Former Israeli Prime Minister Olmert Found Guilty in 'Cash Envelopes Affair' Retrial

New evidence, provided by ex-prime minister’s former office manager, Shula Zaken, was key in verdict.

Emil Salman

Former Prime Minister Ehud Olmert, already facing a six-year prison term after a corruption conviction, was found guilty Monday in a separate case of unlawfully accepting payments from New York businessman Morris Talansky.

In the retrial of the “cash envelopes affair,” the Jerusalem District Court convicted Olmert on a serious charge of illicitly receiving money, as well as charges of fraud and breach of trust.

“His behavior constitutes a breach of trust which harms the public, harms morality, and harms the public’s trust, in how he behaved corruptly,” prosecutor Uri Korev said following the verdict.

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 long-time bureau chief, Shula Zaken, allowed for the introduction of new evidence.

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

The judges noted that Olmert refrained from testifying after Zaken presented the new evidence.

A judge on the new panel, Rivka Friedman-Feldman, said there was enough evidence to overturn the earlier verdict. “In light of the new findings, we are changing the verdict,” the judges said.

A sentencing hearing is slated to take place on May 5. The maximum sentence for fraud under aggravating circumstances is five years in prison. The maximum penalty for breach of trust is three years, but most courts favor punishment ranging from community service to one year in prison.

Olmert’s lawyer, Eyal Rosovsky, said in response to the verdict, “We are obviously very disappointed. We had hoped to convince the court not to overturn the verdict.”
Rosovsky noted that he has not yet read the ruling, but that “After reading the ruling, we will file an appeal if necessary. We believed that the material provided proved insufficient to change the ruling.

“We understand that there are three opinions, including one judge who says [Olmert] should have been convicted in the first place.”

Olmert’s earlier acquittal in the affair had sparked unprecedented criticism, in part because it effectively sanctioned his receipt, over a period of years, of envelopes from Talansky containing hundreds of thousands of dollars that went unreported. The money was allegedly kept in a safe in the office of Olmert’s former close friend, 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, 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, and the prosecutors argued 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.