Olmert arriving at a weekly cabinet meeting in March.(Uriel Sinai/Getty Images)
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The indictment against Ehud Olmert alleges a byzantine system of fraud

Liel Leibovitz
August 31, 2009
Olmert arriving at a weekly cabinet meeting in March.(Uriel Sinai/Getty Images)

Earlier this year, Ehud Olmert, Israel’s prime minister, left office amid a criminal investigation into allegations of widespread corruption. Yesterday, he was formally indicted. The 61-page indictment portrays a byzantine web of front organizations and secret funds, one in which personal connections and political clout came together to erect a nearly impenetrable system of graft and influence.

There are three counts against Olmert in the indictment. (A fourth, of illegal wiretapping, is only against Shula Zaken, Olmert’s former senior aide.) If convicted, Olmert would become the first former Israeli prime minister to serve a prison sentence. Speaking with Israel Radio today, Olmert’s lawyer, Navot Tel-Tzur, declined to respond to the specific allegations. There were “no victims of fraud nor proofs of fraud,” he said, adding that he believed Olmert’s innocence would be proven in court. “This case,” he said, “will end up being an embarrassment to the prosecutors.”

Here, in detail not previously available in the English-language press, are the allegations.

Count 1: The Case of the Fictitious Itineraries

The best way to capture the first of the three accusations against Olmert would be to follow the trail of one example outlined in the indictment.

On May 18, 2002, Olmert, then the mayor of Jerusalem, embarked on a visit to the United States. He was invited to several American cities—Los Angeles, New York, Chicago, Philadelphia—to address Jewish-American organizations, including Elem, a non-profit for Israeli youth in distress, and the International Fellowship of Christians and Jews.

According to the indictment, each group was told it had to pay for Olmert’s airfare and expenses, and the same flights were billed to multiple organizations. That in and of itself would have been fraudulent, but Olmert and his aides are accused of crafting a more elaborate system of deceit. Working with a complicit Israeli travel agency, Rishon Tours, Olmert and his staffers would submit fictitious receipts to the American groups, inflating the prices of flights.

On that trip, for example, the group Elem paid for plane tickets for both Olmert and his wife, Aliza, for $6,674 each, a total of $13,348. The group was issued a receipt by Rishon Tours indicating that it had paid for the Olmerts to fly from Tel Aviv to New York and back. The Fellowship of Christians and Jews, meantime, was charged $9,827; a Rishon Tours’s receipt indicated that money covered the Olmerts’ ostensible tickets from Tel Aviv to Los Angeles. The total airfare for Olmert’s trip—in actuality, only one Tel Aviv-to-U.S. roundtrip, with domestic flights between U.S. cities—was $19,625. Rishon Tours collected more than $23,000 from Olmert’s hosts. The difference, $4,000, was deposited in Olmert’s account with the travel agent and used to pay for personal vacations for him and his family members, upgrades to first-class tickets, and other items unauthorized by Israel’s code of conduct for public officials.

The twice-billed trip, the indictment alleges, was not an isolated case. It names 17 separate incidents and estimates the sums received by Olmert at $92,164. The prosecution’s list of 280 witnesses includes employees at several of Manhattan’s most luxurious hotels, including the Peninsula and the St. Regis, where Olmert is alleged to have stayed.

Count 2: The Case of the Cash-Stuffed Envelopes

The fictitious-receipts scam dwarves in comparison to the second accusation against Olmert. Known as “The Talansky Affair,” the accusation details the former prime minister’s relationship with Long Island businessman Morris Talansky, accused of handing Olmert more than $600,000 between 1997 and 2005, in addition to contributing to Olmert’s various election campaigns throughout the years.

In return for Talansky’s generosity, according to the indictment, Olmert used his clout as a leading Israeli politician to promote his American benefactor’s business interests. In 2005 and 2006, for example, Olmert, then minister of Industry, Trade and Labor, approached both Sheldon Adelson, the billionaire real-estate tycoon who owns The Plaza in New York and The Venetian in Las Vegas, among other hotels, urging them to assist Talansky’s company, Cooltech, a manufacturer of hotel mini-bars.

But then, as with the fictitious receipts, a simple crime was allegedly made more complicated when Olmert decided to entrust the large sums given him by Talansky—often in cash-stuffed envelopes—to his former law partner Uri Messer, who, for a time, kept the money in his own office’s safe. Messer then served as Olmert’s illicit ATM, according the indictment, handing over Talansky’s ill-gotten funds as needed.

For his troubles, Messer did not go unrewarded: the indictment details cases in which Messer’s clients used the lawyer’s influence with Olmert to override or reverse government decisions unfavorable to their enterprises. In July 2003, for example, Olmert’s ministry announced its intention to reduce the tax on imported cooking oil from 4.5 percent to 3 percent, in order to increase competition and better serve consumers. Thinking entrepreneurially, Messer then approached the CEO of Israel’s largest cooking-oil manufacturer and told him that Olmert may be willing to reconsider the policy change. The CEO hired Messer on the spot, and a week later, the ministry published a new statement, announcing that the import tax would be increased to 4 percent.

Charge 3: The Case of the Defrauded Comptroller

Olmert’s third alleged scheme, the alleged defrauding of the state’s comptroller, was the most complex. This part, too, is not without its piquant bits—Olmert, the indictment charges, filed a public disclosure form stating that his rare pen collection, which had been appraised at 1.3 million shekels, approximately $340,000, was worth just 140,000 shekels, approximately $37,000, a mere ten percent of its actual value.

But the accusation’s central character is another American citizen, Joe Elmaleh. Throughout the 1990s, claims the indictment, the businessmen funneled more than $170,000 to Olmert’s bank account. Olmert claimed that sum was a mere loan, but he also failed to report the money, in order, the indictment claim, “to deceive the comptroller and conceal from him the true nature of [Olmert’s] ties with Elmaleh.” Olmert, the indictment details, sat on the board of several of Elmaleh’s companies, and Elmaleh, according to Israeli press reports, purchased 15 paintings by Aliza Olmert, the former prime minister’s wife and an artist.

Liel Leibovitz is a senior writer for Tablet Magazine and a host of the Unorthodox podcast.

Liel Leibovitz is editor-at-large for Tablet Magazine and a host of its weekly culture podcast Unorthodox and daily Talmud podcast Take One. He is the editor of Zionism: The Tablet Guide.