Netanyahu Vows to Remain in Office Despite Scandal

JERUSALEM —  Prime Minister Benjamin Netanyahu vowed Thursday to remain in office, rejecting growing calls for his resignation in an influence-trading scandal that threatens to engulf his government.

“The truth will triumph,” the Israeli leader declared before hundreds of cheering Likud Party loyalists gathered in Tel Aviv. “This government is not going anywhere.”

Despite the bravado, Netanyahu appeared increasingly isolated after revelations that police investigators have recommended that prosecutors indict him on charges of fraud and breach of trust. Only a few of his Cabinet ministers expressed public support, and there was increasing speculation here that his fractious government coalition could break apart.

Netanyahu, through a spokesman, turned down a suggestion by one of his own coalition members that he try to bring the scandal to an early close: Demand that charges be filed against him, then “take a vacation” until the case is resolved.

“That won’t happen,” the spokesman said.

Prosecutors are expected to decide by Monday whether to bring charges against Netanyahu and three close associates, including Justice Minister Tzachi Hanegbi, in connection with allegations that they conspired to appoint an attorney general who was expected to show leniency to a key political ally in an ongoing criminal trial.

All, including Netanyahu, have denied wrongdoing.

The attorney general, Roni Bar-On, resigned less than a day after he took office in January and has not been implicated in the scandal.

In addition to naming Netanyahu and Hanegbi, police recommended indictments against two other officials: Aryeh Deri, a legislator from the ultra-Orthodox Shas party, and Avigdor Lieberman, the director of Netanyahu’s office.

Officially, an indictment would not require Netanyahu to step down, but politically, it would be difficult for him to do otherwise, legal experts said.

The opposition Labor Party called on Netanyahu to resign, saying he had “lost his moral basis to rule.”

The allegations are the most serious ever brought against an Israeli prime minister. And even if the current attorney general, Elyakim Rubinstein, and State Atty. Edna Arbel choose not to indict Netanyahu, the decision by police to implicate him has raised serious questions about the future of his government.

The crisis has also coincided with the latest mission to the region by U.S. Middle East envoy Dennis B. Ross, who is attempting to help restart peace talks between Israel and the Palestinians. The negotiations have been frozen since last month.

Ross met Thursday with Netanyahu in Jerusalem and Palestinian Authority President Yasser Arafat in Gaza City, but little progress was expected.

“Netanyahu is clearly going to be preoccupied until this gets resolved,” an official involved in the talks said.

The official said Ross was considering moving up his departure for Washington and could leave as early as today.

David Bar-Illan, a senior aide to Netanyahu, said he hoped that the slowdown will prove temporary.

In Washington, White House Press Secretary Mike McCurry called the scandal “a domestic legal matter that the Israeli government and the people of Israel have to resolve.”

Despite U.S. officials’ refusal to discuss Netanyahu’s legal problems publicly, they say that a long interruption of the peace process, which would seem inevitable if the prime minister is indicted, would not be welcome.

Palestinian leaders, who privately voiced some satisfaction at Netanyahu’s crisis, declined to comment on the matter publicly, saying it is an internal Israeli affair.

Rubinstein and Arbel, along with a team of prosecutors, continued to examine evidence Thursday, at one point reportedly ensconcing themselves in a location away from the Justice Ministry to escape a flood of media attention.

Both officials have reputations for integrity and independence.

Rubinstein, who was appointed four months ago to replace Bar-On, is a former judge widely known as “Mr. Clean.” Arbel, a career civil servant who was appointed to her job before Netanyahu became prime minister, is considered tough but fair.

Meanwhile, rumors swirled about scenarios that could force Netanyahu from office.

One threat appeared to come from two small parties that have allied themselves with Netanyahu and accepted spots within his coalition but may wish to distance themselves from scandal.

The two factions--the Russian immigrants party, led by Trade Minister Natan Sharansky, and the Third Way, led by Internal Security Minister Avigdor Kahalani--scheduled party meetings for today. They control 11 seats in the coalition and could bring down the government if they leave it. Netanyahu’s coalition consists of 66 votes in the 120-seat parliament.

Times staff writer Norman Kempster in Washington contributed to this report.