Associated Press
American businessman Morris Talansky, right, meets with Israel Prime Minister Ehud Olmert in New York in 2003.

JERUSALEM — A Jewish-American businessman testified Tuesday in a corruption probe that threatens to bring down Prime Minister Ehud Olmert, saying he handed cash-stuffed envelopes to the Israeli politician he described as a bon vivant with a penchant for fancy hotels, fine cigars and first-class travel.

Morris Talansky's testimony offered an unflattering portrait of Olmert just as the already unpopular Israeli leader seeks to rally reluctant public support for peace talks with Syria and the Palestinians.

Police suspect Olmert illicitly took up to $500,000 from Talansky in illegal campaign contributions or bribes before becoming prime minister in 2006. Olmert, who denies wrongdoing, says the funds were legal contributions but has promised to step down if indicted.

Legal affairs analyst Moshe Negbi said Talansky's testimony suggests Olmert could face charges of bribery and breach of trust. "I don't think that there were ever such grave suspicions against a prime minister in Israel," Negbi said.

Olmert's lawyer Eli Zohar labeled Talansky's testimony "twisted" and said the truth would be revealed in the cross-examination, which is set for July 17.

"In general, we're saying that we're not talking about criminal activity whatsoever," he said.

Olmert, whom police have questioned twice, had no comment on the testimony.

Israel TV said late Tuesday that Defense Minister Ehud Barak, leader of the Labor Party, Olmert's main partner in the governing coalition, was considering calling on Olmert to suspend himself from office or resign. Opposition politicians called publicly for his resignation.

Talansky told the court he turned over about $150,000 of his own money to Olmert, directly and through political aides, at meetings in New York and Jerusalem over a 15-year period.

He said much of the money was raised in New York "parlor meetings," where Olmert would address American donors who then would leave contributions on their chairs.

Throughout his eight-hour testimony, Talansky spoke of his love for Israel and his conviction that Olmert was the right man to lead the country. For that reason, he said, he "overlooked" nagging doubts about why Olmert insisted on receiving the money in cash.