This article is more than 10 years old

This article is more than 10 years old

Israeli police believe former prime minister Ehud Olmert is the prime suspect in a burgeoning corruption investigation surrounding a major property development in Jerusalem, the Israeli press reported today.

Olmert, 63, cut short a trip to Europe and flew home yesterday in the face of growing questions about his role in the Holyland scandal, in which prosecutors believe hundreds of thousands of dollars in bribes were paid during the planning and construction of apartment blocks.

Yesterday police arrested a former Jerusalem mayor, Uri Lupoliansky, in connection with the case. He is being held on remand, together with six others, one of whom is a long-time confidant of Olmert. None has yet been charged.

Israeli media said police believed Olmert was the main suspect, although they gave no formal comment on the case.

The case is focused on the time Olmert was mayor of Jerusalem, when Lupoliansky was his deputy.

Olmert was forced to step down as prime minister last year in the face of mounting corruption allegations and is being tried on separate corruption charges – although that trial was halted as soon as the Holyland scandal emerged this month.

Olmert has not been charged or questioned by police in the case and has protested his innocence. "I reject the innuendo and the suspicions it implies. They are baseless," he said.

The Holyland towers, which are under construction, were built despite widespread local protest and, standing on a prominent hillside in the city, are widely seen as an eyesore.

According to Israeli press reports, police have found documents that appear to show massive bribes were paid over many years to allow the project to go ahead, allowing developers to benefit from reduced taxes and administrative fees and to avoid the usual planning restrictions.

Lupolianksy's lawyer yesterday denied the allegations.