Olmert Suspected Of Bilking Charities
Investigation of Israeli Premier Expanded Based on New Evidence

By Griff Witte
Washington Post Foreign Service
Saturday, July 12, 2008

JERUSALEM, July 11 -- Israeli investigators have widened a probe into fraud allegations against Prime Minister Ehud Olmert based on evidence that he cheated several charitable groups, officials said Friday, further imperiling Olmert's prospects for staying in office.

The latest accusation, announced in a joint statement by the Justice Ministry and the police, is that Olmert billed charitable organizations and the government for the same flights and then used the extra money to fund personal vacations during his tenure as mayor of Jerusalem and trade minister.

Among the organizations is the Holocaust memorial Yad Vashem, according to officials close to the investigation who spoke on the condition of anonymity because the case remains active. Other charitable groups that paid Olmert include those that help soldiers, mentally disabled children and the physically disabled, the officials said.

The statement said that a travel agency coordinated the fraud on Olmert's behalf. Olmert would speak for the groups during trips abroad, then ask each one -- plus the government -- to separately pay the airfare.

An official close to the investigation said Olmert made more than $100,000 through the alleged scheme, which also included double billing for hotel rooms and other travel expenses.

The allegations, if proved, could very quickly end Olmert's 2 1/2 -year run as prime minister and abort or delay peace initiatives he has pursued with Syria and the Palestinians.

"Olmert for all practical purposes is finished," said Menachem Hofnung, a political scientist at Hebrew University in Jerusalem. "Before, there was an assumption that he could last until the end of 2008. Now the question is whether he can last until the end of July."

Hofnung said the new allegations "look serious. It appears to be a very simple and ugly fraud."

The allegations follow testimony by New York businessman Morris Talansky that he gave Olmert $150,000, much of it in cash, over a nearly 15-year period. Talansky said he believes Olmert used the money to fund a lavish lifestyle -- including a family vacation in Italy and expensive cigars. Talansky is to be cross-examined by Olmert's attorneys next week.

A spokesman for Olmert on Friday said the prime minister would continue fighting the allegations.

"The prime minister is convinced that he has done nothing wrong and that as this investigation continues, his innocence will clearly be shown," said Mark Regev, Olmert's spokesman.

But Olmert has said he will step down if he is indicted, and investigators indicated Friday that they are nearing that point. Olmert was questioned by investigators for more than two hours Friday, his third such session since the scandal broke two months ago.

Meanwhile, Olmert is facing political pressure to step aside from allies including his top lieutenants in government -- Defense Minister Ehud Barak and Foreign Minister Tzipi Livni -- both of whom covet Olmert's job.

Livni is expected to seek the leadership of Olmert's Kadima party when primaries are held next month. Olmert has not said whether he plans to run, and political analysts said Friday's revelation makes it highly unlikely.

A poll published Friday in the daily Yediot Ahronot found that four of five Kadima members want Olmert to quit.

For the past week, Olmert's associates and the police have engaged in an unusual war of words in the media. Police officials have repeatedly leaked information suggesting they have information that will end Olmert's career; Olmert aides, in turn, have blasted the police for unprofessional behavior and have said Olmert is being unfairly targeted.

Scandal has shadowed Olmert for much of his political career. Investigators have opened up numerous cases against him, but none of the allegations have stuck.

Legal analysts have said, however, that the Talansky allegations are the most serious yet and that Friday's evidence suggesting duplicate billing is also potentially indictable.

Among the allegedly defrauded organizations was AKIM Israel, a group that helps the mentally disabled. The group's chairman, Reuven Samuel, said in an interview Friday that Olmert spoke in front of a gathering of the group's supporters in New York approximately five years ago and that the supporters paid for the flight.

"He did what we asked him to do, and he brought honor and profit for our organization," Samuel said. "I can't be angry with him for doing something good."

Samuel said that he did not know how much money had been raised from Olmert's speech but that an evening fundraiser with a high-profile speaker such as Olmert can draw half a million dollars.

Samuel said police had asked one of the organization's officials to testify about Olmert's visit.

A spokeswoman for Yad Vashem, Iris Rosenberg, said Olmert had been active in speaking in behalf of the organization, a state-chartered institution. But she said she did not have specific information about who paid for any trips he took in the organization's behalf. "This was quite a long time ago," she said.

The allegations precede Olmert's rise to the prime ministership in 2006, when he took over after Ariel Sharon became incapacitated following a stroke. Olmert's term is not scheduled to end until 2010.

Special correspondent Samuel Sockol contributed to this report.