Israeli police to investigate Olmert house purchase

By Jeffrey Heller

JERUSALEM (Reuters) - Israel's attorney-general ordered police on Monday to open a criminal investigation into Prime Minister Ehud Olmert's purchase of a home in Jerusalem.

A complaint filed by an investigative journalist alleged Olmert received a "significant discount" on the price in return for using his influence in Jerusalem city hall to speed up building permits for the contractor who sold him the home.

Olmert denied any wrongdoing in the case, one of several corruption probes that have plagued the Israeli leader since he took office last year and raised questions about his political future as he pursues peace talks with the Palestinians.

"The attorney-general decided to order police to open a criminal investigation into the Cremieux affair," the Justice Ministry said, referring to the street where Olmert bought the house for $1.2 million in 2004.

Israeli media reports said $320,000 was knocked off the purchase price.

Olmert served as mayor of Jerusalem from 1993 to 2003.

Israel's main government watchdog, the state comptroller's office, first investigated the complaint and gave its findings to Attorney-General Menachem Mazuz.

"This is a needless investigation," said a statement issued by the Prime Minister's Office after Mazuz ordered the police probe. The price Olmert paid for the home, it said, was in line with real estate market conditions at the time.