Israeli Police Raid Trade Ministry in Olmert Probe

NEWYou can now listen to Fox News articles!

Police swooped down on the offices of the Ministry of Industry and Trade in Jerusalem on Tuesday, seizing documents in a widening corruption probe threatening Ehud Olmert's premiership.

Police spokesman Micky Rosenfeld said investigators from the National Fraud Unit raided the offices "in connection with the Olmert investigation." Olmert headed the ministry from 2003 to 2006, before he became prime minister.

Earlier in the day, an Israeli newspaper reported that Olmert helped to have land rezoned for associates of the U.S. businessman suspected of giving him money, as well as promoting their bids for government projects.

The report in the Yediot Ahronot daily — which gave no further details — was the first indication of what Olmert might have given in return for the hundreds of thousands of dollars he allegedly received illicitly from Jewish American businessman Morris Talansky.

The investigation, the fifth into Olmert's conduct since he became prime minister two years ago, has raised doubts about his ability to conclude a peace deal with the Palestinians and provoked widespread speculation about his ability to remain in office.

On Monday, police raided Jerusalem's City Hall, searching offices and confiscating documents related to the probe, which spans Olmert's tenure as Jerusalem mayor from 1993 to 2003 and subsequent years as Israel's minister of industry and trade.

Olmert has denied any wrongdoing, and Talansky has insisted that all of his actions on behalf of Olmert were legal.

On Tuesday, Talansky's lawyer, Jacques Chen, dismissed the suspicions raised in the Yediot Ahronot report.

"He never asked (Olmert) for anything and doesn't know anything about it," Chen told The Associated Press. "He has no connection to this."

Police would not comment on the Yediot Ahronot report.

The probe has cast a pall over Israel's 60th anniversary celebrations and embarrassed the prime minister at a time when he had expected to savor U.S. President George W. Bush's second visit to Israel in just four months.

Bush is due to arrive in Israel on Wednesday for a three-day visit marking Israel's anniversary. Ahead of the visit, he told Israeli media at the White House that his relations with Olmert were "excellent" and called the Israeli leader an "honest guy."

But he also said negotiations with the Palestinians do not hinge on Olmert and identified Israel's foreign and defense ministers as possible replacements.

Olmert has said he would resign if indicted. Even if he hangs on to power, he might not be strong enough politically to win support for a peace deal that would necessarily involve sweeping territorial concessions to the Palestinians.

Even before Olmert's latest legal woes emerged earlier this month, peace talks had been listing. Palestinians are furious with Israel for continuing construction on lands they claim for a future state. They also say Israel is hampering a Palestinian economic recovery by refusing to scale back a network of West Bank roadblocks that Israel says is essential to keep out attackers.

Israel counters that the Palestinians haven't done enough to rein in militants and that no peace deal could be implemented unless Abbas regains control of the Gaza Strip, now ruled by Islamic Hamas militants after a violent takeover last June.

The U.S. president hopes to get Olmert and Abbas to work out a final peace agreement by the end of his term in January. But in an indication that deadline might be overly ambitious, Bush just said he hopes "to get something defined" by then.

The Justice Ministry has been deliberately vague on what laws the Israeli leader might have broken because the probe — expected to take months — is at an early stage, a ministry official said. But an Israeli police official has said possible directions include money laundering, graft and campaign finance violations.

He spoke on condition of anonymity because the investigation is continuing.

Police questioned Talansky again on Monday. He has agreed to remain in the country until May 21 and to "return whenever necessary" to testify in the case, Chen said.

Allegations of corruption have clung to Olmert throughout his three-decade political career, but he has never been convicted. Since becoming prime minister in 2006, he has been a suspect in several corruption affairs involving real estate deals and questionable political appointments.

Some of these investigations remain pending.