Saturday, July 12, 2008

'PM invented, oversaw fraud mechanism' staff and AP , THE JERUSALEM POST

The police has multiple fictitious tax receipts and investigators have at least one incriminating testimony against Prime Minister Ehud Olmert, probably from an employee of the Rishon Tours travel agency, Channel 2 reported Friday evening.

"Olmert invented the fraud mechanism and oversaw it personally," a police source told Channel 2. Earlier Friday, the Justice Ministry and the police unveiled stunning new allegations against Olmert, accusing him of getting multiple sources to pay for identical trips abroad so he could pocket the difference.

The new suspicions - made public shortly after police questioned Olmert for a third time in a burgeoning corruption scandal - could make it even tougher for the embattled leader to hang on to his job and pursue peacemaking with the Palestinians.

Police officials said Olmert is suspected of having illicitly taken some $100,000 by deceiving multiple sources into thinking they were paying for the same trip.

Since the corruption case against Olmert first broke in May, he has denied any wrongdoing, saying he never took money for his private use. He has promised to resign if indicted.

Investigators came to Olmert's official Jerusalem residence on Friday to grill him in connection with the probe, which centers on hundreds of thousands of dollars he allegedly received from an American Jewish businessman before becoming Prime Minister in 2006.

The questioning lasted more than two hours, and afterward, investigators announced the investigation had widened.

"While serving as mayor of Jerusalem and as minister of industry and trade, (Olmert) is suspected of seeking funding for flights abroad in his official capacity from several sources at the same time ... including the state," the Justice Ministry and police said in a joint statement.

Each of these sources was asked to pay in full for the same flight, it added.

Police suspect that the "considerable sums" that remained after the flight was paid for "were transferred by Olmert to a special account (his) travel agency administered for him. These monies were used to finance private trips abroad by Olmert and his family," the statement said.

Police officials said Olmert also billed multiple sources for other expenses, such as hotels, on dozens of trips abroad - with the illicit funds amounting to some $100,000. All information from the police outside the official statement was obtained on condition of anonymity because the case is still under investigation and officers were not authorized to expand on the statement publicly.

Olmert served as Jerusalem mayor for 10 years until 2003, when he was appointed trade minister in former Prime Minister Ariel Sharon's government. He held that position until 2006.

A senior police officer with the National Fraud Unit said the Rishon Tours travel agency "acted like a bank branch for the Olmert family." Before going abroad, they'd contact the agency to check the balance in Olmert's account there and "order tickets," he said.

The agency, he said, also took care of hotel and other expenses the family incurred. No one answered the phone at the agency's offices on Friday, a short business day in Israel because of the Jewish Sabbath beginning at sundown.

Besides asking the state to pick up the tab for his trips, Olmert also approached leading Israeli companies for funding, the police official said. Companies paid for his trips even when he was trade minister and responsible for overseeing corporate practices - raising suspicions of conflict of interest and breach of trust, he said.

Through a spokesman, the prime minister insisted he had broken no laws.

"Prime Minister Olmert is convinced that he is innocent of any wrongdoing and firmly believes that as this investigation continues, that innocence will become apparent to all," the prime minister's spokesman, Mark Regev, said.

Regev wouldn't comment on the substance of the new suspicions.

The whiff of corruption has clung to Olmert throughout his more than three decades in politics, though he has never been convicted of any wrongdoing. But this latest case - the fifth opened against him since he became prime minister - could end his political career.

In May, businessman Morris Talansky testified that he gave Olmert hundreds of thousands of dollars in cash-stuffed envelopes, and that some of those funds went to fund expensive cigars, hotels and other luxuries.

The testimony sparked a public outcry, further tarnishing a prime minister who has faced four previous police investigations since he became Israel's leader. Olmert's Kadima party plans a primary election in September that could replace him as leader.

The turmoil in Israeli politics is likely to hurt a US-backed initiative to forge the outline of a peace deal between Israel and the Palestinians by year's end. It also threatens to derail recently renewed peace talks between Israel and Syria.

Olmert's lawyers are to begin cross-examining Talansky in a Jerusalem court on Thursday. The cross-examination is expected to last five days, an aide has said.

Olmert's team is hoping that the cross-examination will discredit the 75-year-old American businessman and help restore the Israeli leader's standing.
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