updated 5/7/2008 7:02:01 AM ET 2008-05-07T11:02:01

A New York-area businessman and philanthropist has emerged as a key figure in an Israeli investigation into financial dealings of Ehud Olmert that have cast a new cloud over the embattled prime minister.

Morris “Moshe” Talansky of Woodmere, Long Island, was questioned by police in Israel about reported payments he made to Olmert in the 1990s, when the prime minister served as Jerusalem’s mayor, according to the New York Post, which first reported the story Tuesday.

The investigation, which emerged last week, threatens to embarrass Olmert as the country marks its 60th anniversary of independence on Thursday. Dozens of world leaders, including President Bush, are scheduled to join celebrations next week.

An Israeli court has barred publication of most details of the case. A court statement Tuesday said police and prosecutors have submitted a request “to take testimony from a foreign resident.”

It did not identify the witness.

A telephone call to Talansky’s home in Woodmere was not immediately returned; two of his grandchildren in Israel said he was there but was unavailable to talk.

Olmert lawyer Eli Zohar said that if the prosecutors’ request is approved, the witness would not testify for some time while lawyers prepare for the questioning.

Series of scandals
Olmert has been suspected in a series of scandals throughout his three-decade political career, but never been convicted.

The current case is the fifth police investigation against him since he became prime minister in 2006. The investigation came to light last week after police swooped into his home and questioned him for 90 minutes “under caution,” an indication under Israeli law that an indictment could be forthcoming.

Olmert’s spokesman, Mark Regev, said the prime minister remains “very focused” on his agenda. With U.S. backing, Olmert and Palestinian President Mahmoud Abbas have set a year-end target for reaching a historic peace deal.

But the investigation could limit Olmert’s ability to pursue that agenda.

The case has sparked new calls for him to resign, including from some junior members of his coalition. Even if Olmert stays in office, he is unpopular with the general public and could have a tough time rallying support for a bold initiative.

Talansky, a former trustee of Yeshiva University who has made charitable donations to a variety of Jewish charities, is CEO of Global Resources Group, a financial investment firm that he operates out of his multimillion-dollar Long Island mansion.

Talansky is also the U.S. contact for the New Jerusalem Foundation, an organization founded by Olmert while he was Jerusalem’s mayor. It took some heat in 1999 when it raised $4.5 million before it registered as a nonprofit organization and opened its books to the public.

Its stated goal is to support educational, cultural, social welfare and beautification projects throughout Jerusalem.

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