Businessman says he gave Israeli leader thousands in cash

American businessman Morris Talansky leaves a Jerusalem courtroom Tuesday after being questioned about his relationship with Israeli Prime Minister Ehud Olmert.
American businessman Morris Talansky leaves a Jerusalem courtroom Tuesday after being questioned about his relationship with Israeli Prime Minister Ehud Olmert. Dion Nissenbaum / MCT

JERUSALEM — He railed against his Israeli interrogators, lectured the judges on American democracy and wept with frustration over his unwelcome role as a pivotal figure in an unfolding corruption investigation that could bring a premature end to Israeli Prime Minister Ehud Olmert's political career.

By the time he was done testifying on Tuesday at a special court hearing, American businessman Morris Talansky had painted an unflattering portrait of Olmert as a manipulative figure whose taste for luxury had overwhelmed his potential to become one of Israel's legendary leaders.

In a rare public deposition before a three-court judge, Talansky told Israeli prosecutors that he gave Olmert tens of thousands of dollars in cash, checks and loans to finance overseas trips, upscale New York hotel rooms and struggling political campaigns.

Talansky said he was "very, very uneasy" about the large amounts of cash he gave Olmert over the years, but he trusted a politician he revered as one of Israel's potential saviors.

"Cash disturbed me," Talansky said. "I couldn't understand it, and I accepted the answer simply because I saw something bigger, hopefully, out there."

Talansky estimated that he'd given Olmert $150,000 in cash, checks and loans over 15 years. To date, he said, Olmert hasn't repaid the loans.

Talansky, 75, is a key figure in the unfolding corruption investigation looking into suspicions that Olmert accepted bribes before he became prime minister in 2006.

Olmert has denied the allegations but pledged to step down if he's indicted.

It remains unclear what, if any, Israeli laws Olmert may have broken. After the hearing, State Prosecutor Moshe Lador said it was "too early" to draw any conclusions about a possible indictment.

"This whole investigation is not at the end, but in the middle," said Lador, who led Tuesday's questioning of Talansky. "No decisions have been made, no decisions are now even considered."

The deepening scandal, however, is dominating the Israeli media and threatening to undermine Olmert's attempts to broker elusive peace deals with Palestinian Authority President Mahmoud Abbas and Syrian President Bashar Assad.

While Olmert's lead attorney described Talansky's testimony as "twisted," the New York businessman's sworn testimony raised significant questions about the prime minister's fundraising in the United States.

Over the course of six hours, Talansky displayed an increasing disillusionment with Olmert that built over the last 15 years.

After he was caught up in the investigation, Talansky said Tuesday, he wanted to confront Olmert so he could express his "anger" about the Israeli leader's conduct.

"This is no way to build a relationship, to run a country, to be a high official," said Talansky. "By taking cash all the time."

In one case, Talansky said, Olmert asked him for a $25,000 loan because he was going on an Italian vacation.

After he'd given Olmert cash for years, Talansky said, in 2005 the Israeli leader asked three prominent American businessmen to talk to him about his struggling new mini-bar business.

State prosecutors presented a letter Olmert wrote to American casino billionaire Sheldon Adelson on Talansky's behalf three weeks after Talansky paid a $4,000 hotel bill for Olmert, who was then vice prime minister in Prime Minister Ariel Sharon's coalition government.

Around the same time, prosecutors said, Olmert wrote a letter to the defense minister of Chile about another investment Talansky was involved with that sold satellite space to nations around the world.

Talansky said he knew nothing about Olmert's letter to Chile and said the Israeli leader's attempts to help him with his mini-bar business did no good.

"I said to myself, never go to a politician for business," said Talansky, who denied that he gave Olmert money with the hope of getting anything in return.

The court allowed state prosecutors to question Talansky in court to ensure that his testimony is documented before he returns to the United States this week.

Talansky has agreed to return in July when Olmert's attorneys, who asked for more time to prepare, will question the businessman.

After the hearing, Olmert attorney Eli Zohar called Talansky's testimony "twisted."

"Come back in July and you will see what picture you will get from the whole story," said Zohar.

Talansky could be cast as an unreliable witness, and Olmert's attorneys may try to question the businessman about a series of lawsuits in the United States in which he's alleged to have used threats and intimidation to try to collect debts.

Talansky emerged as a key player in the investigation last month and was brought in for questioning when he returned to Israel for Passover.

Wearing a black skullcap, the white-haired Talansky quickly shed his gray jacket and tie after he entered the small courtroom to begin his testimony.

Talansky appeared uncomfortable in his role. He slumped in his seat, grimaced at some of the questions and angrily accused police interrogators of treating him like a criminal.

Speaking in English throughout the hearing, Talansky broke down twice on the stand, once when he implored the court to let him return to New York to be with his wife and once when he accused Israeli police interrogators of painting him as a criminal.

"They destroyed my family," Talansky said as he wept on the stand. "You can never, never redeem the people who did it to me, (they) can never redeem themselves for destroying the trust of children in their father and grandfather."

Talansky blasted the Israeli judicial system and lectured the court on American interrogation methods. At one point, he cast the investigation as a stain on Israel that would hurt the nation's ties with American Jews.

"I can't understand how we are hurting ourselves," said Talansky.