Netanyahu confidants named as suspects in new corruption probe

By Jeffrey Heller and Tova Cohen

JERUSALEM (Reuters) - Israeli police revealed on Tuesday they had arrested the controlling shareholder and CEO of the country's biggest telecoms company, as well as two former officials with close ties to Prime Minister Benjamin Netanyahu, in a corruption case.

The arrests in the investigation dubbed "Case 4000" came just days after police recommended Netanyahu himself be indicted for bribery and fraud in other cases, known as "1000" and "2000".

Shaul Elovitch, a family friend of Netanyahu's who controls telecoms firm Bezeq through his Eurocom holding company, was arrested along with his wife, his son and Bezeq's CEO Stella Handler.

Former Netanyahu spokesman Nir Hefetz and former Communications Ministry Director-General Shlomo Filber, both known as close confidants of the prime minister, were also arrested.

All the arrests took place on Sunday, but the identities of the suspects were withheld for two days under standard Israeli criminal procedure.

Elovitch, his wife and son deny any wrongdoing, a Eurocom spokeswoman said. A lawyer for Handler said she is cooperating fully with the investigation and denies the allegations. Bezeq officials declined to comment.

Filber's lawyer declined to comment. Hefetz's attorney could not immediately be reached.

Netanyahu, now in his fourth term, has denied any wrongdoing in the various investigations which threaten his long dominance of Israeli politics. He has dismissed any suggestion of illegality in his dealings with Elovitch or Bezeq.

The Israel Securities Authority (ISA) last year began investigating suspicions that Elovitch meddled in the 2015 merger between Bezeq and its satellite TV unit YES for personal financial gain.

In its new probe, police suspect that Bezeq received regulatory benefits in return for enabling favourable media coverage of Netanyahu on Walla, a news website that is also controlled by Eurocom.

"This is a new investigation in the Bezeq case as a result of evidence raised in the ISA investigation," a joint statement from the police and ISA said.

"During the investigation suspicions mounted of offences of integrity, money laundering laws and the securities laws which were carried out over time."

In a Facebook post on Monday, Netanyahu - who has described the investigations against him as a "witch hunt" - said: "There has never been any payback or illegal act in interaction with Elovitch."

Israeli media reports said Netanyahu is likely to face questioning in the police Bezeq probe. A statement issued on Sunday by a personal spokesman to Netanyahu said all decisions related to Bezeq "were made according to recommendations of expert committees and expert officials".

The ISA said in November it had enough evidence to support criminal charges against senior Bezeq officials, leaving it to Tel Aviv prosecutors to decide whether to indict.

(Additional reporting by Steven Scheer and Ori Lewis; Editing by Keith Weir)