Businessman testifies that he gave cash to Olmert

JERUSALEM - A Jewish-American businessman testified yesterday in a corruption probe that threatens to bring down Prime Minister Ehud Olmert, saying he handed cash-stuffed envelopes to the Israeli politician he described as a bon vivant with a penchant for fancy hotels, fine cigars and first-class travel.

Morris Talansky's testimony offered an unflattering portrait of Olmert just as the already unpopular Israeli leader seeks to rally reluctant public support for peace talks with Syria and the Palestinians.

Police suspect that Olmert illicitly took up to $500,000 from Talansky in illegal campaign contributions or bribes before becoming prime minister in 2006. Olmert, who has denied wrongdoing, has said that the funds were legal contributions but has promised to step down if indicted.

Legal affairs analyst Moshe Negbi said Talansky's testimony suggests that Olmert could face charges of bribery and breach of trust. "I don't think that there were ever such grave suspicions against a prime minister in Israel," Negbi said.

Olmert's lawyer Eli Zohar labeled Talansky's testimony "twisted" and said that the truth would be revealed in the cross-examination, which is set for July 17.

"In general, we're saying that we're not talking about criminal activity whatsoever," he said.

Olmert, whom police have questioned twice, had no comment on the testimony.

Talansky told the court that he turned over about $150,000 of his own money to Olmert, directly and through political aides, at meetings in New York and Jerusalem over a 15-year period.

He said that much of the money was raised in New York "parlor meetings," where Olmert would address American donors who then would leave contributions on their chairs.

Throughout his eight-hour testimony, Talansky spoke of his love for Israel and his conviction that Olmert was the right man to lead the country. For that reason, he said, he "overlooked" nagging doubts about why Olmert insisted on receiving the money in cash.

Talking about the cash transfers, Talansky said that he told himself that it was "absolutely, absolutely insanity." But he said that he "sort of resolved my conscience" by calculating that his own personal outlays amounted to $10,000 to $15,000 a year.

"No question about it, over a 15-year period, it didn't seem to be that astronomical a figure," he said.

Talansky, who is not a suspect in the case, repeatedly denied expecting anything in return.

"The relationship was purely one of admiration," he said. "I never expected anything personally. I never received anything personally. I never had any personal benefits from this relationship whatsoever." His interest was in Olmert "ultimately becoming the leader I thought hopefully he would be," he said.

Talansky said he thought that most of the money he gave to Olmert was for political campaigns. But Olmert also asked him for a personal loan of $25,000 to $30,000 to vacation in Italy, and sought money for personal expenses, including upgrades to first-class air travel, he said.

Talansky, 75, said he didn't know how his money was spent. "I only know that he loved expensive cigars," he said. "I know he loved pens, watches. I found it strange." In one case, he said, he walked to a bank to withdraw $15,000 in cash for a loan as Olmert waited in a luxury hotel.

Talansky said that Olmert never repaid either loan.

The investigation is the fifth that police have launched into Olmert's affairs since he took office in 2006, and there is widespread speculation that the savvy politician might not be able to weather the latest accusations.

Olmert's downfall could dash U.S.-backed efforts by Israel and the Palestinians to work out a final peace agreement by the end of the year. Israel and Syria also announced last week that they had resumed peace talks.

The questionable donations to Olmert were made before and during his 10-year tenure as Jerusalem mayor, which ended in 2003, and his subsequent term as trade minister, police have said.

In at least one case, Talansky said he used his personal credit card to pay a $4,700 bill for a three-day stay at the Ritz Carlton hotel in Washington in 2004.

Olmert called him to say his own credit card was "maxed out," Talansky testified. "He asked if he could borrow my card and he said it was part of a loan."

Throughout the period in question, Olmert was a leading politician in the hardline Likud Party. In late 2005, Olmert bolted the Likud to help form the centrist Kadima Party, which he now leads.

When Olmert asked him for $72,500 to help pay for his Likud primary campaign in 2003, Talansky said that he decided that would be a "wrap-up" of all the money he would give to "political Israel."

"I believe that was the last I ever gave for any campaign," he said.

He told the court that he had only seen Olmert once at a social function since he became prime minister. *