The development marks the latest scandal to engulf the beleaguered Israeli leaders inner circle. Netanyahu already stands accused of bribery in two other cases.
Nir Hefetz, a former spokesman of the Netanyahu family, is suspected of suggesting to Judge Hila Gerstel that she could be appointed attorney general if she killed a pending case against Sara Netanyahu's excessive household spending.
The offer never materialized.
Earlier, police named Hefetz as one of two Netanyahu associates under arrest for their suspected role in a separate wide-ranging corruption probe.
"Nir Hefetz never presented this ludicrous offer to the prime minister and his wife, he was never asked by them to make such an offer and we cant imagine that Hefetz would even imagine such a thing," Netanyahu said.
Earlier Tuesday, with an initial gag order lifted, police identified Hefetz and Shlomo Filber, the former director of the communications ministry under Netanyahu, as the two suspects in promoting regulation worth hundreds of millions of dollars to Israel's Bezeq telecom company, in return for favorable coverage of Netanyahu in a highly popular subsidiary news site.
Bezeq's controlling shareholder Shaul Elovitch is also in custody, along with his wife, son and other top Bezeq executives. Former journalists at the Walla news site have attested to being pressured to refrain from negative reporting of Netanyahu.
The new probe comes days after police announced there was sufficient evidence to indict Netanyahu for bribery, fraud and breach of trust in two separate cases.
Netanyahu is accused of receiving lavish gifts from Hollywood mogul Arnon Milchan and Australian billionaire James Packer. In return, police say Netanyahu had operated on Milchans behalf on U.S. visa matters, legislated a tax break and connected him with an Indian businessman.
Netanyahu has long accused the Israeli press corps of being biased against him and has taken steps to counter it by promoting more sympathetic outlets to him.
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