JERUSALEM — Israel’s state prosecutors began a hearing on Tuesday to decide whether to indict Foreign Minister Avigdor Lieberman on charges of fraud, breach of trust and money laundering, a move that could shake up Israeli politics and lead to early elections.

Mr. Lieberman, who has denied all wrongdoing, has been under investigation for years in connection with business activities he is accused of starting while in the private sector and continuing once in Parliament and government between 2001 and 2008. The accusation is that companies formally led by his family members or associates were in fact under his direct control and received millions of dollars from outside businesses with interests in Israel.

Attorney General Yehuda Weinstein announced last April that he planned to indict Mr. Lieberman but offered him this hearing so he could present his case and use the intervening months to prepare for it. Mr. Lieberman is overseas and is represented by a team of lawyers. Mr. Weinstein is expected to make a final decision on the indictment in the coming months.

If an indictment is handed down, Mr. Lieberman will not be obliged to resign his positions of foreign minister and leader of his ultra-nationalist party, Yisrael Beiteinu, the country’s third-largest party and an important part of the governing coalition. But he has said a number of times that he might step down from those posts to concentrate on his defense.