Attorney General Menachem Mazuz will consider ordering Finance Minister Abraham Hirchson to suspend himself or take a leave of absence in the wake of police investigations into suspected embezzlement, senior Justice Ministry officials said Wednesday.

Mazuz, who met with police officials last night for a briefing on the case, has decided there is no need to take immediate action regarding Hirchson's continued tenure as finance minister.

"At this stage, we have not identified an immediate need to take any steps," a Justice Ministry official said Wednesday. "In the future, steps may be taken regarding the minister's tenure."

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Police are investigating whether Hirchson used some of the NIS 5.65 million allegedly embezzled from Nili, a nonprofit organization associated with the National Workers' Organization, to finance political activity in the Likud party, of which Hirchson was a member before joining Kadima. The embezzlement allegedly took place while Hirchson headed the workers' association.

Hirchson, a close ally of Prime Minister Ehud Olmert, denies all charges, his associates said Wednesday. Since the investigation is only beginning, the minister is not considering leaving his post at this point, unless Mazuz orders him to do so, they said.

However, officials knowledgeable about the case said the investigation is already in the advanced stages and that the final phase will begin after Hirchson is questioned further.

Officials: PM won't fire Hirchson, but would let him quit

Olmert's associates said the prime minister intends to follow Mazuz's directives and has no intention of firing Hirchson. Leading Kadima officials said Olmert would allow Hirchson to resign if that becomes necessary, rather than dismissing him.

Hirchson was questioned under caution for seven hours Tuesday by the police financial crimes unit. He is suspected of fraudulent gain under aggravating circumstances, theft, fraud, breach of trust and fraudulent registration of corporate documents.

A National Workers' Organization employee has told police that Hirchson accepted envelopes filled with cash totaling hundreds of thousands of shekels for several months. Police investigators are expected to ask Hirchson to explain unusual changes in his bank accounts in an effort to uncover the source of the money.

Police began to suspect Hirchson had used the funds only after the embezzlement was first discovered during a separate investigation.

Civic organizations Ometz and the Legal Forum for the Land of Israel demanded Hirchson be suspended while the investigation is underway.

"It is inconceivable that someone suspected of stealing money and other serious offenses should continue to serve as finance minister for even one more day, and is responsible for managing the state treasury," Ometz wrote to Olmert and Mazuz. The legal forum is considering filing a petition with the High Court of Justice if the demand to suspend Hirchson is not met.

The Movement for Quality Government had a more moderate request, asking Olmert and Mazuz to block Hirchson from involvement in allocating the budget for the police and other law-enforcement authorities while the investigation is underway.

"When the finance minister is involved, a basic difficulty arises due to his central role in funding the law-enforcement system, including the state investigating authorities," the organization said in its written request. "It is fitting for Minister Hirchson to refrain from all involvement in discussions or decision-making related to financing law-enforcement institutions, specifically the Public Security Ministry and the Israel Police."

In addition to examining the finance minister's bank accounts, police investigators are also looking into the accounts of Hirchson's son Ofer. They suspect the minister may have tried to help his son cover his debts by transferring stolen funds.

Sources close to the investigation said Wednesday that there appears to be sufficient evidence linking Hirchson to the embezzlement.

Political associates who spoke with Hirchson in the past two days said he was in a bad emotional state, to the extent that it posed a health risk.

"He is a gentle and sensitive man, and the investigation, the suspicions, the newspaper headlines and the investigation of his son are very hard for him," one of his associates said.

Hirchson did not show up at the Knesset on Wednesday, the last day of the parliament's winter session. People close to him said he spent the day at the Finance Ministry working to stave off the strike that began Wednesday morning.

"Minister Hirchson plans to continue working as usual, without changing his agenda, despite the burden of the investigations," an associate said.

Nonetheless, top Kadima officials said Wednesday that they don't see how Hirchson could continue serving as finance minister in light of the investigation, saying it is natural for him to focus on his personal affairs.

"It is problematic for the finance minister to be absent from the Knesset on such an important day, when laws were passed," a Kadima member said. "Kadima is in a difficult situation in any case, and a finance minister who has a hard time functioning will add to the difficulty."

Kadima has not made any official statements to the press regarding the investigation, and has not publicly discussed who might be appointed in Hirchson's place. Olmert is expected to retain the finance portfolio, and Kadima members speculated to be among the possible replacement candidates include Interior Minister Roni Bar-On, former justice minister Haim Ramon and Housing and Construction Minister Meir Sheetrit.