Israeli Prime Minister Olmert Questioned in Bank Corruption Case

JERUSALEM – Police questioned Israeli Prime Minister Ehud Olmert on Tuesday about his involvement in the privatization of Israel's second-largest bank — one of two cases in which the Israeli leader is being investigated on suspicion of corruption.

Investigators interrogated the prime minister at his official residence for about five hours on suspicion of breach of trust, police spokesman Micky Rosenfeld said. The premier will be questioned again Thursday, he said.

According to Israel Radio, after questioning Olmert, police investigators sneaked out a back door to avoid reporters.

Authorities suspect Olmert tried to rig the government's sale of a controlling interest in Bank Leumi in favor of two associates when he was finance minister in 2005.

Olmert has said the transaction was handled properly. The associates, Australian real estate developer Frank Lowy and American billionaire S. Daniel Abraham, never submitted a formal bid for the bank.

"The prime minister is confident that at the end of investigation, it will emerge that all the decisions taken with regard to the privatization of bank Leumi were professional and taken judiciously following consultations with relevant sources, and that his actions were above reproach," his office said in a statement ahead of the questioning.

Last month, Israel's attorney general ordered police to launch a separate criminal investigation into allegations Olmert bought a Jerusalem home from a developer at well below market value — in return for helping the developer obtain construction permits from Jerusalem authorities.

State comptroller Micha Lindenstrauss, a government watchdog, also has accused Olmert of using his influence to steer a government grant to a colleague in 2001, when he was trade minister. Suspicions also have clouded two other real estate deals in which Olmert has been involved.

The prime minister has been dogged by corruption allegations throughout his three-decade political career but never has been convicted. He consistently has denied any wrongdoing.

While the police investigations pose no immediate threat to Olmert's job, it is another distraction for the embattled leader as he tries to make peace with the Palestinians.

The investigations also came at a time when his image has begun to improve following last year's inconclusive war against Hezbollah militants in Lebanon and a series of scandals.