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New scandal questions for Israeli PM

Ehud Olmert - New questions over money
Ehud Olmert - New questions over money

Israeli police have said new suspicions have arisen over the financial dealings of Prime Minister Ehud Olmert.

Investigators began questioning Mr Olmert today for a third time over allegations he took bribes from a US businessman.

The scandal, which police and judicial sources say involves hundreds of thousands of dollars in questionable cash payments over a decade from the early 1990s, broke two months ago when detectives moved at short notice to question the prime minister.

The case could force him from office and hamper US-backed peace talks between Israel and the Palestinians.

Mr Olmert said he did nothing wrong in his dealings with New York Jewish fundraiser Morris Talansky but has promised to step down if indicted.

Israeli investigators have also travelled to the US to seek evidence.

In testimony in May, Mr Talansky told the Jerusalem District Court that he had passed $150,000 to Mr Olmert over a 15-year period, including loans that were never repaid.

Mr Olmert said the money was used legally to fund election campaigns.

His lawyers plan to cross-examine Mr Talansky starting on 17 July in court hearings expected to last several days.

Ehud Olmert averted a coalition crisis over the affair when he agreed to hold a party leadership election after Defence Minister Ehud Barak's Labour Party, his main partner in the government, called on him to step aside.

Yesterday, the Kadima party confirmed that it will hold a leadership election in September which Mr Olmert's deputy, Foreign Minister Tzipi Livni, appears likely to win.