Olmert faces new corruption inquiry

Just as defense lawyers were hoping to discredit the star witness against him, police confronted Israeli Prime Minister Ehud Olmert with new corruption allegations Friday -- that he had made duplicate expense claims for trips abroad and pocketed tens of thousands of dollars.

The widening investigation already has forced Olmert to schedule a September primary election by his centrist Kadima party. The new allegations make it more likely that he will be ousted as party leader and, eventually, as head of a government deeply involved in peace talks with Syria and the Palestinians.

Israelis often marvel at Olmert’s survival instincts in the face of scandals that have shadowed his 35 years in public office without leading to a single indictment. But just over halfway through his four-year term, there is a growing sense that his luck is running out.

Details of the latest investigation surfaced after police questioned the prime minister at his official residence Friday for the third time in a case opened in May. They include the first suggestion that Olmert took public funds for private use.

Authorities focused on about $100,000 that Olmert allegedly collected for official trips abroad during his 10-year service as mayor of Jerusalem and his subsequent three years in the Cabinet before he became prime minister in 2006.

According to a joint statement by the Justice Ministry and the police, Olmert deceived multiple sources, including private companies and various government agencies, into thinking they were paying his full fare for the same international flights.

The “considerable sums” left over were “transferred by Olmert to a special account [his] travel agency administered for him,” the statement said. “These monies were used to finance private trips abroad by Olmert and his family.”

He also billed multiple sources to pay for the same hotel rooms and other expenses on his official trips, the statement said.

The suspicion that Olmert approached private companies for travel money while he was trade and industry minister raised a separate legal issue: possible conflict of interest. In that job he oversaw corporate practices.

Olmert, who has promised to resign if indicted, insisted through a government spokesman Friday that he had broken no law.

“The prime minister is convinced that he did not do anything wrong and firmly believes that this will become abundantly clear to everyone as the investigation continues,” said the spokesman, Mark Regev.

The new allegations were unveiled less than a week before the key prosecution witness in a 2-month-old bribery case against Olmert, Jewish American businessman Morris Talansky, reappears in court for cross-examination.

Olmert’s lawyers say they hope to discredit Talansky’s May 27 testimony that he passed about $150,000 to Olmert over a 15-year period, including loans never repaid. The prime minister has said the money was used legally to finance election campaigns.

An aide to the prime minister, Amir Dan, was quoted on the Maariv NRG news website as saying that he believed law enforcement authorities timed the announcement Friday to keep Olmert on the defensive.

“It seems as though the police and prosecutors have understood that there is nothing to back up Talansky’s testimony, and so [they] are trying to create spin by making a drama out of nothing,” Dan said.

Olmert has organized a team of political operatives to create some spin of his own. They have been assigned to exploit any damage to Talansky’s credibility, with the aim of shoring up Olmert’s political clout and staving off three challengers to his leadership of centrist Kadima.

The party has agreed to hold a primary by Sept. 25 in preparation for general elections that could be held if Olmert’s coalition loses its dwindling majority in parliament. Recent surveys by Israeli newspapers make Foreign Minister Tzipi Livni the party favorite. But she trails Benjamin Netanyahu, head of the right-wing opposition Likud Party and the leader among likely candidates in a general election.

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boudreaux@latimes.com