Best guess [assuming that the two shielded arm wires are good]:
The static is because the metal arm is not properly grounded to the chassis. The bearings are providing the only ground for it.
Look at the contact piece in the arm head. There is a brass strip pressed firmly against the p.c. board at the trace corresponding to 'green'. If missing, bent away from the p.c. board, or the trace on the board is badly tarnished, you lose the arm ground.
The problem may disappear if you do the following mod:
Remove the turntable to amp ground wire, and toss it.
Take the cover off the mute switch. Solder a [thin] wire to the two solder tabs that already have the arm wire shields tacked to them, and then tack that to the metal chassis. There may be an unused solder tab under one of two screws that secure the mute switch. Replace cover.
Seth
Forever Analog and Covered In Parrot Po9op