Olmert urged to stand down over corruption claims

An aide to Ehud Olmert (above) said a call from Ehud Barak for himto step down over court allegations he received envelopes of cash from a US businessman 'changednothing' (AP)

The Israeli Prime Minister Ehud Olmert's most powerful coalition partner has called on him to step aside in the face of widespread anger at allegations that he had repeatedly received envelopes stuffed with cash from a US businessman.

In the wake of testimony by the businessman Morris Talansky that he had personally handed over $150,000 (£76,000) for Mr Olmert during a period of some 15 years, the Defence Minister and Labour Party leader Ehud Barak urged the Prime Minister to leave office – either permanently or for as long as the police investigation against him continues.

But while Mr Barak's intervention triggered potentially the most serious threat yet to Mr Olmert's political survival, it did not come with a deadline. Nor did it shake Mr Olmert's apparent determination to stay in office until or unless he is formally indicted.

Mr Barak called on Mr Olmert to release the reins of government "through [self-] suspension, vacation, resignation or declaring himself incapacitated" and warned that he would trigger elections if the Prime Minister did not stand down or was not replaced by his colleagues in the ruling Kadima party.

Saying that Mr Olmert could not at once "deal with the challenges facing Israel, such as Hamas, Hizbollah, Syria, Iran and the captive soldiers" and at the same time handle "his own affairs", he added: "Therefore, acting out of concern for the good of the country... I believe the Prime Minister must disconnect himself from the day-to-day running of the government."

According to a survey in the daily newspaper Haaretz, 70 per cent of those polled – and 51 percent of voters in Kadima – do not believe Mr Olmert's version that the money he received from the American businessman went only for his election campaigns.

Mr Barak launched his intervention at a news conference in the Knesset building after Mr Talansky's testimony – dismissed as "twisted" by Mr Olmert's lawyers – appeared to contradict the Prime Minister's insistence that he had not benefited personally from any payments made to him over the period under investigation.

Mr Olmert's aide, Tal Zilberstein, told Israeli television "the press conference changed nothing". "The Prime Minister was not considering resigning, nor taking a leave of absence, nor any of the other suggestions raised at that press conference," he said. To do so would be tantamount to an admission of offences of which he intends "to prove his innocence".

Uncertainty remains about how ready Mr Barak is to carry out his threat to lead his party out of the coalition and so trigger an election which the current polls suggest he would not win. While some of his allies suggested that the "moral message" he conveyed would increase his popularity, the polls indicate at present that Benjamin Netanyahu's right-wing Likud would be the biggest party after any new election.

The one factor that could alter that landscape would be if Mr Olmert were to be replaced as Kadima leader by Tzipi Livni, the Foreign Minister. She has reportedly incurred Mr Olmert's anger by not notably rallying to his support but she is deemed to be the most popular politician in the country. However, she has rivals within Kadima such as Shaul Mofaz, the former chief of staff in the military who has a base among political activists though much less so in the country.

Ms Livni would also be best placed – among Kadima politicians – to inherit Mr Olmert's efforts to conclude a "shelf agreement" on a two-state solution with the Palestinian President Mahmoud Abbas. Concern that these could now grind to a halt were underlined yesterday when Nabil Abu Rudeineh, an aide to Mr Abbas, said there was "no doubt that what is happening in Israel will have negative repercussions on the negotiating track".

Sima Kadmon, a columnist for the Yedhiot Ahronot daily, wrote in a front-page commentary yesterday: "The issue here is the unassuming way in which an elected official takes into his hands huge sums of money in cash, credit card or as a loan. Where is the shame? Where are we living?"

Sleaze and scandal in Israeli politics

* Omri Sharon, son of ex-prime minister Ariel Sharon, began a seven-month prison term in February 2008 after conviction on campaign funding violations. His father is mentioned in the inquiries but has not been charged.

* Finance minister, Avraham Hirchson, resigned in July 2007 under suspicion of embezzling millions from a union he used to run.

* Israel's President, Moshe Katsav, forced to resign in June 2007 amid rape and sexual harassment charges.

* Olmert ally, Haim Ramon, convicted in March 2007 of forcibly kissing a female soldier. After a light sentence, Ramon returns to Olmert's cabinet as Vice Premier.

* President Ezer Weizman is forced to resign in 2000 under suspicion of accepting money from a businessman.

* Prime Minister Ehud Barak and aides suspected in 2000 of campaign finance irregularities. No charges are filed.

* Decorated general Yitzhak Mordechai resigns from cabinet in 2000 after being charged with sexually assaulting female workers. He is convicted and given suspended sentence.

* Prime Minister Benjamin Netanyahu suspected in 1997 of engineering appointment of attorney general in exchange for support from the Shas party, but is not charged.

* Prime Minister Yitzhak Rabin resigns in 1977 before an election in which his wife is found to have an illegal foreign currency account in the US.