Former prime minister Ehud Olmert was due to land in Israel early Thursday morning, after cutting short a trip to Europe due to reports alleging his involvement in a suspected case of bribery during the development of the Holyland project in Jerusalem. Olmert was mayor of the city from 1993 to 2003.

Police on Wednesday arrested former Jerusalem mayor Uri Lupolianski on suspicion of a range of offenses, including taking bribes, in connection with the development of the former Holyland Hotel site. Lupolianski, who was Jerusalem's mayor from 2003 to 2008, is suspected of receiving over NIS 3 million in bribes from Hillel Charney, owner of the site on which the Holyland project was built, in exchange for facilitating the project.

At a hearing Wednesday on Lupolianski's detention, the deputy president of the Rishon Letzion Magistrate's Court, Abraham Heiman, called the evidence against him "above and beyond a reasonable suspicion."

A statement released by Olmert's spokesman, Amir Dan, said, "Olmert denies any connection with the [Holyland] affair, but clearly stated a week ago already that he will show up for any interrogation if he is so requested." The statement added, "We have all seen how big, decisive headlines at the beginning of an investigation change completely over time, once the true facts begin to emerge."

Sources close to Olmert denied yesterday that his return to Israel was coordinated with prosecutors, though his spokesman confirmed that it was due to reports of his involvement in the case. Olmert's attorney, Eli Zohar, sent a letter to Jerusalem District Attorney Eli Abarbanel on Sunday, asking that the prosecutor's office coordinate the scheduling of any police interrogation of Olmert. However, no response has yet been received.

In the Lupolianski case, police suspect that bribes were given to the former city official via three different channels over the course of several years, and that construction of the Holyland development progressed in a manner that correlated with Lupolianski's activities. Most of the funds were allegedly transferred to the Yad Sarah organization, a charity that lends medical equipment, which the former mayor founded and of which he served as chairman for many years.

Police say Lupolianski demanded and received bribes from the developers of the Holyland project through a middleman, in the form of contributions to Yad Sarah. The organization is alleged to have received about NIS 1.5 million from Charney and his family through 1999 and approximately NIS 1.4 million in additional funds from 2000 to 2006.

Under questioning, Lupolianski did not deny that Charney's family contributed large sums of money to Yad Sarah over the years, but insisted that the donations were made legally and openly and had no connection to the various political positions that Lupolianski held. He became a member of the Jerusalem City Council in 1989 and was appointed deputy mayor in 1993. Following Olmert's resignation as mayor in 2003, Lupolianski became the acting mayor and was subsequently elected to the post in his own right.

The former mayor reportedly told police interrogators that "the Charney family has been contributing to Yad Sarah for 20 years - not just Hillel Charney, but also his mother. They even received a certificate of recognition from Yad Sarah. Everything was open and kosher."

Lupolianski added that he did not personally receive any of this money in any manner and was not familiar with the exact amounts the Charney family had given.

Lupolianski also denied receiving another $30,000 in alleged bribes in the form of money to help finance his 2003 mayoral campaign. These funds were allegedly paid by a middleman directly to campaign activists in order to obscure the money trail.

With regard to suspicions that he received NIS 100,000 in bribes in the form of a contribution from the Charney family to a yeshiva run by one of Lupolianski's sons, the former mayor said the contribution was made directly to the yeshiva, with no involvement on his part.

Police, however, suspect that there was a direct correlation between the timing of the contributions to Yad Sarah, the campaign donations and the donation to the yeshiva on one hand, and actions that Lupolianski allegedly took to help the Charney family in connection with the Holyland project on the other.

In return for alleged bribes, police suspect, Lupolianski worked to expedite the Holyland project, thereby saving the developers millions of shekels. He also allegedly made it possible for them to expand the development, thus increasing their revenues by millions of shekels. Among other things, police suspect that Lupolianski expedited approval of the project by the local planning and building committee and mobilized support for it among committee members, brought about the rejection of some 1,000 objections filed against the development, worked to block demands to reduce the height of the planned buildings and reduced building fees.

Lupolianski is also suspected of money laundering, conspiracy, fraud, breach of trust and tax offenses.

In an interview with Channel 10 yesterday, Lupolianski said that Olmert, who was mayor of the city from 1993 to 2003, was the person with direct responsibility. "The mayor is the one who decides," Lupolianski said.