Lawyers for Israeli Prime Minister Ehud Olmert have cross-examined for a second straight day a U.S. businessman at the center of corruption allegations against the embattled leader.

Morris Talansky walks into the courtroom at the District court in Jerusalem, 18 Jul 2008

The defense attorneys Friday again tried to discredit testimony provided in May by U.S. financier Morris Talansky.

The 75-year-old Talansky appeared tired and frequently exasperated during the cross-examination.  He said there may be an occasional lapse in his memory, but he insisted his testimony overall was accurate.

Talansky said he provided Mr. Olmert with $150,000 stuffed into envelopes while Mr. Olmert served as Jerusalem mayor and trade and industry minister.

Israeli police questioned Mr. Olmert for a third time last week about the allegations.

Mr. Olmert says the payments were legal campaign contributions.  He denies wrongdoing, but has said he will resign if indicted.

Also last week, Israeli police said they are investigating whether Mr. Olmert made multiple, excessive expense claims for trips abroad.

Police say Mr. Olmert is suspected of enriching himself by charging various entities, including the state, for the same travel expenses.  Police say some of the money was allegedly deposited into one of Mr. Olmert's private accounts.

Mr. Olmert was mayor of Jerusalem for 10 years until 2003.  He later served as trade minister before becoming prime minister in 2006.

Israel's defense minister and Labor Party leader, Ehud Barak, has demanded the ruling Kadima Party pick a new leader because of the investigation into the corruption allegations.  The Labor Party is Mr. Olmert's main coalition partner.

The ruling party approved a motion earlier this month to hold an election by late September.

Some information for this report was provided by AP and Reuters.