By Agencies

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An Israeli court has acquitted former prime minister Ehud Olmert on two key corruption charges while finding him guilty on a lesser charge, in a verdict he hailed as just.

The Jerusalem District Court on Tuesday cleared Olmert on charges of receiving cash-stuffed envelopes and falsely billing trips abroad multiple times, but convicted him on the charge of granting favours to a former colleague during his time as a minister.

Olmert still faces a second trial over allegations he accepted bribes during his time as Jerusalem mayor to smooth the way for the construction of the massive Holyland residential complex in the city.

Under Israeli legal precedent, a cabinet minister, including a premier, must step down if he is indicted for a serious crime. When Olmert, as PM, was charged in September 2009, he resigned.

Fraud allegations

The verdicts on Tuesday cover three separate cases: illegally accepting funds from an American supporter; double-billing Jewish groups for trips abroad; and giving jobs to unqualified political cronies.

The American supporter testified that he gave Olmert hundreds of thousands of dollars, some of it in envelopes stuffed with cash. Olmert has denied any wrongdoing.

The trial covered offences allegedly committed before Olmert became prime minister, while he served as mayor of Jerusalem and later as a cabinet minister. The charges were filed only after he became premier.

“It's been a long, drawn-out affair and all the details are out there in the media. It has added to the cynical view here that government is corrupt and it's true that other politicians have been convicted," our correspondent said.

Chan added: "Even so, legal scholars say there may be a silver lining, which proves there is a rule of law in Israel and no one is above it, including the prime minister."

Olmert's legal woes do not end with Tuesday's verdict.

He is still facing a separate trial in which he is accused of accepting hundreds of thousands of dollars in bribes to promote a contentious Jerusalem building project when he was the city's mayor and later the cabinet minister of industry and trade.

The flurry of allegations hurt Olmert's chances of reaching a peace deal with the Palestinians. Olmert claimed to be close to an accord just as he was driven from the premiership.

Known as dealmaker

Since leaving office, Olmert has said he offered the Palestinians a peace deal under which Israel would have ceded about 93.5 per cent of the occupied West Bank, along with Israeli territory to make up for the 6.5 per cent of the West Bank land that Israel would retain.

He also proposed international administration of east Jerusalem's most sensitive holy sites.

At the time, the Palestinians' chief negotiator said they turned down the offer because they were not willing to compromise over full control of east Jerusalem. Negotiations have been largely frozen since Olmert left office.

There were other instances of corruption in Olmert's cabinet. His former finance minister was sentenced to five years for embezzlement, and another member of his cabinet was sentenced to four years for taking bribes.

Neither case occurred while the two were in the cabinet.

Last year, former Israeli president Moshe Katsav was sentenced to seven years in prison after being convicted of rape and other sex crimes. He served as president from 2000 to 2007.

Olmert faced corruption accusations throughout his long political career but has never been convicted.

The 66-year-old Olmert has largely stayed out of the public eye since stepping down.

A veteran politician known less as a statesman than as a backroom dealmaker, Olmert was catapulted unexpectedly into the country's top job when a stroke incapacitated his predecessor, Ariel Sharon.

Besides the inconclusive peace efforts with the Palestinians, his term was marked by a war with Lebanon's Hezbollah in 2006 and a bruising offensive in Gaza in early 2009.