Olmert Funding Scandal Highlights Perilous Ties to U.S. Jewish Money

The apparent involvement of a pulpit rabbi turned businessman in a financial scandal that could fell Israel’s prime minister underscores the potentially perilous relationship Israeli politicians have with wealthy American Jewish supporters.

During his days as mayor of Jerusalem, Ehud Olmert was well known for his ability to raise funds from Americans and other non-Israeli Jews. Israeli authorities long have explored whether Olmert, now Israel’s prime minister, crossed the line of legality in the process, but they apparently did not have a material witness to wrongdoing until a few days ago.

On Tuesday, the New York Post reported that Rabbi Morris “Moshe” Talansky, 75, an American multimillionaire, was willing to provide details to Israeli authorities about alleged financial wrongdoing involving Olmert in the 1990s, when Olmert was mayor.

The case became public last week when Olmert was questioned “under caution” by police in his home. Israeli political sources told JTA that Olmert’s advisers are preparing for the possibility that he could be forced to resign or take a leave of absence over the matter.

“I hope, for everyone’s sake, and for Olmert’s sake, that the suspicions now circulating turn out to be baseless,” Defense Minister Ehud Barak said in an interview with Israel Radio Tuesday. “Meanwhile, let’s be patient.”

The notion that Israel’s prime minister may stand accused of financial irregularities involving money from an American Jewish political supporter highlights the potential legal complications in the relationships between Israeli politicians and foreign donors who have emotional, political and religious interests in the Jewish state.

Talansky, an Orthodox rabbi who used to sit on the board of Yeshiva University’s rabbinical seminary, supports Orthodox causes in Israel, sources say.

Israeli politicians have come to depend on private campaign contributions, and that can lead to a host of problems, says Stephen P. Cohen, national scholar for the Israel Policy Forum.

“We all know from the United States that in a democracy, one of the most complicated issues is the rules about political money and on how that money is used, and that sometimes money that is supposed to go to campaigns somehow moves into the pockets of a politician,” Cohen said. “This is not a uniquely Israeli problem, but it has penetrated Israel in a serious way because Israeli politics are of great interest to non-Israeli citizens, especially Jews.”

It is still not known exactly what role Talansky played in the Olmert affair. He may have financed Olmert, been the conduit through which someone else funneled foreign money to Olmert or merely have knowledge of financial wrongdoing involving Olmert.

This is hardly the first time an Israeli prime minister has gotten caught up in a fund-raising scandal.

Olmert’s predecessor, Ariel Sharon, was caught up in two incidents. In one, his son Gilad received $700,000 from a Likud Party activist in exchange for lobbying for a development deal on a Greek Island. In the other, an overseas Sharon supporter lent Sharon money through Gilad to pay off a political debt. That loan eventually became a gift.

Sharon’s other son, Omri, was sentenced to seven months in prison for his involvement in campaign finance fraud stemming from his father’s 1999 candidacy for prime minister. Ariel Sharon was cleared in that case.

In the Olmert probe, it was the Post who revealed Talansky’s name. An Israeli government gag order has barred the country’s media outlets from reporting some details of the story, including Talansky’s identity.

Talansky was ordained at Yeshiva University’s Rabbi Isaac Elchanan Theological Seminary in 1956, according to a Yeshiva spokeswoman, and led congregations in Portland, Ore., and Far Rockaway, N.Y., before going into fund raising.

He made a name for himself as the executive director of American Friends of Shaare Zedek Medical Center in Jerusalem, holding the position from the mid-1980s until 1997, according to the organization’s current director, Paul Glasser.

Glasser said the hospital is not concerned about any connection between Talansky’s alleged involvement in illicit Olmert fund-raising activities and his tenure at Shaare Zedek.

“Nobody said there is any connection,” he said.

Talansky’s fortune grew over time and he became involved in supporting a number of Jewish organizations, most of them Orthodox.

He has resided in several well-off Jewish neighborhoods on Long Island, including Lawrence, Great Neck and Woodmere, where he now lives.

Rabbi Yaakov Lerner of the Young Israel of Great Neck, where Talansky once was a member, would not comment for this story.

Talansky helped start the New Jerusalem Foundation, a civic group closely associated with Olmert. He also has been active with the Mesorah Heritage Foundation, which raises money for the Jewish book publisher ArtScroll. Talansky once donated $100,000 to the foundation in honor of his mother’s 99th birthday, according to the foundation’s executive director, Meir Zlotowitz.

Though he is a registered Democrat, according to The New York Times, Talansky also has donated to hawkishly pro-Israel U.S. Republicans. He gave $1,000 to the Bush-Cheney campaign in 2003 and some $5,000 to an exploratory committee for Rudolph Giuliani in 2000.

In Israel, politicians already are bracing for the fallout from this latest scandal involving the prime minister.

If Olmert is forced to leave office permanently or temporarily, Foreign Minister Tzipi Livni would become acting prime minister.

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