Probe of Israeli Prime Minister Centers on N.Y. Businessman

By Forward Staff

Published May 07, 2008, issue of May 16, 2008.
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Please read our updated version of this story here.

A corruption investigation that is threatening to bring down Prime Minister Ehud Olmert is centered on an Orthodox businessman from Long Island.

Morris (Moshe) Talansky of Woodsburgh, N.Y., was questioned this week in Israel about allegedly funneling money to Olmert when he served as mayor of Jerusalem and later as minister of trade and commerce, according to Israelis briefed on the investigation.

The case is being described in the Israeli press as the most serious of three investigations currently being conducted into Olmert’s affairs. As details of the Talansky investigation surfaced, officials involved in the probe suggested that Olmert might be forced to step down, at least temporarily, once the investigation is completed. Other sources in the Justice Department dismissed such suggestions, however, saying it is too early to judge how the investigation will affect Olmert’s political career.

On May 6 the Jerusalem district court heard a request from the attorney general’s office to depose Talansky, 75, who is not an Israeli citizen. The court was expected to decide on the request by the end of the week. According to sources following the case, regardless of the court’s ruling, Talansky is expected to be allowed to return to the United States.

As of press time it was not clear if Talansky had cooperated with police investigators or if his testimony could be politically damaging to Olmert. Details of the investigation were hard to come by in Israel, where the media has been prohibited from reporting on the case by a gag order imposed by the Jerusalem district court at the request of Attorney General Menachem Mazuz.

Talansky, a businessman who has been involved in real estate and investment concerns, is a prominent member of his local Jewish community and has served in several posts related to fundraising for Jewish and Israeli causes. He was on the board of Yeshiva University until last year, and previously served on the board of the American Committee for Shaare Zedek hospital in Jerusalem.

But it was Talansky’s job as a fundraiser for the New Jerusalem Foundation, an organization dedicated to raising money for projects in Jerusalem, that brought the Long Island businessman into close contact with Olmert. According to Israeli sources, investigators are looking into allegations that the New Jerusalem Foundation served as a conduit for fund transfers to interests tied to Olmert.

As of press time, the identity of the donors who allegedly transferred funds to Olmert was unclear. So, too, was whether the alleged donors received any benefits in return.

The investigation is reportedly looking into allegations that Shula Zaken, a longtime personal assistant to Olmert, kept a detailed journal of the money transfers. According to Israeli sources, while investigators are looking into allegations that Talansky served as a go-between, it is not believed that he himself provided funds.

An ordained Orthodox rabbi, Talansky has three children, one of whom, Yitzhak, lives in Jerusalem in the ultra-Orthodox neighborhood of Har Noff and previously served as head of a yeshiva.

The Long Island businessman is party to a pending lawsuit in New York against Israel Aircraft Industry, which is partially owned by the Israeli government. Talansky was among several investors in an Israeli satellite-imagery company that was forced by the Israeli Defense Ministry to stop selling satellite images to the Venezuelan government, according to court filings. The lawsuit alleges that the Defense Ministry’s decision cost Talansky and his partners millions of dollars.

While Talansky has donated to both Democratic and Republican candidates over the years, the New Jerusalem Fund has been led since its founding in 1992 by right-wing politicians, first by Olmert himself and subsequently by current Jerusalem Mayor Uri Lupoliansky. The foundation raises approximately $4 million to $5 million annually, according to an official involved in fundraising for Israeli causes, and centers its efforts on soliciting donations from Evangelical Christians.

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