Court to Rule in Olmert’s Retrial Over Talansky ‘Cash Envelopes’

Shula Zaken’s testimony could ruin former PM — or exonerate him.

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Then Israeli Prime Minister Ehud Olmert pauses during a session in the Knesset in this February 28, 2007 file photo.
Then Israeli Prime Minister Ehud Olmert pauses during a session in the Knesset in this February 28, 2007 file photo.Credit: Reuters
Revital Hovel
Revital Hovel

The Jerusalem District Court is set to pronounce judgment today in the retrial of former Prime Minister Ehud Olmert in the “cash envelopes affair.”

Olmert was acquitted in 2012 on breach of trust charges in the case, but a retrial was ordered last year after a plea bargain with the prime minister’s former office manager, Shula Zaken, allowed for the introduction of new evidence.

Audio recordings made by Zaken and about which she testified in the retrial disclose that Olmert persuaded her not to testify in the first trial, out of fear that she would incriminate him.

Olmert’s acquittal in the affair sparked unprecedented criticism, in part because it effectively sanctioned his receipt, over a period of years, of envelopes from U.S. businessman Morris Talansky containing hundreds of thousands of dollars that went unreported.

The money was allegedly kept in a safe in the office of Olmert aide and attorney Uri Messer.

In their 2012 acquittal, a panel of three judges — then-district court president Moussia Arad, Jacob Zaban and Moshe Sobel — ruled that the prosecution had not proved that the money Olmert received from Talansky was used for political rather than private purposes, finding reasonable doubt in the matter.

During initial questioning by police, Olmert denied having received money from Talansky. But in court he admitted to receiving the funds, although he claimed that the money was for permitted political purposes.

With the case’s return to the District Court, Judge Rivka Friedman-Feldman was appointed instead of Arad, who has retired. At the focus of the resumed trial was Zaken’s testimony and the recordings that she provided, regarding an annual stipend of $30,000 that she received from Olmert.

Evidence of the stipend was visible in Zaken’s diaries, but because she did not take the witness stand, they were not accepted as evidence.

In his testimony in the previous trial, Olmert denied all knowledge of the stipend. In the recordings Olmert can be heard to be familiar with and well aware of the stipend, whose source was the Talansky “kitty.” The state maintains that Zaken’s annual stipend constituted improper, personal use of finds. Prosecutors argue that this justifies a conviction.

Haaretz has learned that in the 23 cases that the Supreme Court has returned to the District Court due to new evidence or faults in the legal process, the decision has remained unchanged. However, in the Talansky case, the side that asked for a retrial is the state prosecution, not the defense, as is usually the case.

Whatever the court’s decision, the case is expected to return to the Supreme Court following an appeal by the losing side. The Supreme Court’s ruling will also include a decision on the state’s appeal of Olmert’s acquittal in the Rishon Tours affair.

In the second round of the Talansky trial, Olmert’s central argument has been that the money he transferred to Zaken according to her diaries and recordings were given to her as part of her political role.

Omert’s attorneys said that Zaken’s life mission “was not to order sandwiches for him [Olmert] and connect his phone calls. Her life mission was her deep obligation day and night to him, with one purpose – to make him prime minister.”

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