The state decided on Monday to close the case of Kiryat Ata Mayor Yaakov Peretz, who was suspected of fraud, breach of trust and receiving bribes.
The Northern District Prosecutor's Office said its decision was based on insufficient evidence.
Peretz was suspected of employing a city councillor while serving as chairman of a company, in exchange for the individual's political support.
"For a long time I claimed that in the end it will be proven that there was no basis to this, and that is what happened," Peretz said Wednesday.
The probe, which began undercover, was made public three years ago when Peretz was called in for questioning.
Investigators suspected that he had made fictitious appointments when serving as chairman of the board of Hameshakem. The company, which aids the elderly and people with disabilities in finding employment, is owned by the government and the Zionist Histadrut. CEO Rabbi Yoav Ben-Tzur was arrested during the investigation against Peretz.
Six months ago, another case against Peretz was closed. In that case he was suspected of illegally municipal workers at his campaign headquarters.
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