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On Friday, May 23, investigators from the National Fraud Unit, headed by Brig. Gen. Shlomi Ayalon, arrived at the Prime Minister's Residence in Jerusalem and interrogated him on suspicion of receiving cash from Moshe (Morris) Talansky. In the course of that interrogation they whipped out Olmert's classified declaration of assets, the one he had submitted to the state comptroller in 2003 as required by law.

One line in the report cited a $75,000 loan Olmert took from Joe Elmaleh, a wealthy Israeli businessman who now lives in Vermont. Olmert received that hefty loan on January 1, 1993, when he was an opposition Knesset member and a few months away from beating Teddy Kollek in the Jerusalem mayoral race. The investigators discovered that this money has never been repaid.

The police investigators asked Olmert several tough questions. "Why didn't you repay the loan to Elmaleh?" they queried. The prime minister claimed that the repayment date had not yet arrived, even though more than 15 years had gone by. Olmert thereby effectively confirmed that he has not repaid a cent to Elmaleh. The loan is worth about $150,000 today, or half a million shekels.

The state comptroller in 2003, former Supreme Court justice Eliezer Goldberg, read the laconic report of the loan in the declaration of assets filed by Olmert - by then minister of trade and industry and deputy prime minister. He tried to understand why such an experienced politician had failed to repay a loan he took from a businessman who had had clear economic interests in Israel. In an exchange of letters, Olmert told Goldberg that he intends to repay the loan to Elmaleh when he is able, and that Elmaleh had never asked for his money back.

Goldberg, who was legally authorized to convey the information to the attorney general, preferred to compromise with Olmert, and instructed him to have Elmaleh sign a document in which Olmert undertakes to repay the money at a later date. So in July 2004 Olmert asked Elmaleh to sign a document, now in the police's possession, which states: "As deputy prime minister I have been asked by State Comptroller Eliezer Goldberg to confirm the following facts with you: The original loan that I took from you on January 1, 2003 was for $75,000. The conditions of the loan were linkage plus 3 percent interest, and we agreed that I would pay you the money whenever you asked for it. The value of the money in July 2004 is about $140,000. From here on in it is agreed that if you do not request the money, I will return it to you in full in January 2009."

Goldberg refused this week to comment on the matter, on the grounds that Olmert's declaration of assets is classified.

Olmert's friend Elmaleh is known as one of the most controversial figures in the history of the Israeli capital market. In the 1990s Elmaleh controlled companies that were involved in oil exploration, headed by a company called JOEL (Jerusalem Oil Exploration Ltd.) Elmaleh drew huge salaries and options from the companies under his control, which prompted fierce criticism in the financial columns. One of the board members who approved those benefits for Elmaleh was Olmert.

Despite repeated requests, Elmaleh remained unavailable for comment by press time.

Amir Dan, the prime minister's media adviser, said in response: "Without commenting on details from the investigation, we want to make it clear that everything concerning Elmaleh was reported and dealt with vis-a-vis the state comptroller. The loan given by Elmaleh in 1992 (sic), in the context of his friendship with Olmert, was reported through the entire period in Olmert's declarations of assets to the state comptroller, and it will be paid off when the due date arrives. Olmert was a board member of JOEL for a short time and behaved in accordance with the guidelines and with the law."

See full story in Haaretz Magazine on Friday.