Israel's Prime Minister Ehud Olmert says he will resign if he is indicted in a corruption investigation involving an American businessman long involved in Israeli politics. VOA's Jim Teeple reports, the scandal is breaking in Israel just one week before Mr. Olmert hosts President Bush and other world leaders as part of Israel's 60th anniversary celebrations.

Ehud Olmert

Just hours after Israelis celebrated their 60th anniversary Ehud Olmert went on national television to deny he had personally accepted hundreds of thousands of dollars from American businessman Morris Talansky.

Mr. Olmert says he never accepted any money from Talansky and if he is indicted by Israel's attorney general he will step down. Israel's prime minister says Talansky had contributed to his two campaigns for mayor of Jerusalem, but that his lawyer had handled all of the transactions.

Mr. Olmert's comments came after Israel's attorney general's office lifted a gag order in the case. Investigators are looking into whether Mr. Olmert personally accepted hundreds of thousands of dollars between 1999 and 2005, while he was mayor of Jerusalem and minister of trade and industry.

Morris Talansky, a New York-based businessman with family and homes in Israel, told Israeli TV news reporters that he and Ehud Olmert are personal friends and that he is baffled by the investigation.

"Actually I have no idea, it is totally baffling to me," he said. "When they asked for details I told them whatever I knew. Yes I knew him for 20 years when he was mayor of Jerusalem, we were very very friendly and I used to meet him all the time at dinners in New York."

Israeli media reports say investigators are also examining whether Talansky was a conduit for illegal campaign contributions. Israel has strict laws governing such contributions.

Danny Rubenstein, a columnist for Israel's Haaretz newspaper says for now the investigation is focusing on Mr. Olmert's close associates. He says any indictment of Mr. Olmert, if it comes, will not come soon.

"So an investigation will take at least three or four months, and during this time anything can happen," he said.

The investigation is the fifth such case involving Mr. Olmert's activities before he became prime minister two years ago. So far, no previous investigations have resulted in any charges, but they have left Mr. Olmert with low public approval ratings. Danny Rubenstein says whether the public will forgive Mr. Olmert this time will depend on where the money went.

"There is one thing that is very important here. If the money went to public issues, like the campaigns then public opinion is ready to forgive," he said. "If even one cent went to his pocket that is a problem, and that will make the difference here."

Mr. Olmert's political opponents are not waiting for the results of the investigation to deliver their verdicts on the case. Opposition figures and even some members of Mr. Olmert's own governing coalition have called on him to step down - something he has rejected for now.

A statement from the White House said the investigation will have no affect on President Bush's visit next week to Israel, where he will join ongoing celebrations marking Israel's 60th anniversary, and push for progress in peace negotiations between Israelis and Palestinians.