Police Accuse Israeli Prime Minister of Corruption, Probe His Expenses

Police revealed stinging new allegations against Israeli Prime Minister Ehud Olmert on Friday, accusing him of pocketing tens of thousands of dollars by deceiving multiple sources into paying for the same trips abroad.

The latest revelations came just after police grilled Olmert for a third time in a widening corruption probe -- and made it even harder for Olmert to hold on to his job and carry out peace talks with the Palestinians and Syria.

Police said Olmert is suspected of obtaining $100,000 before he became prime minister by getting multiple sources -- including the state and public organizations including charities -- to pay for identical trips abroad so he could pocket the difference.

The allegations were the most damaging for Olmert since police accused him in May of taking hundreds of thousands of dollars in cash-stuffed envelopes from an American entrepreneur when he was a cabinet minister and mayor of Jerusalem.

Police said Friday they were widening their investigation to include the funding of trips abroad.

Olmert has consistently denied any wrongdoing. Yet even before the latest accusations, Israeli pundits and media were nearly unanimous in their assessment that the prime minister is on his way out.

"It's hard to fathom what Olmert is trying to achieve by postponing his dishonorable exit from public life when it's obvious to everyone else that his public career is over," read the lead editorial Friday in the Haaretz daily.

Yet Olmert's lawyers are hoping that their cross examination next week of the key witness in the case -- 75-year-old American Jewish businessman Morris Talansky -- will bolster the prime minister's fortunes. In a stunning deposition in May, Talansky testified that he handed Olmert hundreds of thousands of dollars in cash-stuffed envelopes over the course of years, and that some of that money went to fund expensive cigars, hotels and other luxuries.

Olmert's backers note that he's been written off before only to re-emerge intact. This is the fifth major corruption case against him and few thought he'd survive the fallout from his much criticized handling of the war in Lebanon which broke out two years ago Saturday.

Nevertheless, the weight of the corruption probes taken together, combined with Olmert's rock-bottom approval ratings and Friday's highly embarrassing disclosures can only be described as overwhelming. Olmert has said that he will resign if indicted.

After police questioned the prime minister for two hours at his official residence in Jerusalem, the police and Justice Ministry issued a statement saying Olmert, "while serving as mayor of Jerusalem and as minister of industry and trade, is suspected of seeking funding for flights abroad in his official capacity from several sources at the same time ... including the state."

Each of these sources was asked to pay in full for the same flight, it added.

Police suspect that the "considerable sums" that remained after the flight was paid for "were transferred by Olmert to a special account (his) travel agency administered for him. These monies were used to finance private trips abroad by Olmert and his family," the statement said.

Police officials said Olmert also billed multiple sources for other expenses, such as hotels, on dozens of trips abroad -- with the illicit funds amounting to some $100,000.

A senior police officer with the National Fraud Unit said the Rishon Tours travel agency "acted like a bank branch for the Olmert family." Before going abroad, they'd contact the agency to check the balance in Olmert's account there and "order tickets," he said.

No one answered the phone at the agency's offices on Friday, a short business day in Israel because of the Jewish Sabbath beginning at sundown.

Besides asking the state to pick up the tab for his trips, Olmert also approached leading Israeli companies for funding, the police official said. Companies paid for his trips even when he was trade minister and responsible for overseeing corporate practices -- raising suspicions of conflict of interest and breach of trust, he said.

All information from the police outside the official statement was obtained on condition of anonymity because the case is still under investigation and officers were not authorized to divulge details not included in the statement.

Through a spokesman, the prime minister insisted he had broken no laws.

"Prime Minister Olmert is convinced that he is innocent of any wrongdoing and firmly believes that as this investigation continues, that innocence will become apparent to all," said Olmert's spokesman, Mark Regev.

Regev wouldn't comment on the substance of the new suspicions.

Olmert's Kadima Party, a centrist movement that favors territorial compromises with Israel's Arab neighbors, is planning to hold primary elections in September to choose a new leader. Olmert has said he might run in the primary, but analysts predicted Friday's revelations would keep him out of the race.

"If there were any chances that Olmert would run in the Kadima primaries it appears now that they are very minimal, close to zero," said Raviv Druker, political affairs analyst for Israel's Channel 10 TV.

At stake is far more than the fortunes of the 62-year-old Olmert, a masterful political survivor and lover of luxury who became prime minister after his predecessor, Ariel Sharon, suffered a devastating stroke in January 2006.

Olmert's government is deeply involved in what insiders describe as highly imperfect yet nonetheless serious peace negotiations with both the Palestinians and Syria. If new elections were held now, polls show former Prime Minister Benjamin Netanyahu, the hawkish leader of the right-wing Likud Party, would probably win.

However, Foreign Minister Tzipi Livni is likely to win the Kadima primaries in September. Polls show she'd give Netanyahu a good run in a general election. If she became prime minister, she'd be Israel's second female leader after Golda Meir and would likely pursue Olmert's peace moves.

Palestinian negotiator Yasser Abed Rabbo said the latest allegations against Olmert are largely inconsequential for the peace talks because there's been so little progress in the negotiations.

"It's not like the process is progressing and Olmert's scandals are hampering it," he said.