The Justice Ministry has denied that Finance Minister Abraham Hirchson will be questioned under caution in the coming days, regarding suspicions he was involved in alleged embezzlement at a non-profit association affiliated with the National Workers Labor Federation.

Police sources said earlier that Hirchson would be questioned regarding suspicions of involvement in the embezzlement of NIS 5.5 million in "Nili," a non-profit organization that operates seven educational institutions of the National Worker's union.

"The Nili affair has been presented before Attorney General Menachem Mazuz, and State Prosecutor Eran Shendar," said a Justice Ministry spokesman. "But the police have not requested, nor have they received approval, to question Minister Hirchson in the affair."

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Police cannot question the finance minister without Mazuz's approval, which police sources had said they received in recent days.

The finance minister was expected to be questioned in the Lod offices of the Police's Economic Crimes Fighting Unit.

Police have already arrested five former employees of "Nili." Roughly one week ago, the Tel Aviv District Police fraud unit issued a request to the head of the Police Investigation and Intelligence Department, asking him to approve the questioning of Hirchson due to new evidence that had come to their attention.

Based on the testimony of the primary suspects in the case, it appears that Hirchson's involvement in the affair may be greater than previously suspected. Once the investigation began focusing on the finance minister, the case was transferred to the economic crimes unit.

The investigation was first reported on Channel 10. According to the report, in 2003, the general secretary of Nili, Ovadia Cohen, told Hirchson that he took money from the organization in order to pay off debts he owed to loan sharks.

Investigators had originally suspected that Hirchson removed Cohen from his post immediately after hearing of the embezzlement, but decided not to open an investigation into the incident or to contact the police.

Some two years after Cohen's dismissal, an accountant discovered that NIS 5.5 million was missing from the organization's coffers - with no explanation whatsoever. The accountant suggested that the company turn to the police, and after the complaint was filed, the evidence was submitted to the attorney general.

The National Workers Federation, independent of the larger Histadrut Labor Federation, was affiliated with the forerunners of the Likud party.

Hirchson was a member of Likud at the time of the suspected crime, before jumping ship to join Ariel Sharon's new Kadima party.