Olmert 'took cash for foreign trips and banked surplus'

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Israeli police are investigating allegations that Prime Minister Ehud Olmert sought multiple funding for foreign trips and then banked the surplus, heaping more pressure on the leader who is already facing calls to resign.

A joint statement by the Israeli police and the Justice Ministry issued yesterday announced that the current investigation of Mr Olmert had been widened to cover the latest suspicions of "serious fraud and other offences" during his period as Jerusalem Mayor and Industry Minister. The surprise disclosure came after police officers put the accusations to Mr Olmert during their third interrogation of him over what the statement called "suspicions he unlawfully received money".

The police have been investigating allegations by the American businessman Morris Talansky that he gave Mr Olmert hundreds of thousands of dollars in envelopes stuffed with cash and that some of the money went to fund hotel stays, expensive cigars and other luxuries.

The statement said that "according to the suspicions" Mr Olmert "would seek duplicate funding for his trips abroad on public duty from several public bodies, including the state, with each of them requested to fund the same trip". The travel agency involved would then send invoices to each funding body "as if each of them was solely funding the trips". The surplus was used to fund private trips abroad by Mr Olmert and his family, the statement suggested.

Associated Press yesterday quoted unnamed police officials as saying the payments amounted to around $100,000 (£50,000) and that the Rishon Tours travel agency "acted like a bank branch for the Olmert family". The travel company was not immediately available for comment.

Mark Regev, the Prime Minister's spokesman, said yesterday that Mr Olmert "is convinced that he is innocent of any wrongdoing and firmly believes that as this investigation continues, that innocence will become apparent to all". He did not comment on the details of the police statement.

The investigation has triggered fresh speculation about how long Mr Olmert – whose party is now due to hold leadership elections in September – will be able to survive, let alone promote negotiations with the Palestinian President, Mahmoud Abbas, or Syria.

It has also sparked a media counter-attack by some of Mr Olmert's associates against what one told Haaretz this week was a "personal campaign" by the police against the Prime Minister. After one anonymous police source was widely quoted as saying that if Mr Olmert had not been Prime Minister he would have been "arrested long ago", the paper quoted one of his advisers, Amir Dan, as saying, "it's time the police stopped their tendentious leaks."

But the fragility of Mr Olmert's premiership was underlined yesterday by a poll showing that 79 per cent of voters in his party, Kadima, believe he should resign over the allegations, and 57 per cent that he should not run in the leadership contest.