Morris Talansky, the American-Jewish businessman suspected of making illicit cash transfers to Prime Minister Ehud Olmert, said in court testimony in Jerusalem on Tuesday that he had transferred Olmert some $150,000 over 15 years, and that Olmert had tried to aid a Talansky business venture by introducing him to several American billionaires.

Olmert's lawyer Eli Zohar labeled Talansky's testimony "twisted" and said the truth would be revealed in his cross-examination set for July 17. "In general, we're saying that we're not talking about criminal activity whatsoever," Zohar said.

Talansky, 75, said there were no records of how the money he transferred was spent. "I only know that he loved expensive cigars. I know he loved pens, watches. I found it strange," Talansky told the court, then shrugged.

However, Talansky insisted that he never expected anything in exchange.

"I had a very close relationship with him, but I wish to add at this time at the relationship of 15 years was purely of admiration," he added. "I never expected anything personally. I never had any personal benefits from this relationship whatsoever."

But later, he said he had grown disillusioned over the years.

"Olmert had the ability to reach out to the American people, the largest and richest community of Jews in the world," Talansky said. "That's why I supported the man. That's why I overlooked, frankly and honestly, a lot of things. I overlooked them, maybe I shouldn't have."

It remained unclear if Talansky's day-long testimony had significantly helped prosecutors near proof of a "smoking gun" of evidence of bribery against Olmert. Although he admitted to having given Olmert cash-filled envelopes, Talansky maintained that he had asked for nothing in return.

The businessman told the court that Olmert had asked him for donations for his 1993 Jerusalem mayoral campaign and throughout his tenure as industry and trade minister. He said the cash-filled envelopes were transferred through Olmert's former bureau chief, Shula Zaken, each one containing between $3,000 and $8,000, and that the transfers were "legitimate."

Talansky also said that Olmert volunteered to contact three billionaires, including Plaza Hotel owner Yitzhak Tshuva and Las Vegas casino mogul Sheldon Adelson, to try to drum up business for a hotel minibar venture run by Talansky. But Talansky said the offer did not help, and Adelson slammed down the phone on him.

"I said to myself, 'I'm never going to go to a politician for business'," Talansky said with a laugh. "He wanted to do me a favor and it never worked out." Adelson, America's third richest man, was questioned in the case earlier this month during a visit to Jerusalem.

Early deposition

In an unusual move, prosecutors had won permission to depose Talansky in court in a preliminary phase of a criminal investigation into the prime minister, in which no indictments have yet been filed.

The early testimony was requested because Talansky resides in the United States and authorities were concerned that he may not return to Israel to testify in the future. At one point during the hours-long deposition, the possibility of adjourning until Wednesday was raised. This led Talansky to break down in tears, saying he was in a rush to return to the United States due to his wife's ailing health.

Prosecutors are intent on determining whether the money Talansky donated to Olmert - suspected of reaching sums of up to $500,000 - amounted to bribery. Olmert, who stated publicly that he only received funds for campaign purposes, has promised to step down if indicted for bribery.

The unpaid loans, Talansky told Jerusalem District Court, included a $25,000-$30,000 loan used for a 2004 family vacation to Italy. Olmert never paid him back, Talansky said.

The businessman also mentioned a second loan for $15,000, which Olmert asked for during a stay at the Regency hotel in New York. Olmert refused to take a check and asked for cash, Talansky said.

Talansky said he walked to a bank four blocks away and withdrew the money. When he handed over the cash to Olmert, he asked to be repaid as soon as possible. "Famous last words," Talansky said, explaining that he was never paid back.

Cash, no checks

At the start of the deposition, Talansky said that Olmert had specifically requested donations in cash, but later amended the statement to say that Olmert had simply said he preferred not to receive the money in check form.

Talansky alleged that some of the cash he donated was used to upgrade airline tickets from business class to first class, and that he once paid $4,700 for Olmert's three-day stay at the Ritz-Carlton hotel in Washington, D.C.

According to documents revealed during the deposition, that hotel bill included laundry costs, video rentals and international phone calls. This sum, the witness explained, was also a loan that was never repaid.

"Olmert called him to say his own credit card was maxed out," Talansky testified. "He asked if he could borrow my card and he said it was part of a loan."

Talansky said that he later requested the money be paid back, after which Olmert sent him the phone number of his son, who was then working at Nickelodeon Studios in the United States. The two met, and Olmert's son allegedly promised Talansky he would speak with his father. However, he said, he hadn't heard from Olmert or from his son since.

No contact with Olmert as PM

Talansky said the last payment he made to Olmert was for some $72,500 for the latter's Likud primary campaign in 2003. He said there had been no contact since Olmert became prime minister, except for a single meeting at a social function.

Testifying in English, Talansky said he first met then-health minister Olmert in the early 1990s, while the American businessman was working for the U.S. fundraising arm for Shaare Zedek, a Jerusalem hospital.

When Olmert visited New York at one point, Talansky received Olmert's room number from Zaken, and met him there to bring money, he said.

The witness said that he was told the money was needed for expenses, which he thought meant campaign needs such as advertising and posters. He estimated that he tranferred money during roughly half of his visits to the Industry and Trade Ministry.

Olmert had asked him for loans, Talansky said, and he subsequently organized New York fundraisers to help raise cash. He told prosecutors that at such events, envelopes were left on guests' chairs, and then given to Olmert and Zaken.

Talansky also testified that he had asked Olmert, who was a member of Likud at the time, why he didn't raise money through the party's fundraisers in the United States. Olmert told him that should he do so, the money would go straight to the party, Talansky said.

He said that he gave Olmert money because of his great respect for the Israeli politician, who he had believed would represent the future of Israel's leadership.

"He was articulate, he was intelligent. I felt that he would be a leader that I would have hoped to be if I had the talent," Talansky said, adding that Olmert would warmly greet him during their meetings in Jerusalem.

"Whenever Shula told him I was here, no matter what, he would always come out and greet me. A hug, a big hug. He hugged me. I remember for my 70th birthday he sent me a very beautiful card. He invited me to his son's wedding."

Talansky also spoke at length about his close relationship to Israel and to the Jewish organizations with which he has worked.

Ahead of the testimony, State Prosecutor Moshe Lador told reporters not to jump to conclusions and called media reports incorrect and irresponsible.

"There is no decision. We are at the height of the investigation. The case could develop in different directions down the road - there is a possibility that the whole case could be dropped, and there is also a possibility that another decision will be made in the case," Lador said.

Police have said the charges span a 12-year period, when Olmert was mayor of Jerusalem and minister of industry and trade. Detectives have raided Jerusalem city hall and the trade ministry and have grilled Olmert twice.

Defense attorneys representing Olmert and Zaken will be able to cross-examine Talansky on Wednesday. However, the defense lawyers said Friday that they will not cross-examine Talansky at this time, because they claim they have not been given sufficient time to examine the material collected by police investigators in the case.

The defense has said it would like Talansky to return to Israel at a later date, probably in July, for his cross-examination.

The court decided last week that Olmert and Zaken would not have to be present in court during Talansky's deposition, though the State Prosecutor's Office had sought to compel their presence, arguing that their response during the testimony would offer the judges some insight into the case.

In the Tuesday deposition, prosecutors asked Talansky about his relationship with Olmert and their meetings, both in Israel and abroad, as well as his relationship with Zaken and Olmert's former business partner, attorney Uri Messer. He was asked about people who contributed funds to Olmert that Talansky is suspected of having transferred through Zaken. In addition, he was asked about the dates when the alleged transfers were made, as well as the purpose of the funds.

During the High Court of Justice's deliberations last week on a petition by Olmert and Zaken against Talansky's planned deposition, Lador revealed evidence that he said supports the allegations against the prime minister.

Lador said that during Olmert's terms as both Jerusalem mayor and minister of industry and trade, he maintained close ties with American Jewish leaders. Talansky was actively involved in fundraising and organizing meetings with Israeli public figures, and as a result of his close relations with Olmert, he organized events for his friend.

Lador also told the court that according to the testimony Talansky gave to police investigators, he handed Olmert envelopes full of cash during short meetings between the two. According to this testimony, the requests for money came from Olmert, who also dictated the sums.

Lador said that Olmert is suspected of fraud, breach of trust, tax violations and violations of the Gifts Law. He is also suspected of not reporting his receipts of cash while he was minister of industry and trade, as required by law. Lador was careful not to say that Olmert was suspected of receiving bribes, but hinted that "if there is a reason for the money transfers, if something was offered in return, then this may be significant."

Jurists: Conviction still a long shot Meanwhile, despite the prosecution's cautious optimism Tuesday, the investigation against Olmert is far from being a slam dunk case, legal experts warn.

Avi Lavi, a lawyer specializing in white-collar crime, said Tuesday that the state prosecution is rightly being careful in establishing the basis for crimes to be included in an indictment, should one be filed.

"On the face of it, [Morris] Talansky's testimony is problematic for establishing the necessary foundation for a bribery offense, as described by law, since it requires that the money intentionally be given to a public servant in exchange for him doing something for you in his professional capacity," Lavi said. The state has to prove that specific monies and favors were given in order that Olmert would do something in return for Talansky, even if not immediately. But Talansky claims he wanted nothing in return.

Lavi said it is easier to establish charges of fraud and breach of trust in the case of a public servant systematically receiving favors, even without any quid-pro-quo.

Talansky's testimony also indicates alleged tax evasion, since major gifts went unreported.

Prof. Ruth Kannai, a criminal law expert at Bar-Ilan University, says there is not even enough evidence yet to make a charge of breach of trust stick.

"Merely receiving envelopes with money, a vacation loan, funding for hotels or flights are not necessarily a basis for conviction, although you could say that when you receive so much, in such a manner, over time, it constitutes breach of trust. It still looks to me like it's only the beginning."

Kannai concurred with Lavi that it would be easier to establish fraud and breach of trust in view of Talansky's testimony, as opposed to bribery.