JERUSALEM -- Calls for Prime Minister Ehud Olmert's resignation mounted yesterday as police probed allegations that he accepted hundreds of thousands of campaign dollars in cash-stuffed envelopes from a U.S. citizen.
The investigation into Olmert's financial conduct is the fifth in two years and threatens to force him from office and derail troubled peace talks with the Palestinians.
After a week-old gag order on the case was lifted partially Thursday, police disclosed that they suspect Olmert of illicitly collecting cash for campaigns over at least six years, when he was mayor of Jerusalem and minister of trade in the government of former Prime Minister Ariel Sharon.
American Jewish businessman Morris "Moshe" Talansky is suspected of involvement in passing money to Olmert directly or through his associates, police say.
A Jerusalem court agreed yesterday to hear preliminary testimony from Talansky at an open hearing. The date was not set. State prosecutor Moshe Lador said Talansky expressed concern to police that Olmert would send someone to harm him, Israeli media reported.
Olmert has denied any wrongdoing and said he would resign only if indicted. But political opponents and Israelis said the latest suspicions of criminal misconduct were diverting Olmert's attention from running the country.
Elections do not seem imminent, because Olmert's coalition hasn't indicated they want to move up the vote, scheduled for late 2010. Polls suggest that neither his Kadima Party nor his coalition partners would benefit from early balloting.
Any indictment likely would take months to hand up.
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Olmert might have to keep rivals within his own party at bay, however, to avoid being ousted as head of Israel's largest political party -- a position that earned him the premiership. In Israel, the prime minister is not directly elected but is generally head of the party with the most seats in parliament.
Palestinian negotiator Saeb Erekat said the Palestinian government was following the developments "very carefully."
If Olmert is forced out and early elections ensue, "the peace process will be on hold for a year," he said.
Peace talks, relaunched in November after a seven-year breakdown, already are dogged by long-standing conflicts over security and settlement building. Questions about the health of Palestinian President Mahmoud Abbas, following an unannounced heart test, have added another layer of uncertainty.
The White House said the case would not alter President Bush's visit to Israel next week.
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Olmert was questioned about the case a week ago. Police spokesman Micky Rosenfeld said if necessary, Olmert would be questioned again.
Talansky arrived in Israel last month and has been questioned by police. But investigators asked for the preliminary testimony, fearing he would be reluctant to return to Israel to testify against Olmert.
A gag order was imposed on the affair last week after word broke that Olmert was going to be questioned, though some details were published by foreign news media.
After the gag order was lifted partially -- at the end of what was to have been a festive 60th Israeli Independence Day celebration -- Olmert went on national TV to state his case Thursday.
His campaign finances, he said, were the responsibility of a lawyer named Uri Messer, a longtime confidant linked to other corruption suspicions involving the prime minister.
"I am looking all of you in the eye, and I say I never took bribes, I never took a penny for myself," he said.
Olmert said Talansky had contributed to his two mayoral campaigns and a campaign for chairman of the Likud Party before he left to join Kadima. Talansky also gave him money to cover campaign debt, he said.
Olmert is a suspect in several corruption affairs involving real estate deals and questionable political appointments. He has been questioned several times by police but never has been convicted. All the cases relate to events that took place before he became prime minister.
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