NY financier named in Olmert "bribe" probe: report

NEW YORK (Reuters) - The New York Post on Tuesday named an American businessman at the center of an Israeli police investigation which has sparked intense speculation that Prime Minister Ehud Olmert may be forced to resign.

The newspaper quoted unidentified sources as saying New York financier Morris Talansky was questioned in Israel and was set to disclose a role in passing cash to Olmert when he was mayor of Jerusalem in the 1990s.

Coded notes kept by an Olmert aide called Talansky "The Laundry Man", the right-wing tabloid quoted a source as saying.

A Jerusalem court confirmed on Tuesday that prosecutors wanted to interview a foreign witness in the investigation.

But another court also extended a gag order on media after Olmert's office confirmed on Friday the prime minister had been questioned. Lawyers advised Reuters it may face prosecution in Israel if it publishes any of the details it has of the case.

"A Long Island mogul is at the center of a sensational bribery scandal that could bring down ... Olmert," the Post said. "Talansky is apparently set to sing to Israeli authorities about his alleged role in the scheme, sources said."

Olmert has hit out at "malicious rumors" surrounding the investigation, the latest of several in which he has denied all wrongdoing. His allies accuse right-wing opponents of trying to wreck his U.S.-sponsored peace talks with the Palestinians.

The Post said Talansky, a veteran philanthropist whose name has been associated with fund-raising for Israeli political causes, was questioned when he arrived in Israel to celebrate the Passover holiday, which began on April 26.

Talansky is the telephone subscriber at an apartment close to the Israeli government quarter in Jerusalem. The businessman was not available when Reuters called at the door on Tuesday.