Report: N.Y. Investor Called to Testify in Israeli Scandal

May 8, 2008 — -- The fate of the latest round of Middle East peace negotiations — and the career of Israeli Prime Minister Ehud Olmert — may lie with an unassuming businessman from Long Island.

Morris Talansky, a 75-year-old philanthropist, reportedly has been approached by Israeli authorities who want him to testify as part of their investigation of Olmert, which involves allegations of bribery, or campaign finance irregularities, when Olmert was mayor of Jerusalem in 1999.

Although police imposed a gag order to prevent publication of information about the case, Talansky's name has been published in the New York Post and The New York Times.

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Olmert has reassured aides and cabinet officials that he did not take bribes, but the rumors have crippled him politically amid speculation that he may be forced to resign.

"I promise that, once things are cleared by the authorities, things will be put in the right proportions, the right and accurate context, and that will put an end to the rumors," Olmert told reporters earlier this week.

The widening probe also threatens efforts to restart negotiations with Palestinians, which have been shepherded by Secretary of State Condoleezza Rice and President Bush, who is due to visit Israel next week.

Though Israeli officials maintain negotiations are still on track, a senior Palestinian official expressed concern about the impact on talks.

"As of now, there is no Israeli partner for talks on a final status agreement in light of the continuing investigation against Olmert," the Palestinian aide told Haaretz, an Israeli newspaper.

Talansky and his wife, Helene, recently arrived in Israel to spend Passover with his daughter and son, according to The New York Times.

One of his connections to Olmert appears to be the New Jerusalem Foundation, a charity which raises money for Israeli causes.

Founded by Olmert in 1999, the charity listed Talansky as the group's treasurer on 2006 tax returns, paying him $7,967 that year, it stated.

The group's president was listed as Uri Lupoliansky, the current mayor of Jerusalem, and its vice president was Zvi Raviv, a former top aide to Olmert.

Raviv shares the same Woodmere, N.Y., address as Talansky and his wife, according to the tax return. No one answered the phone at Talansky's residence and that of several of his relatives.

Back in 2000, opposition members of the Jerusalem City Council accused Olmert of using the foundation as a fundraising tool for his political career, telling the Jerusalem Post that they "fear the mayor has been using it ... to raise funds for his own political needs."

At the time, Olmert told the paper that the foundation had raised $4.5 million, deposited in "city banks" and that it was being used to fund 80 projects. Much of the foundation's money was reportedly raised by evangelical Christian groups in the United States.

One of the group's donors has been Rabbi Yechiel Eckstein, the president of the Chicago-based International Fellowship of Christians and Jews.

The only number listed on the 2006 tax return for the foundation is a New York-based accounting firm, where a staffer told ABCNews.com that Talansky is their only official contact with the organization.

Talansky has also been an active fundraiser for the American Committee for Shaare Zedek Hospital in Jerusalem.

Talansky made headlines last year when he and other investors sued an Israeli satellite company called ImageStat, alleging the firm failed to provide access to the satellite's images to Venezuela, Angola, Russia and Taiwan, due to diplomatic concerns.

A lawyer for the plaintiffs declined to comment except to say that the case remains pending.

Talansky has been a bipartisan campaign contributor in American politics, raising $1,000 for President Bush in 2003, Rudy Giuliani's 2000 Senate campaign and Bill Clinton's re-election in 1996.