updated 5/23/2008 6:54:34 AM ET 2008-05-23T10:54:34

Prime Minister Ehud Olmert on Friday was interrogated by police for a second time about corruption allegations that threaten his political survival and Israeli efforts for peace with Syria and the Palestinians.

The investigation is still in progress and no charges have been filed against Olmert. But detectives and state prosecutors are exploring the possibility he may have taken bribes, violated campaign funding laws and laundered money, police say.

National Fraud Squad investigators questioned the prime minister for an hour in his Jerusalem residence, said police spokesman Micky Rosenfeld. He would not disclose any details of the interrogation.

Chief witness deposition delayed
Meanwhile, a Jerusalem court delayed until Tuesday the deposition of the chief witness in the case. Police suspect Olmert illicitly took up to $500,000 in cash from the witness, American Jewish businessman Morris Talansky.

Olmert has acknowledged taking money from Talansky for political campaigns but said his campaign finances were the responsibility of a longtime confidant, Uri Messer, who was questioned again on Thursday. The Israeli leader has denied wrongdoing and vowed to resign if indicted.

The allegations span a 12-year period beginning in the 1990s when Olmert was mayor of Jerusalem and extending through his tenure as minister of industry and trade, which ended in 2006, police have said. Police have raided city hall and the ministry, carting away documents as part of their investigation.

Talansky insists he received nothing from Olmert in exchange for the money. But on Friday, police said investigators were examining allegations that when Olmert was trade minister, he asked an Israeli diplomat in a South American country to request assistance in promoting a technological project in which Talansky was a partner.

The Yediot Ahronot newspaper also has reported Talansky sought favors from Olmert on behalf of associates.

Police have said privately that Messer has given police documents and oral testimony that strengthen their suspicions that the money Olmert received was earmarked for his personal use — and donated in expectation of future assistance.

Witness mum
Talansky had little to say on the new accusations, referring question to his lawyer, Jacques Chen.

But he dismissed as “nonsense” and “ridiculous” a Jerusalem Post newspaper report Friday citing a group of right-wing rabbis who said they pushed him to testify in the case to bring down Olmert. The rabbis are afraid Olmert will cede sovereignty over holy sites in east Jerusalem, the sector of the city the Palestinians want as a capital of a future state, the newspaper said.

Chen wasn’t immediately available for comment Friday. Talansky has been questioned by police and was scheduled to testify under oath on Sunday but the court moved the date to Tuesday. Olmert’s defense team had asked to put off the testimony for two weeks, saying it needed more time to prepare to cross-examine Talansky, Israeli media reported.

Talansky would not say whether he would put off his scheduled return to the United States to testify.

Police last questioned the Olmert two weeks ago for an hour at his residence. The probe is the fifth into Olmert’s conduct since he became prime minister two years ago. No charges have been filed, and one of the cases has been closed.

The investigations have led to demands that the already unpopular Olmert resign and called into question his ability to conclude a peace deal with the Palestinians or pursue recently confirmed peace talks with Syria.

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