Israel's embattled leader is brushing off a new corruption probe that is raising questions about his ability to govern.  As Robert Berger reports from VOA's Jerusalem bureau, the scandal is casting a shadow over a looming deadline in U.S.-sponsored peace talks.

Israeli Prime Minister Ehud Olmert ( file)

Prime Minister Ehud Olmert opened the weekly Cabinet meeting by addressing new allegations of corruption that are threatening to topple him from power.  The scandal has dominated the news in Israel since police investigators made a sudden visit to the Prime Minister's official residence on Friday for questioning.

The investigation is under a gag order, but media reports say police suspect Mr. Olmert received bribes or illegal campaign contributions. 

Mr. Olmert said the investigation has unleashed "a wave of rumors", which he described as "malicious and wicked."  He said that when the facts become clear, they will lay the rumors to rest.

Mr. Olmert has been dogged by several scandals with regard to his conduct as an elected official before he became prime minister in 2006.  The allegations include bribery, fraud and breach of trust, but he denies any wrongdoing and has never been convicted.

The new investigation highlights concerns that Mr. Olmert might be too weak to close a land-for-peace deal with the Palestinians.  The scandal coincides with a visit by U.S. Secretary of State Condoleezza Rice, who is pushing for a peace agreement by the end of the year. 

Mr. Olmert says he will continue to pursue peace with the Palestinians. 

"I have an agenda as the prime minister of Israel," he said.  "I intend to continue with this agenda and continue my job."

But opposition leaders are demanding Mr. Olmert's resignation, and Israel media say the new allegations are so serious that he may be forced to step down.