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The Jerusalem District Prosecutor on Wednesday informed the Jerusalem District Court that Morris Talansky - the key witness in the graft probe against Prime Minister Ehud Olmert - will not return to Israel for further testimony until an immunity deal with American authorities is reached.

Jerusalem District Attorney Eli Abarbanel told the court that, until now, American authorities have not supplied an answer to Talansky's request for immunity against self-incrimination.

Abarbanel informed the court that he spoke with Talansky's Israeli attorney Jack Chen, who told him that Talansky had not yet purchased a plane ticket to travel to Israel despite being scheduled to testify on Sunday.

Abarbanel added that it would have been better if Olmert's attorneys had finished their cross-examination of Talansky last month. The prime minister's associates responded by calling that claim absurd since they are still reviewing evidence passed to them by the prosecution.

The prime minister's media adviser, Amir Dan, said that the prosecution is in trouble because Talansky proved to be an unreliable witness and that his efforts to evade further cross-examination only support that.

State Comptroller slams Olmert

State Comptroller Micha Lindenstrauss on Wednesday accused Prime Minister Ehud Olmert of further improprieties during the period when he served as the minister of industry, trade and labor.

Lindenstrauss said that during Olmert's tenure, over which he has already been investigated for alleged corruption, his aides at the ministry pressured its Investment Center management to advance investment plans and approve grants for entrepreneurs and industrialists in violation of labor regulations and procedures.

The state comptroller referred to a report released on Wednesday that focuses on Olmert's involvement in and approval of a tourism project called Aquaria, a planned recreation park that was to be built north of Eilat by entrepreneur Ran Peker.

According to the report, Olmert and his associates pressed for funding for Aquaria, despite the fact that the project did not prove its economic feasability.

"This incident is in addition to similar cases in which trade minister Ehud Olmert intervened, whether directly or indirectly via his assistants, in the activity of the Investment Center," read part of the state comptroller's report.

Aquaria had originally been planned by American entrepreneurs as a joint Israeli-Jordanian project, who later recommended it be implemented only in Israel. The project was to spread across 1,300 dunams north of Eilat, on land currently being leased to Kibbutz Eilot. The original budget had been $350 million, but was then reduced to $100 million.

The State Comptroller's Office investigated the Aquaria project for nearly a year. The report examined the Israel Land Administration's and several of the ministries involvement in the project, finding improprieties in their handling of the project.

In earlier probes of Olmert's tenure as trade minister, the state comptroller suspected Olmert of illicitly arranging investment opportunities for friends, claiming that he had discussed most of the requests submitted by clients of his close friend, attorney Uri Messer, and saw to it that they received benefits worth tens of millions of shekels.

In all the cases mentioned in the initial expose, Olmert took part in meetings with the entrepreneurs and Messer on the one hand, and with trade ministry officials on the other. Despite the possible conflict of interest, Olmert did not disqualify himself from discussing applications advancing the business interests of his close friend Messer.