Israel's Olmert denies bribery allegations
* Olmert denies accusations in personal statement
* Allegations centre on Jerusalem building project
* Olmert's successor as mayor arrested
(Updates with Olmert associate released to house arrest)
By Ori Lewis
JERUSALEM, April 15 (Reuters) - Former Israeli Prime Minister Ehud Olmert, already on trial for corruption, on Thursday denied wrongdoing in a Jerusalem luxury housing project in which media reports have alleged he took hefty bribes.
Olmert, who was Jerusalem's mayor from 1993 to 2003 and prime minister from 2006 to 2009, said in a pre-recorded statement aired on prime-time television he was innocent and ready to answer police questions over the "Holyland affair".
"I was never offered bribes and I never took bribes from anybody in any matter, in any form, either directly or indirectly," the former prime minister said.
Olmert cut short a visit to Europe on Wednesday and returned home saying he was relieved that a court order barring publication of details of the case had been lifted.
It had failed to stop days of media speculation about his alleged involvement.
"I praise the decision to lift the gag order on the so-called Holyland affair ... in any event my name had appeared throughout the media and nobody had any doubt who was the person mentioned that everybody was talking about," Olmert said.
The media had initally identified as a key figure in the somone with initials that matched Olmert's, and later named the ex-premier as a suspect.
Olmert said he was "willing to be questioned by the police at any time and at any stage that investigators want to question me".
Police announced on Wednesday the arrest of Uri Lupolianski, a rabbi who succeeded Olmert as Jerusalem's mayor and held the post until 2008, in an investigation into whether bribes amounting to millions of dollars were paid for building permits.
No charges have been filed against Lupolianski, who was a deputy mayor under Olmert.
Olmert described the publication of rumours against him as "an unprecedented attempt at character assassination".
Police and court spokesmen have declined to comment on the reports, which led radio bulletins and dominated news websites.
For years, many Israelis have questioned how the Holyland compound's fortress-like circle of towers -- still under construction and widely viewed as an eyesore -- received planning permission in a city that is mostly low-rise.
Olmert said the project he had authorised and supported was to be dominated by three hotels to boost Jerusalem's tourist industry and was to have hundreds of apartments for middle-class non-Orthodox residents.
The project that came to be built currently has no hotels but scores of luxury apartments.
Police last week arrested Olmert's former law associate, Uri Messer, in connection with the Holyland probe, but a court ordered his relase to house arrest late on Thursday.
Olmert is already on trial on suspicion that while serving in public office before becoming prime minister, he received tens of thousands of dollars from a U.S. businessman and double-billed organisations for foreign travel expenses.
He has said he is innocent. (Writing by Jeffrey Heller and Ori Lewis; editing by Andrew Roche)
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