Bat Yam mayor suspected of fraud

National Fraud Unit investigators raid Shlomi Lahiani's home, office; court remands him for 24 hours. Suspicions include administrative irregularities, breach of trust and tax evasion

Eli Senyor|Published: 12.29.09 , 09:40

Bat Yam Mayor Shlomi Lahiani was arrested by National Fraud Unit investigators, along with several other senior city officials, on suspicion of administrative irregularities, breach of trust, zoning and construction offenses, ethical transgressions and tax evasion.

The Petah Tikva District Court rejected Lahiani's bail motion and ordered he spend the night in a

holding cell.

Lahiani was first elected as the mayor of Bat Yam in 2003. Credited with boosting the city's overall municipal status and upgrading almost all municipal services, he was elected mayor again in 2008, with an overwhelming 85% of the votes.

The raid (Photo: Ofer Amram)

Monday saw some 100 policemen raid Lahiani's home, and the homes of several of other high-ranking city officials, considered his close associates. The police also raided Lahiani's brother's home.

Suspicions of fiscal irregularities surfaced back in 2003, when Lahiani – a successful city contractor at the time – reported a NIS 35 million (approx. $9.23 million) debt due to a failed business venture.

The police's Financial Crimes Unit was conducting a lengthy, undercover investigation against Lahiani and his associates.

According to detailed revealed Tuesday, the police suspect that over the years, Bat Yam's mayor unduly promoted his associates and, thus committing ethical transgressions; and made illegal wire transfers.

Lahiani is also suspected of using City resources for personal gain, both for himself and for various family members.

Much of the investigation focuses on how Lahiani managed his NIS 35 million debt, which he owed to Bank Mizrahi: He reportedly took out several loans, one of them a NIS 18 million loan from Union Bank, at which point Bank Mizrahi agreed to waiver the remainder of the debt.

Nevertheless, investigators say that Lahiani "couldn’t possibly hope to pay off the loan" he took from Union Bank. The police are also looking into the way in which the loan was approved in the first place, since the bank classified Lahiani as "insolvent."