend Bezalel Mizrahi."

According to Olmert, Mizrahi was an Israeli intelligence target.

"He is such a target that the intelligence asked the FBI to monitor all of his meetings in the U.S., [and] Scotland Yard to keep tabs on all his movements when he was in England," Olmert testified. "He is followed everywhere in the world, and on the other hand he's running around in all these places with an adviser to the prime minister of Israel."

Olmert claimed that Ze'evi also had ties to the heads of the Yemenite Quarter crew: Aharoni and Oshri, telling of a man who had been a victim of the two who had tied them to Ze'evi.

He went on to talk about how many underworld figures try to buy themselves legitimacy.

"One of the phenomena I pointed out is the desire of criminals to buy status, to build legitimate businesses for themselves with money that was obtained from such illicit practices as extortion and the like," he said. "Both so the system of legitimate businesses can serve as a source for laundering money, and also as a framework that can serve for continuing to do illicit deals."

Olmert said these people also had an interest in building social status for themselves, in order to stave off any suspicions against them.

"There are various levels of creating social protection," Olmert testified. "One way is very sophisticated: You're a businessman and you appear as a philanthropist, as one who is very active in charitable institutions. Donate to a hospital, donate your hotel to IDF soldiers for recreation, and so forth. Of course, you always need to check how many full-price IDF events take place at your hotel over the year. After that there are social events, sometimes innocent ones. Parties, all sorts of important people are invited. And then you forge ties with them, get your picture taken with them."

Coming forward

After he spoke, Olmert approached the committee table and laid down photographs of Ze'evi at various social events. "The pictures hang in their offices," he said, "not to mention the pictures that hang in the restaurant belonging to Eli Ronen, who has a pretty big criminal record."

Olmert said Ronen and his brother used their restaurant to build ties with high-ranking officers.

"The generals were regulars at their place," he said. "In the restaurant on the upper floor there was gambling. There are officers who like young girls, and if there's someone who helps out - they are grateful to him for that. I know that there are also certain hotels (owned by criminal elements ) that were the focus of this type of activity."

Olmert added that Ronen already had been convicted of attempting to bribe customs agents at the Allenby Bridge crossing from Jordan, showing up in Maj. Gen. Avraham Tamir's car.

"I am convinced that Avrasha knew nothing," Olmert told the panel. "I'm sure Eli Ronen came to him and said 'Do me a favor...' The guy takes the general's car and the sentry guard is shaking and obedient."

Olmert claimed that his public crusade had led reluctant individuals to cooperate with the police, and to share with him additional ties between suspects and generals.

"A respectable Jew came to me who knew that I seek information and told me the following story," Olmert said. "'I have a client, a respectable Jew who wanted to build a hotel in Tel Aviv. When he wanted to build the hotel, people who are suspected of being the crime kingpins reached out to his family members. Here they started going out with them, invited them to parties, meals, etc. At a certain point they told them, 'Persuade your father to give us the subcontracting on this project,' this project worth tens of millions. And then at a certain stage they spoke to the father and when he said no, they told him: 'If you don't give us this thing you won't build. We will damage and blow up. At one point at least, Maj. Gen. Gorodish came in and they said - 'He can shut any door in the State of Israel on you, you don't want that.' The father did not give in to all this pressure, and did not agree to the deal by any means, because he didn't want his name mixed up with the mafia."

"Gorodish" was the late Maj. Gen. Shmuel Gonen, who commanded an armored division in the Six-Day War and was the GOC Southern Command in the Yom Kippur War.[ADD THAT HE WAS RELIEVED OF DUTY AND WENT INTO EXILE IN AFRICA?] He died in the winter of 1991.

Meni Cohen, the secretary of the Black Panthers faction in the Knesset, was Olmert's accessory in exposing a criminal affair that centered on a family from the lower-class Jerusalem neighborhood of Musrara, where the Sephardi protest movement was born.

Back in 1970, Cohen had ben caught trying to smuggle 100 kilos of hashish into Israel. Olmert asserted that the man who was behind the financing of that mammoth drug smuggling operation was Rahamim Aharoni, from the Yemenite Quarter gang.

"It was clear that Meni Cohen was doing it for Gumadi," Olmert said. "After he got out of prison we came into contact and he said, 'I want to be rehabilitated.' I asked him, 'Why don't you today, after 5 years, give a statement to the police about Aharoni's involvement?' And he replied that the first night after he was arrested, a very senior investigations officer came into his holding cell and said to him: 'If you mention the name Aharoni, you're dead.' I gave the police commissioner about a month ago details about some 20 officers with senior ranks ... What's surprising is that we're not talking about one man, or about something accidental or one-time, but rather there is a worrisome accumulation concerning a great many people."

Olmert described for the committee a chilling example of alleged protection that then-Police Commissioner Haim Tavori gave the director of El Al's VIP service at Ben-Gurion International Airport, who was suspected of organized smuggling.

"There is growing information about Mike Pinhasi, the director of Sherut Shalom. He makes contact with all the important people in the country. He's a man regarding whom Haim Tavori told the chief intelligence officer of the police, Sammy Nachmias: 'Just drop it, listen, leave him alone.'"

Olmert's testimony offered stinging criticism of police officers: "We are talking about sophisticated crime. It is known that there are several murder cases that weren't solved and the police are helpless. For instance in the Yemini murder, they left money on the bodies in contempt. We are talking about criminals who have methods, who traipse around overseas, have international ties, with capital investments. Up against them are people who are under-qualified, who do not have the appropriate means and do not meet the priorities of police work."

Olmert also lambasted the police for refusing to recognize the existence of organized crime, and hence not being ready to combat it.

Sammy Nachmias, who was among the founders of the elite IDF commando unit Sayeret Matkal, testified before the committee and bolstered Olmert's criticism when he said sarcastically: "If they'd give us the equipment and the means that the vegetable council police has, everything would be all right."

Then-Attorney General Aharon Barak told the committee: "Serious crime takes off on a jet plane whereas the police chase it on foot. We are neither smart enough nor sophisticated enough to find a solution."

Barak added that "the existing systems, and primarily the police, need to be shaken up from outside. The shake-up must come from this committee ... There are no good investigators in the investigations division, and the existing situation is not being dealt with."

State Prosecutor Gavriel Bach said there were too many women in his office to fight organized crime. "There is a type of case, mainly in serious crime, where it is desirable that more men appear," he said. "In a serious rape case, [in cases] of exceedingly dangerous criminals from the underworld, in drug matters, and when we're talking not only about these criminals but all the families that have friends of the family sitting behind the attorney and threatening and cursing, then there are girls who withstand this very courageously, but it is not something to be desired."

The chief of the national fraud squad and politicians' worst fear, Binyamin Ziegel, complained about customs agents whom he said were aiding organized crime, especially ones from the Soviet Republic of Georgia.

"Today, when there are containers and ties can be forged with the customs officials, and the customs official makes the decisions, then obvious bribery exists. Today the Georgians came along whom Stalin was unable to break - it's clear that we won't be able to. These are people who had a hard time being absorbed [into Israeli society] and they looked for easy money. That's the path they were used to over there - smuggling and illegal trade. They are brutal, and if anyone cooperates they won't hesitate to attack and go as far as murder."

Olmert singled out court clerks as a genuine problem.

"Shlomo Hillel [the police minister] always used to tell me, 'show me a corrupt judge,' and I'd say, I don't have to point to a judge, but I can point to clerks that simply burn files ... Is that not organized?"

Wiretaps and "offing Pepe"

During the course of the hearings, the committee chairman, Shimron, flew to London for a sensitive meeting with someone who was described in the Israeli media as one of the heads of organized crime in the country, Yaakov Cohen. Shortly after Shimron returned to Israel with the tape reels, Olmert appeared before the committee again with a harsh message: "In view of Mr. Shimron's trip to England, I had a bad feeling that the committee is not being fed and is not receiving the cooperation the Israel Police ought to be giving it."

Olmert complained that the committee had not heard from senior police officers who were experts on Cohen. "Cohen is the international connections man," Olmert testified. "He deals in money smuggling, in my estimation he's dealt in recent years with the smuggling of hundreds of millions of dollars, in Brazil he was the protege of one of the Jews who is known to be one of the biggest gangsters in South America, a multi-billionaire. Scotland Yard makes much of Cohen ... He is a gambler with special standing at the gambling houses in London. He lost 600,000 pounds sterling in one night. El Al pilots would do favors for him, and he would give them money and a signature that would grant them the right to play in those clubs."

'The Cat Burglar'

In his second appearance before the committee, Olmert described a dialogue that took place between him and a prison inmate named Micha (Pepe ) Rockenstein, a thief known as "The Cat Burglar." Olmert reconstructed a meeting he had with the attorney general, Prof. Aharon Barak, at which Haaretz's investigative reporter Avi Valentin was also present.

"The context for holding the meeting was information that we knew with certainty, and we knew it to be in the police's possession, including the tapes that on the face of it tied people to the perpetration of serious crimes, including Bezalel Mizrahi, Rahamim Aharoni and Rehavam Ze'evi," he said. Olmert said that Rockenstein had contacted him and asked to meet with him at the prison, where he told Olmert that he had served as the middleman in a deal to sell stolen diamonds to Mizrahi and Aharoni, who wanted to sell the diamonds back to the real owners. "He told me that through Gandhi, these diamonds returned overseas," Olmert said.

Olmert added that Rockenstein wound up in prison after he tried to extort Mizrahi. Pepe telephoned Mizrahi at home in the winter of 1975, introduced himself as a police officer investigating his affairs, and told Mizrahi that he had information that someone was planning to kidnap his little boy. Pepe offered him protection, and also offered to hand over the case file in return for one million Israeli liras. What Rockenstein didn't know was that he was under police surveillance as a suspect in a robbery.

The police approached Mizrahi, and by mutual consent a wiretap was installed on his telephone. An indictment was filed against Rockenstein on charges of extortion. Initially he denied the facts, and Mizrahi was called to testify at his trial, but eventually he retracted his denial, was convicted and sentenced to six years in prison.

Olmert maintained to the committee that Rockenstein confessed to the offenses after his wife was assured that "Gandhi spoke with Minister Avraham Ofer, and Ofer spoke with the prosecutor in the case, who said that she wouldn't demand a heavy sentence."

After he was disappointed by the false promise, the inmate contacted Olmert from prison and offered to give him very valuable information in exchange for better conditions. Olmert claimed that there had been two attempts "to off Pepe" since his incarceration.

Two senior police officers were asked to explain to the Shimron committee why the explosive information that the professional burglar had conveyed to the energetic MK had failed to ripen into an investigation. The head of the investigations department, Brig. Gen. Reuven Minck, told the committee that Rockenstein's allegations were totally unreliable in his view and that the man refused to give a full statement out of fear for his life and for the lives of his family members.

The head of the police intelligence division, Yaakov Nachmias , who handled the case, testified before the committee that Rockenstein had a credibility problem, but that he was privy to information. Despite this, they did not get to the stage of negotiating with him.

He added that the police have "top secret" intelligence files relating to Ze'evi.

In 2005, while on a prison furlough one afternoon, Rockenstein was driving through Holon with his wife and children. A motorcyclist sped past his car and fired a series of shots at him. He sustained light to moderate injuries.

Tuvia Oshri and Rahamim Aharoni were convicted in the 1980s for a double homicide at the Bar-Bakar factory and were sentened to many years in prison.

A month after the murders, shortly after the investigation had been launched and while he was still staying at a safe house in Tel Aviv, Oshri telephoned Ze'evi at midnight.

"Tell me, is everything alright with your telephone?" he asked. "Hope so," Ze'evi replied, without knowing that Oshri's phone was bugged. Then Oshri asked whether Ze'evi could come over to his apartment. "If necessary," the general replied.

In 2004, Aharoni went back to jail after he was convicted of attempting to export Ecstasy to the United States and got a 12-year sentence in a plea bargain. The plan was to stash the drugs inside polishing tables that were sent to Belgium and from there to the U.S.

Bezalel Mizrahi was never convicted, except in traffic court. In the late 1970s he sued Haaretz for libel after the newspaper alleged he was an "Israeli Godfather." He won the lawsuit, and received hefty compensation. However, the Supreme Court verdict in the case said that Haaretz had succeeded in proving that Mizrahi came up with an illicit plot together with Oshri and Aharoni, probably to import drugs. The libel suit wreaked havoc with Mizrahi's life and he said afterward that he was sorry he pursued it. A detailed article about the case ran in Haaretz Magazine in December 2008.

Ze'evi also filed a libel suit - against Olmert. "Public lynching and character assassination characterize MK Olmert's campaign," Gandhi told the media at the time. The suit ended in a compromise. "One day I get a phone call from Menachem Begin," said attorney Ram Caspi, who represented Ze'evi, "and he told me, 'I want to see you with Maj. Gen. Ze'evi. We got to the place. Olmert was already there and at the meeting Begin asked both of them personally to reach an agreement. He forced them to reach a compromise. Begin loved Gandhi very much."

Despite the agreement, bad blood remained between the two. Ze'evi was assassinated by Palestinian terrorists in 2001 and when Olmert became prime minister some four years later, he was active in the effort to commemorate Ze'evi's memory.

"I feel his absence, he was loyal to the end to the Land of Israel," Olmert said on the seventh anniversary of Ze'evi's murder at the Hyatt hotel in Jerusalem.

Urim and Tummim

At the end of his second appearance before the Shimron committee, Olmert told its members excitedly: "Your committee is walking a thin rope. It can make an enormous contribution from a public standpoint or else be a huge miss. There are enormous expectations from the committee. I appeared at Haifa University after [Anwar] Sadat's visit. The auditorium was full - they came to hear about the Shimron committee. In my opinion it calls for far-reaching conclusions about the Israel Police, about its leadership, and the public must be informed of this. This report will be the Urim and Tummim . Anyone who wants to cover up will cover up if the report allows it."

The Shimron committee presented its findings in February 1978. For the very first time, the existence of organized crime in Israel was acknowledged, and numerous recommendations were put forward with the aim of improving the work of law enforcement authorities.

Shimron warned that "The social phenomenon of organized crime whose heads rely on individuals with standing at high levels is worrisome. Sometimes the desire to eat at a fancy restaurant and to revel in flattery bind senior bureaucrats together with members of organized crime."

Olmertcalled for Tavori, the police commissioner, to be fired. "Just a month ago the police chiefs denied that there is organized crime and ignored most of the grave facts that now appear in the Shimron report. These people can no longer lead the campaign against organized crime."

A year later the committee coordinator, Yaakov Eliav, complained that the government had failed to implement the vast majority of the committee's recommendations.

Olmert, who received death threats during his campaign, deserves credit for his role in the historic report issued by Shimron and his colleagues. In less than a month, on May 15, Olmert will testify under oath once again. This time it will be at his own trial, in the Jerusalem District Court, following an indictment that charges him with, among other things, receiving illicit benefits .