Israel`s Outgoing Leader Olmert Faces Legal Fight

The ministry said Mazuz would invite Olmert`s attorneys to a private hearing before he decides whether to file formal charges.

Israel's Justice Ministry said it has evidence that outgoing Prime Minister Ehud Olmert kept more than $350,000 in a secret fund and did favours for a U.S. businessman who handed him cash-filled envelopes.

The allegations were contained in a statement issued by the ministry on Sunday in which Attorney-General Menachem Mazuz said he was considering indicting Olmert on charges of fraud, breach of trust and fraudulent receipt of monies.

Olmert, who resigned in the corruption scandal in September but is staying on until a new government is formed following a Feb. 10 election, has denied any wrongdoing.

His spokesman responded to the six-page ministry statement, effectively a draft indictment, by saying the allegations were based on false testimony.

The ministry said Mazuz would invite Olmert's attorneys to a private hearing before he decides whether to file formal charges.

Evidence in the case, the ministry said, showed that while serving as trade and industry minister and then finance minister from 2003 to 2006, Olmert tapped into a "secret fund" of cash kept for him by his former law partner.

At one stage the fund contained more than $350,000, and the cash was kept in a safe in the lawyer's office and later in a bank safety deposit box, the ministry said.

Whenever Olmert asked for some of the money, the lawyer would personally hand it to him or give the sum to a long-time aide to the veteran politician, according to the statement.

The case focuses on Morris Talansky, a New York-based fundraiser for various Israeli organisations. He testified in an Israeli court last May that he had given Olmert $150,000 in cash-stuffed envelopes over a 15-year period.

Olmert, a former mayor of Jerusalem, has described the money as legal contributions to election campaigns before he became prime minister in 2006.

The ministry's statement said Talansky supplied mini-bars to hotels and businesses and that Olmert, at the American's request and in breach of the law, tried to help him sell the product by contacting several business executives in the United States and Israel on his behalf.

In a separate investigation, Mazuz has said he is considering indicting Olmert over suspicions he made duplicate overseas travel expenses claims while serving as Jerusalem's mayor and as a cabinet minister.

Olmert had denied the allegations.