Israeli police to question Olmert for fourth time

By Avida Landau

JERUSALEM (Reuters) - Israeli police probing bribery and fraud allegations will question Ehud Olmert for the fourth time on Friday, two days after he said he would resign as prime minister as soon as a new party leader was elected next month.

Police are investigating allegations the embattled leader took bribes from an American businessman and made double claims for travel expenses when he was trade minister and mayor of Jerusalem.

Olmert has denied any wrongdoing.

Police spokesman Micky Rosenfeld said investigators had originally requested a lengthy mid-week session but Olmert's office had allotted only two hours on Friday from the prime minister's schedule. Olmert will be questioned at his official residence in Jerusalem, Rosenfeld said.

Olmert's lawyers have spent five days cross-examining American fundraiser Morris Talansky, who has alleged he gave the Israeli leader cash-filled envelopes. Talansky's cross-examination will resume on August 31 and Sept 1.

Olmert said on Wednesday his Kadima party would hold an election in September to pick his successor but vowed to pursue peace talks with the Palestinians and Turkish-mediated negotiations with Syria until his last day in office.

Top advisers said Olmert could stay in office for months as caretaker premier, long enough to pursue the peace talks, but politicians said he had no mandate to commit Israel to any deals.

Foreign Minister Tzipi Livni said on Thursday that she continued to hope for a peace deal with the Palestinians this year and called on all parties that support peace to unite.

Four Kadima ministers have launched campaigns to replace Olmert in the September 17 vote. Livni is the frontrunner and her closest rival is Transport Minister Shaul Mofaz, a former defence chief known for his tough tactics in crushing a Palestinian uprising.

The prime minister has faced a handful of inquiries recently into his past financial affairs as mayor of Jerusalem for 10 years until 2003 and subsequently as a cabinet minister until he succeeded the ailing Ariel Sharon as premier in early 2006.

(Writing by Avida Landau, editing by Tim Pearce)