THE TALANSKY AFFAIR: JUST ANOTHER OLMERT

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001021

SIPDIS

E.O. 12958: DECL: 05/09/2018
TAGS: PGOV KJUS IS
SUBJECT: THE TALANSKY AFFAIR: JUST ANOTHER OLMERT
INVESTIGATION?


Classified By: Ambassador Richard H. Jones. Reason 1.5 (B/D)


1. (C) Summary: PM Olmert held a late night press conference
on May 8 to deny allegations of unlawful activity in
accepting political contributions from an American
fund-raiser, Morris Talansky. Allegations surfaced in the
media that Olmert received illicit funds from Talansky over
the course of a decade of public office prior to his
premiership. Despite the media and legal pressures, we
expect Olmert to continue to focus on peace negotiations with
the Palestinians and the President's visit. Casting the ball
into the Attorney General's court, Olmert said that if
indicted he would promptly resign, but until then he would
remain in office and fight to prove his innocence. An
indictment of Olmert is not expected in the short term, if at
all, but the lifting of the press gag order will ensure
intense speculation about Olmert's viability or
survivability. In the words of one pundit, "Until the
charges are refuted or until there is an indictment, the road
is long..." PM Olmert's major coalition partner, the Labor
Party, says it is staying in government and fear of elections
will remain the glue that galvanizes the coalition. Calls
for Olmert's resignation, however, are widespread within the
opposition, and this scandal, whether exaggerated or not, has
taken whatever wind of renewal was in Olmert's sails this
spring. End Summary.

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THE OLMERT FILES
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2. (SBU) PM Olmert holds the record of "most-investigated
Israeli prime minister" but it is worth noting that the past
three Prime Ministers (and many ministers and MK's) have been
investigated as well. The status of the cases against Olmert
to date are as follows:

-- Bank Leumi Case: It is alleged that during his tenure as
Finance Minister in 2005, Olmert tried to change the terms of
sale for controlling shares of Bank Leumi to help several
close associates. Police have since recommended closure of
the investigation due to lack of evidence. The final word in
this case is with the Attorney General, who has yet to
pronounce his views.

-- Cronyism Case: Olmert remains under investigation for
alleged cronyism in making political appointments during the
period in which he served as Minister of Industry & Trade,
2003-2005.

-- Real Estate Cases: In 1996 and again in 2004, Olmert
bought and sold several pieces of prime real estate in
Jerusalem and Tel Aviv at below-market prices from
associates, giving rise to suspicions that he was receiving
and paying bribes. These transactions were the subject of
separate inquiries, one of which is ongoing, one of which was
closed, and another has not been pursued.

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NOT JUST ANOTHER INVESTIGATION
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3. (SBU) The latest allegations against PM Olmert suggest
that while serving as Mayor of Jerusalem from 1993 and
extending to his subsequent tenure as Minister of Industry,
Trade and Labor, Olmert accepted monies amounting to hundreds
of thousands of dollars from American businessman Morris
Talansky. It is alleged that on various visits to Israel,
Talansky passed the funds in cash and checks to Olmert, his
office director Shula Zaken, and associate Uri Messer, all of
whom are now being investigated. Bribery is suspected
according to media reports, but the police have given no
indication what Olmert allegedly was offered or gave in
return, nor the purpose to which the funds were put.
Olmert's motives may be immaterial, however, as Israeli law
does not require proof of motive to make a conviction. In his
statement to the media on May 8, Olmert denied any allegation
of bribe-taking or "unlawful" acceptance of monies for
personal gain, and insisted the sums were accepted for his
campaign funding when running for reelection as mayor and in
the Likud Party primaries.


4. (SBU) According to media reports, the National Fraud
Squad will question Olmert again in the coming days.
Meanwhile, the Jerusalem District Court has yet to hand down
its decision as to whether the Israel Police may take
preliminary testimony from Morris Talansky, who is waiting in
Israel for the court decision. Olmert's long-time friend and
former legal partner Uri Messer has already been questioned.
Shula Zaken, the PM's former office director has reportedly
maintained her right to silence at every interrogation for
over a year, and is under house arrest.

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5. (C) Comment: Ehud Olmert was a seasoned attorney before
he entered government office. It accounts in no small
measure for the style in which he has handled all of the
investigations against him. Promising to step down if
indicted puts tremendous pressure on the Attorney General to
weigh his decisions carefully, while removing some pressure
from coalition members, including the Labor Party, to act. In
the past, Olmert has demonstrated remarkable resilience to
the repeated onslaughts of the media and the periodic
interrogations by the National Police Fraud Squad, but many
well-informed Israelis see his situation as particularly dire
this time. As influential Yedioth Ahronoth commentator, Nahum
Barnea summed up the prevailing popular wisdom in a May 9
op-ed: "Olmert is unlikely to survive the current
investigation among the public. If not because of the
Talansky affair, whose real weight is a lot less than the
rumors, then because of the cumulative effect of all the
investigations against him." End Comment.


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