US businessman says he gave Olmert $150,000 in cash-stuffed envelopes

· Money given over 15 years to Israeli leader, court told
· Financier believes it was spent on luxury lifestyle

• Rory McCarthy in Jerusalem
• The Guardian, Wednesday May 28 2008

Israeli PM Ehud Olmert visiting an Israeli navy base in Haifa, Israel. Photograph: Moshe Milner/Getty images

A US businessman at the centre of a high-profile corruption investigation told an Israeli court yesterday he gave thousands of dollars to Israel's prime minister, Ehud Olmert, in envelopes stuffed with cash, some of which he claims was spent on expensive hotels, holidays and cigars.

Morris Talansky, a long-time supporter and friend of Olmert, said he gave at least $150,000 (£75,000) over 15 years, including the years when Olmert was a government minister and mayor of Jerusalem. There are no records of how the money was spent and Talansky admitted he was "disturbed" when Olmert specifically asked for cash rather than cheques.

Talansky's testimony yesterday at the Jerusalem district court comes as a major embarrassment to Olmert in this the fifth, and most serious, corruption investigation brought against him. But Talansky said he received no personal gain from the money he gave Olmert - who has denied any suggestions of corruption, adding he would resign if charges were brought against him.

Israeli prosecutors are investigating whether Olmert broke campaign finance laws in the years before he became prime minister in 2006. But yesterday's court appearance was not part of a trial. Talansky, 75, who is also a rabbi and a long-time fundraiser, lives in Long Island, New York, and the Israeli authorities wanted to take his testimony before he leaves for the US in case he did not return to Israel.

Continued . . .