Woody Allen has a talent for finding comedy in tales of crimes and misdemeanours, but there was only glum resignation on his face when he turned up in a Manhattan court yesterday to try to recoup money he says he is owed by his former friend and producer of his films, Jean Doumanian. But according to Mr Allen’s lawyers there was nothing small time about the financial damage inflicted on him.”Woody Allen was deprived of nearly $12m,” Michael Zweig asserted to the jury in his opening arguments in the Manhattan Supreme Court, adding that money had been diverted through “sleight of hand” and “accounting shenanigans”.Ms Doumanian and Mr Safra, co-heads of the Sweetland Films production company, came to the financial rescue of Mr Allen in 1993 with a three-film funding agreement, under which he was to get a salary and a cut of profits after investments were recouped. They were Bullets Over Broadway, Mighty Aphrodite and Everyone Says I Love You.The deal apparently started to get fuzzy when Sweetland bankrolled the next five Woody Allen movies – Deconstructing Harry, Wild Man Blues, Celebrity, Sweet and Lowdown and Small Time Crooks – with no more than handshakes between friends. It was from these films, Mr Allen contends, that his one-time saviours starting withholding cash that was due to him.”All of the money in dispute went to two persons, Jean Doumanian and Jacqui Safra,” Mr Zweig told the jury, noting that during the filming of Celebrity their production company bought two Aston Martin cars at $40,000 each.

When the film was done, he said, one was sold to Mr Safra for a mere $5,000 and “is sitting in the Safra Vineyards in Napa, California”.This is a dispute that has apparently wrecked on one of the industry’s most hailed friendships, cemented when Ms Doumanian came to Mr Allen’s side during his messy separation from Mia Farrow in the early 1990s and his subsequent love affair with their adopted daughter, whom he has since married, Soon-Yi Previn.Mr Allen, whose latest film, Hollywood Ending, made in collaboration with Dreamworks SKG, has barely made a dent on the North American box office. He has said he launched the lawsuit only after long thought and with much reluctance. Ms Doumanian has declared she wants nothing more to do with the comedian.The lawyer for the defendants, Peter Parcher, said Mr Allen was overreacting and and was being manipulated by his handlers and managers, calling them his “Hollywood Harrys”. He argued that Mr Allen had received everything coming to him from the films – $19.5m – and that he in fact owed money to his clients.”This is a bogus case orchestrated by Woody Allen’s handlers,” Mr Parcher told the court “Woody Allen does not negotiate He makes movies His handlers negotiate He followed the suggestions of his people. They thought they had a golden goose they could fleece.”The trial, which formally began with jury selection on Thursday, is due to last two weeks Mr Allen was preparing to take the stand last night.. Renewed efforts by the United States to restore calm in the Middle East had barely begun yesterday when they ran into difficulties as Ariel Sharon refused to budge from a set of core conditions. Mr Sharon appears unmoved by the American argument that Palestinian attacks against Israel are unlikely to end unless the Palestinians see some prospect of political progress.

Mr Burns is pressing for the main issues ­ an end to violence, Palestinian reforms and political progress ­ to be bundled together. “We believe we should move on all tracks at once,” a US State Department source said. “Sharon says that they have to move on their track first ­ an end to terror and the reform of the PA.” This latest disagreement between the US and Israel was seen by the Palestinians as more evidence that Mr Sharon has no intention of seeking a political agreement.It does not bode particularly well for the visit to the region next week of the director of the CIA, George Tenet. Many Palestinians see him not only as a central figure in Mr Arafat’s corrupt and inept Palestinian Authority, but as a senior player in a sprawling security apparatus which has been responsible for a wide range of human rights abuses.The same Palestinians tend to support the chorus of demands for reforms of the Palestinian Authority, in the hope that it will deliver a far more democratic and accountable government.Responding to this ­ and to US pressure ­ Mr Arafat has promised elections and signed a long-delayed law separating the executive from the judiciary. He is said to be planning to reshuffle his cabinet, reducing the number of ministers from 33 to 19.The Arabic Al-Ayyam newspaper said that there are plans for the 12 Palestinian security services to be consolidated into four branches ­ internal and external security services, police and national security (a de facto army). Israel hopes that the CIA-crafted reforms will lead to a streamlined Palestinian security system, which is willing and able to stamp down on Palestinian militants, instead of participating in attacks on Israel themselves. Mr Sharon does not seem deterred by the argument that the Palestinian security forces ­ many of whom strongly sympathise with the politics of the militant groups, if not their methods ­ are hardly likely to be willing to defend Israelis from attack by fellow Palestinians unless there is some hope of diplomatic progress..

As international efforts to promote Middle East peace diplomacy hit rough water yet again, Israel’s armed forces swept back into Nablus yesterday at the end of a week of daily military raids into Palestinian-run areas of the West Bank. Eyewitnesses said that after the Israeli troops checked the identities of the men, some Palestinians were blindfolded and handcuffed and taken away for questioning. Reports said about 100 men were detained, to be added to the thousands held in Israeli lock-ups from previous round-ups.The Israeli army invaded Nablus in force in April, killing at least 70 Palestinians, including civilians, amid fierce fighting. It said its latest operation was in response to recent “murderous attacks” against Israelis, a reference to the renewed wave of Palestinian suicide bombings, which resumed less than a month after the end of Israel’s military invasion of the West Bank aimed at crushing the Palestinian “terrorist infrastructure”.Yesterday’s raid might have been connected with an attack four days ago, in which a Palestinian gunman penetrated Itamar, a Jewish settlement near Nablus, and shot dead three teenagers before being killed himself.Reports yesterday said that Israeli troops also blew up a house belonging to relatives of a suicide bomber ­ also standard practice in this conflict.