Police Commissioner Moshe Karadi announced on Thursday that he has decided to remove himself from the investigation into Prime Minister Ehud Olmert's involvement in the sale of Bank Leumi, because both he and the prime minister are represented by the same attorney, Eli Zohar.

Meanwhile, Attorney General Menachem Mazuz will consider limiting the authority of Prime Minister Ehud Olmert, in accordance with developments in the criminal investigation into the Bank Leumi affair, Mazuz's deputy said Thursday.

Eyal Yanun informed attorney Yossi Fox of Mazuz's intentions, in a response to Fox's request that the attorney general suspend Olmert due to the criminal investigation against him.

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"There is nothing in law or practice on that supports your demand, according to which, the prime minister is obligated to suspend himself at this juncture," said the statement from Mazuz's office.

"It is clear that should there be questions regarding a link between the investigation and a specific action or use of authority on the part of the prime minister, the restriction of the prime minister's authority regarding that subject will be considered," continued the statement.

The comments were also delivered to State Prosecutor Eran Shendar, who decided to open the investigation, and to the prime minister's chief of staff, Yoram Turbowitz.

Fox wrote in his request that, "It is unreasonable for a prime minister who has a heavy cloud over his head to continue in his post. It is clear that from hear on out the prime minister will be completely busy with defending himself and his good name, and will be unable to run state affairs in an independent manner."

Shendar named acting AG in order to launch probe into PM
Shendar was recently named "acting attorney general" for three months, which is what enabled him, in place of Attorney General Menachem Mazuz, to make the decision about opening a criminal probe against Prime Minister Ehud Olmert in the Bank Leumi case.

Olmert is suspected of having tried to alter a tender for Leumi's privatization, with the goal of assisting a friend who was bidding. Mazuz decided that it would be improper for him to be involved in the case because his sister, Yemima Mazuz, was involved in the tender, in her role as the Finance Ministry's legal advisor.

By law, however, only the attorney general can approve a criminal investigation of the prime minister. After consulting with colleagues at the Justice Ministry, Mazuz decided to ask acting justice minister Tzipi Livni to appoint Shendar as "acting attorney general," so that Shendar could make the decision instead.

On Tuesday, Shendar decided to give the investigation the go-ahead. Should the probe not be finished in three months, Mazuz might ask Livni - or whoever is then justice minister - to extend Shendar's appointment.

The police's fraud squad appointed four investigators on Wednesday to handle the probe. Police have already conducted preliminary inquiries into the affair, which the Justice Ministry requested to help it decide whether a criminal investigation was warranted; during these inquiries, they took preliminary testimony from Bank of Israel Governor Stanley Fischer and Accountant General Yaron Zelekha. Olmert, who is thus far the only suspect, will not be questioned until the final stages of the investigation.

Over the next few days, the investigators will obtain warrants to search for and confiscate documents; only then will they begin summoning witnesses for questioning. If necessary, they will also depose witnesses overseas.

Australian businessman Frank Lowy, the friend for whom Olmert is suspected of trying to rig the tender, said Wednesday that he welcomed the decision to open an investigation. He vehemently denied that he or any representative of his acted in any way improperly, and said he is certain that the investigation will prove this.

Lowy ultimately withdrew from the tender before it closed, and Cerberus-Gabriel, bought the bank.

The spokesman added that, while Lowy has known Olmert for many years, he never donated to Olmert personally or to any political campaign in which Olmert was involved.

"The Lowy family was approached to join a consortium to tender for an interest in Bank Leumi," the spokesman said. "After considering the investment and conducting some preliminary due diligence, it was decided not to proceed with the consortium or the tender process. The Lowy family did not then or now have any involvement at all with Bank Leumi."