State Comptroller Micha Lindenstrauss on Monday called for for the closure of a loophole in the law that allowed Vice Premier Shimon Peres to accept massive contributions during his run against Amir Peretz in the 2005 Labor Party primaries.

He also said that Peres should consider either returning any inappropriate donations made during his campaign for the Labor leadership election in 2005, or donating them to the state.

Lindenstrauss added, however, that he did not recommend a police investigation into Peres over the matter, but issued strong criticism of the vice premier over his financial arrangements.

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The comptroller's remarks appear in a report on the political parties' primaries during the 2004-5 period, presented Monday by Lindenstrauss to Knesset Speaker Dalia Itzik.

In the report, the comptroller said that Peres' expenditure exceeded the legal limit of NIS 366,000 per candidate (approximately $85,000).

Lindenstrauss also criticized the fact that Peres accepted three donations totaling $320,000 more than nine months before the Labor primaries were held.

The current law does not limit donations in this period, but says that any single donation within the nine months leading up to the election cannot exceed NIS 40,000 (approximately $9,000).

Lindenstrauss said that it was inappropriate for a candidate in primary elections that had not yet begun should solicit an unlimited amount of money in Israel and abroad, or accept donations from the wealthy.

The comptroller also said that at present, the fact that candidates for public office, including Knesset members, receive donations from wealthy individuals, led to "the danger of the rich gaining control of government." He proposed a change in the law to impose a blanket limitation on political donations.

The report also said former prime minister Benjamin Netanyahu of the Likud Party did not follow legally mandated accounting practices and spent more money than he was allowed to when running for the Likud leadership.

The comptroller called on Netanyahu to return NIS 83,000 ($19,000) to the public coffers.

Netanyahu said Monday that he would pay the money of his own pocket, Army Radio reported.