Israel's Olmert admits taking cash but won't quit

By Alastair Macdonald

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert admitted on Thursday that he took cash from an American businessman but refused to resign over a police investigation into hundreds of thousands of dollars of alleged bribes.

As Israelis enjoyed festivities marking Independence Day and the 60th anniversary of the founding of their state, police lifted a week-old media gag order and announced details of accusations that sparked calls for Olmert to quit.

Whether he does or not, doubt over his future is likely to upset his faltering, U.S.-sponsored peace negotiations with the Palestinians and will cast a heavy cloud over next week's celebratory visit to Israel by U.S. President George W. Bush.

The White House said Bush still intended to make the trip.

Olmert, in a late-night, televised address to the nation, said: "I look each and every one of you in the eye and say, 'I never took bribes. I never took a penny for myself'."

With Olmert's allies complaining of a campaign to wreck the peace process, it was unclear if his fragile coalition would rally behind a man who last year said he was "indestructible".

Israelis are no strangers to tales of corruption at the top in the Middle East's most feted democracy.

Olmert has weathered a string of investigations since he succeeded the ailing Ariel Sharon as prime minister in 2006. Sharon's son is in jail at the moment for campaign funding misdeeds on his father's behalf.  Continued...