JERUSALEM, July 16 (Reuters) - An Israeli investigation into fraud and corruption has turned a spotlight on how Ehud Olmert, when mayor of Jerusalem, raised funds from rich American Jews.
Less in view have been fruitful financial ties Olmert enjoyed with evangelical Christians in the United States, a relationship that became strained after the prime minister launched talks with Palestinians that could return parts of Jerusalem to Arab rule.
The police inquiry has focused on allegations that Olmert took cash stuffed in envelopes from Jewish financier Morris Talansky, whom Olmert's lawyers will cross-examine on Thursday.
Investigators do not suggest any wrongdoing in Olmert's dealings with churches and other groups which, according to U.S. and Israeli records reviewed by Reuters, channeled millions to a charitable foundation he headed while Jerusalem mayor.
But the probe of "campaign donations" in cash from Talansky -- who served as treasurer of the U.S. arm of that foundation -- has drawn attention to how Olmert won and lost Christian support when he opened the door to splitting Jerusalem after campaigning against its division during his 10 years as mayor to 2003.
Olmert raised about $70,000 for the New Jerusalem Foundation at a single Christian fundraiser in Dallas in 2002. But this year, the evangelical leader who helped organise that event voiced "outrage" at Olmert's starting talks about sharing the city with the Palestinians as part of the U.S.-backed Annapolis process. He vowed to "do everything in my power" to prevent it.
Many in the evangelical movement who helped elect President George W. Bush believe Bible prophesies foretold the creation of the Israeli state and the Jewish capture of Jerusalem's holy sites as part of a countdown to the end of the world that will include the battle of Armageddon and the Second Coming of Jesus.
Bush himself is a born-again Christian who told Israel's parliament in May the Jews were God's "chosen people". But he has also thrown his weight in his last year in office behind a Palestinian state whose leaders want a capital in Jerusalem.
Before becoming premier in 2006, Olmert raised large sums from Christians who heard him vow to retain Jewish control over all of the city at the heart of both religions -- a condition, some believe, for bringing about their biblical vision of world peace, when "they shall beat their swords into ploughshares".
"Olmert ... identified the huge potential in Christian support for Israel and he sought to tap into it," said David Parsons of the International Christian Embassy Jerusalem (ICEJ), which promotes cooperation between evangelicals and Israel.
But Olmert angered erstwhile backers when, with Bush, he relaunched talks with the Palestinians at Annapolis in November.
Those talks are at risk if Olmert quits, which he says he will do if indicted. He denies wrongdoing and aides lay blame for his troubles on unspecified opponents of the peace negotiations.
The Jerusalem issue has played into the campaigns to succeed Bush, with Barack Obama and John McCain both courting Jewish and Christian voters -- and, in doing so, courting controversy.
When Obama tried to woo Jewish Democrats by saying Jerusalem "must remain undivided", Palestinian leaders protested he was prejudging negotiations. Obama said he had used "poor phrasing".
McCain's drive for support from evangelical Republicans went awry when he had to disown an endorsement from Texan preacher John Hagee -- after media reported Hagee's view of the Holocaust as part of God's biblical plan for the Jews to move to Israel.
Some Israelis criticise Olmert for embracing evangelicals, including Hagee, who visited Olmert in Jerusalem in April.
The critics say some Christians' goal in supporting Israel is to provoke the prophesied apocalyptic showdown between good and evil in which Jews must perish or be converted to Jesus.
"Do we still need to point out that Jesus can return only after Armageddon and to this end it is best if Israel continues to be at war?" rival politician Colette Avital wrote last month.
Yet Olmert, who once called the Christian community the most politically powerful in the world, was not the first Israeli politician to tap the evangelicals for money. He was, however, one ofthe most aggressive after being elected mayor in 1993.
"Olmert gets it," said Yechiel Eckstein, founder of a group that has raised nearly $500 million for Israeli and Jewish causes, mainly from Christians. Eckstein, a rabbi, set up the International Fellowship of Christians and Jews in 1983.
Olmert's bond with evangelicals is rooted in his platform as mayor of keeping Jerusalem united. Palestinians accuse him of spearheading Jewish settlement round the city, dividing Arab East Jerusalem from the West Bank, both occupied by Israel in 1967.
Olmert headed the New Jerusalem Foundation, set up in 2000 to fund charity projects in the city, and records filed with Israel's Justice Ministry show that groups like Eckstein's International Fellowship were among the largest donors.
In Israel, the New Jerusalem Foundation, which is now headed by Olmert's successor as mayor, said in a statement to Reuters that it was not under investigation and described the U.S. branch as a "separate legal entity" that it never oversaw.
Public documents indicate financial links between the two.
MILK COW GOES SOUR
"The United States is one of the best milking cows in the world. You come to the United States and you milk," said Ranan Gissin, an aide to former prime minister Ariel Sharon.
"It's not just the money. It's the political support. We're talking about 70 million people," Gissin said of evangelicals.
Olmert was long a familiar speaker on the U.S. fundraising lunch and dinner circuit. Public records show that, for example, he attended a series of three meetings in churches organised by a group known as the Jerusalem Prayer Team, whose founder Mike Evans's stated mission is "to protect the Jewish people ... until Israel is secure and the redeemer comes to Zion".
From 2002 to 2004, church fundraisers organised by the Jerusalem Prayer Team, including the one in Dallas, raised $239,300 for the New Jerusalem Foundation. NJF records say it spent its money on parks, charity meals and other programmes.
But Olmert's relationship with many Christians has soured.
"I think he's changed over the years and power can do that," said one pastor who attended Olmert's fundraisers in the past.
"I don't think it's the same Ehud Olmert that we knew."
Evangelicals did not oppose all talks, Gissin said, but were firmly against "giving away holy real estate like Jerusalem".
A group of Christian leaders, including George Morrison from Colorado, met Olmert in April: "When he was mayor, he found a friend in evangelical Christians and evangelical Christians found someone strong on Jerusalem," Morrison said. But now many Christians were "questioning if he is on the same page".
In a declaration he read to Olmert on behalf of the group, which also included Hagee and Evans, Morrison assured the prime minister that American evangelicals could mobilise to try to stop Bush or his successor pressing Israel into giving up land.
In January, Evans made clear his view of Annapolis: "I was completely outraged when I heard that Ehud Olmert, whom I have known for 26 years, stood next to President Bush and declared that he would work to fulfill the final status solution.
"This means the division of Jerusalem," he wrote on his Web site. "I will do everything in my power to resist that."
Editing by Alastair Macdonald and Samia Nakhoul
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