Testimony on money for Olmert rivets Israel

He usually insisted on cash. As an up-and-coming Israeli politician, Ehud Olmert allegedly once summoned a wealthy Long Island contributor to the Regency hotel in New York and asked for $15,000 to cover campaign expenses.

Taken aback but too heavily invested to ask questions, Morris Talansky said, he walked four blocks to a bank and withdrew the money while Israel’s future prime minister waited at the hotel. “I said I would give him a check, and he said he needed cash,” Talansky recalled in court, rolling his eyes.

The American’s testimony Tuesday riveted Israelis as prosecutors sought to portray Olmert as a corrupt, high-rolling favor trader who received as much as $500,000 in illicit funds when he was mayor of Jerusalem and a member of parliament.

Olmert has not been charged, and legal experts said it was unclear whether Talansky’s testimony could form the centerpiece of an indictment.

But the picture that emerged, of an ambitious politician with a weakness for fine cigars and first-class travel who allegedly demanded envelopes stuffed with cash, was a damaging blow, even in a country where high-level corruption is presumed to be common. It added to a sense among Israelis that the prime minister’s days are numbered, even as he tries to rally their support for peace efforts with the Palestinians and Syria.

Talansky, a 75-year-old rabbi-turned-investor and fundraiser for Jewish causes, said he turned over about $150,000 to Olmert, directly and through political aides, at meetings in New York and Jerusalem over a 15-year period. He said he gave because he admired Olmert’s leadership qualities and never asked for or received anything in return.

Eight hours of dramatic testimony left the white-haired witness emotionally drained and twice in tears. He told a packed courtroom that Olmert’s preference for cash over checks “disturbed” him. His money helped pay for an Italian vacation and other private Olmert family expenses, Talansky said.

On one occasion in 2004, he said, he paid Olmert’s $4,700 bill for a three-night private stay at the Ritz-Carlton hotel in Washington after the future prime minister called to say his credit card had “maxed out.” Olmert took that money and the $15,000 handed to him at the Regency in New York in the 1990s as personal loans, but never repaid, Talansky said.

“Talansky’s account speaks volumes, and many now ask themselves if Olmert is the person they want heading the government,” said Limor Livnat, a legislator from the right-wing opposition Likud party.

Olmert has said the money he received was for legitimate campaign expenses, not bribes, and that his attorney at the time, Uri Messer, was in charge of overseeing the donations and making sure they were legal. Olmert has said he will resign if indicted.

Tuesday’s testimony was not part of a formal court proceeding against him. The court was taking Talansky’s oral deposition because he lives in the United States and authorities were concerned that he might not return to Israel to testify.

Talansky, who is not under suspicion of wrongdoing, was questioned in English. He often pressed his hands to his head as he tried to remember details of his long relationship with Olmert.

Defense lawyers said they would challenge parts of his testimony under cross-examination, which is set for July 17. Among other things, they said the Italian vacation never happened.

“Olmert did not perform any criminal act whatsoever,” attorney Navot Tel-Tzur said.

The legal repercussions of Talansky’s account will not be clear until prosecutors decide which charges, if any, to bring against the 62-year-old prime minister.

Legal experts said proving that Olmert knowingly violated campaign spending limits would be difficult because the law changed frequently during the period under investigation.

Prosecutors could try to build a bribery case by showing that the money was never declared for campaign purposes or that some of it went into Olmert’s pocket. But legal experts are divided on whether Olmert would bear the burden of proving that cash he kept was simply a gift rather than payment for a past or future official favor.

“Accepting cash never smells good, but in order for it to constitute a criminal offense, further evidence is needed,” said Miriam Rosenthal, a former Tel Aviv district prosecutor.

Few Israelis knew of Talansky until the investigation became public this month. Since then, his odd-couple relationship with Olmert has been widely discussed here as a troubling example of the dependence of Israel’s fiercely competitive democratic system on wealthy contributors, particularly American Jews.

Talansky said the two met when Olmert was running for mayor in the early 1990s and was a rising star in Likud, a party he later quit. The American said he bankrolled Olmert because the candidate impressed him as someone who could heal Jerusalem’s divide between religious and secular Jews.

A decade later, Talansky said, he donated $72,500 to Olmert’s campaign in a Likud primary, in which candidates for parliament competed for spots on the party’s general election ticket. Party primary races are expensive and not publicly funded.

Much of the money for Olmert, he said, was raised at New York “parlor meetings” where the candidate would address American donors, who would then leave contributions on their chairs. Talansky said he was asked to turn over the total in cash.

When he asked why he couldn’t give checks, which would be tax-deductible, Olmert explained that Likud regulations would have required him to share the money with other candidates, Talansky said.

“Cash disturbed me,” Talansky testified. “I accepted the answer simply because I saw something bigger” in Olmert’s potential.

At another point, he said, “That’s why I overlooked, frankly and honestly, a lot of things. I overlooked them. Maybe I shouldn’t have.”

A prosecutor asked Talansky whether he had obtained receipts for any of the cash donations, which ranged from $5,000 to $15,000 at a time. The question touched off laughter in the courtroom. Talansky replied that he had not.

Olmert sometimes solicited cash for unspecified personal expenses and liked to live well, Talansky said; he flew first class, stayed in hotel suites, smoked fine cigars and sported luxury pens and watches.

Talansky said he “never expected anything personally” from Olmert in return and “never had any personal benefits from this relationship, whatsoever.”

But he said Olmert had offered to help him with his mini-bar business and put him in touch with two major players in the American hotel market. Nothing came from those contacts, he said.

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boudreaux@latimes.com