Police investigators believe documents and computers confiscated at the family home of an Austrian millionaire may prove that Sharon, or one of his sons, illegally received three million dollars from Austria.
However, police officials said the complex investigation would not be completed before the upcoming elections in late March.
The dramatic development in the investigation was reported Tuesday evening by Israel's Channel 10.
During the ongoing investigation into apparently illegal donations received by the Sharon family from South African millionaire Cyril Kern, investigators uncovered large sums of money apparently transferred into the account of Gilad Sharon, the prime minister's son, from Austria.
Shortly thereafter, the name of Martin Schlaf – a close family friend and owner of casinos worldwide, including the one in the West Bank town of Jericho – was raised as a possible source for the funds.
According to suspicions, the large sums transferred to Sharon junior may have originated at Schlaf's casino companies. Police officials previously requested permission to investigate in Austria, but without success.
However, investigators recently got a break after Schlaf's brother, James, arrived in Israel. Police officials received reports of the
A document police submitted to the court notes that "in the framework of the investigation against Sharon, apparent evidence has been found to point to the involvement of James Schlaf and his brother Martin Schlaf in transferring three million dollars to the prime minister's family."
Police officials suspect some of the funds were used to pay back illegal donations received by the Sharon family, while the rest of the money remained in the family's hands. However, investigators are unsure whether the findings would incriminate the Sharon family for illegal receiving funds.
Earlier, James Schlaf petitioned the court to ask the confiscated computers and documents be returned to him, but following the Channel 10 report, he announced he would withdraw the request.
Notably, police investigators believed for a while now that GIlad Sharon and Schlaf were connected, but this time an official police document makes the charge, on the eve of the upcoming general elections.
The attorney representing the Schlaf brothers in Israel, Navot Tal-Zur, told Ynet: "I view the reports with severity, because we are talking about yet another leak regarding the investigation during a critical juncture, on the eve of the elections, as was the case previously in this affair."
"At this time the police have no new evidence, aside from the fact we're talking about a personal computer. This headline recycles the suspicions in the Cyril Kern affair, based on an intentional leak."
'Bottomless barrel of corruption'
As expected, the reports of Sharon's alleged criminal involvement spurred immediate responses from local politicians.
The PM's opponents are apparently united on the question of Sharon's future and predict a political earthquake that will rattle the Kadima party and hold serious implications on the elections, should Sharon be found guilty of wrongdoing.
Associates of Likud Chairman Benjamin Netanyahu said they were satisfied with the affair's publication, adding they considered the matter to be very severe.
Shinui leader Yosef (Tommy) Lapid said Attorney General Menachem Mazuz has to decide whether to indict Prime Minister Ariel Sharon ahead of the March 28 general elections.
"If police suspicions are solid as reported, and if there is evidence indicating that Sharon and his family members received three million dollars from Martin Schlaf, this would mean a sharp turnaround in the elections campaign," Lapid said.
Labor MK Ophir Pines-Paz, who characterized the affair as "a political earthquake" and "a new low in Israeli politics," also called on Mazuz to decide whether to indict the PM before the elections.
"For the first time in our history, a prime minister has been accused of taking bribes," Pines-Paz said.
Other Knesset members said the new findings prove the depths of corruption the Kadima party has sunk to.
MK Chaim Oron (Meretz) called Sharon's party "a bottomless barrel of corruption," while fellow party member MK Ran Cohen said the Israeli public will get a chance to protest against the PM's corruption in the ballots.
Meanwhile, right-wing politicians were also quick to criticize Sharon.
Sources in the National Union party called the prime minister to resign and withdraw his premiership candidacy in light of the reports.
"The Kadima party is bound to disintegrate now, and Israel will be able to regain its moral sanity and values," a party source said.
Attila Somfalvi, Ronny Sofer, and Roee Nahmias contributed to the reports