In 2006, Union Bank gave Bat Yam Mayor Shlomo Lahiani an NIS 11 million loan despite the opposition of senior bank officials. The person who pushed for giving Lahiani the loan was the bank's then-CEO, Dov Kotler, who is a friend of attorney Yoram Danziger.

Danziger recently took a leave of absence from his current job of Supreme Court justice after police questioned him under caution on suspicion of bribing Lahiani. He is suspected of having served as Lahiani's personal lawyer at what turned out to be highly reduced rates, or even nothing, at a time when the Bat Yam municipality was giving him hundreds of thousands of shekels worth of work. Police suspect that Danziger's use of his personal ties with Kotler to secure Lahiani the loan were also part of the quid pro quo.

The two men met in the early 1990s, when Lahiani, then a real estate entrepreneur, rented a house in Savyon that belonged to Danziger's mother. "The house was on a two-dunam lot with a courtyard and a pool, but there was no sea, and for me, that was hard," Lahiani told Haaretz Magazine last year.

Soon, as Lahiani related, the men became "good friends. We hang out together, play tennis together, go to the country club together; we went abroad together. He's the responsible adult ... I and my wife, Dorit, consult with him on the most personal matters. He's a friend on a level it's hard to grasp."

In 1997, Lahiani's construction company, Alshav, obtained financing from Bank Mizrahi to build a luxury apartment complex on the Bat Yam beach. He was to repay the loan from the proceeds of selling the apartments. Instead, his debt to Mizrahi had ballooned to NIS 35 million by 2001, and in 2002, Mizrahi asking the Tel Aviv District Court to appoint a receiver for Alshav.

Bankruptcy loomed. But in spring 2003, just months before he was elected Bat Yam's mayor, the feverish negotiations Danziger held with Mizrahi on Lahiani's behalf produced a surprising agreement: The bank forgave NIS 16 million of the debt and instead took over a government guarantee the project had obtained. But Lahiani still had to repay Mizrahi hundreds of thousands of shekels a year.

A Mizrahi official later said the bank suspected Alshav of having failed to deposit all the proceeds of the project's sales in a closed account, as required by the loan agreement. But it also concluded that NIS 20 million was the maximum Lahiani could repay.

Meanwhile, Lahiani had met Kotler at a party at Danziger's house. So in 2004, the newly elected mayor invited Kotler and the head of Union's Bat Yam branch, Miri Levy, to his office. At that meeting, he proposed that Union buy his debt from Mizrahi in exchange for the collateral he had given the latter.

Evidence amassed by the police indicates that Kotler agreed to this in principle on the spot. The evidence also shows that senior Union officials, including the head of the bank's business division, objected, Haaretz has learned. But Kotler pressured his subordinates to approve the deal.

"Kotler is the one who decided to approve this loan," a senior Union Bank official said. "The bank's credit committee opposed the loan, mainly because of Lahiani's history with Bank Mizrahi."

But Kotler did condition the loan on obtaining suitable collateral, Union officials said, so once the loan was approved in principle, the bank began checking out Lahiani's collateral. At some point, to prove his ability to repay, Lahiani cited the shares he and his wife held in a local Bat Yam paper, Gal Gefen Zahov, which were worth millions of shekels.

At this point, Danziger again entered the picture, as the shares were actually held in trust for the couple by his law firm's trust company, Yodan. Haaretz has learned that Union eventually agreed not to put a lien on the shares, but to make do with a letter from Danziger to the bank in which he promised not to sell them.

In December 2005, Danziger wrote his friend Kotler a letter which began, "Dear Dovele, is the accompanying wording sufficient?" The accompanying wording promised that Yodan would not "sell or mortgage" the shares without the bank's written permission. But as a Union official noted, "based on this letter, the bank has no ability to sell the shares if the agreement is violated" - i.e., if Lahiani didn't repay the loan.

In late 2006, a few months after Kotler left the bank, the deal to transfer Lahiani's debt from Mizrahi to Union was finalized. Associates of Kotler said that while Danziger's involvement did help inspire Kotler's trust - aside from being friends, Danziger had served as Kotler's personal lawyer - the deal did not seem commercially unsound, as the properties Lahiani offered as collateral seemed sufficient.

While the negotiations with Union were underway, the Bat Yam municipality opened various bank accounts with Union. Lahiani participated in the city council meetings that approved this and actively supported opening at least some of these accounts. But Union officials said the amount of money moving through the accounts was negligible compared to the bank's total turnover.

In 2005-07, a period that overlapped with Danziger's efforts to close the Union-Mizrahi deal, the municipality paid Danziger's law firm NIS 823,500 for various services, including preparing a municipal bond issue that ultimately never took place and filing a lawsuit that was later withdrawn.

In 2007, Danziger was appointed to the Supreme Court. It was at around this time that Danziger's law firm erased Lahiani's debt to it. Danziger's associates said the firm erased the debts of several clients who couldn't pay when Danziger split up with his former law partner, Dori Klagsbald, and Lahiani was one. But police suspect this was a planned move to reduce Lahiani's effective fees.

Lahiani told the police he never received any form of bribe from Danziger, and associates of both men said they expected police to close the case against the justice.

Danziger told Haaretz Magazine in 2010 that he and Lahiani had known each other for about 20 years, and that his law firm had handled various matters for Lahiani and for companies owned by Lahiani and his relatives. The firm "charged fees for its services that were normal for such work, and that is true, inter alia, for its legal representation and advice relating to Bank Mizrahi and Union Bank."

Lahiani said in the 2010 interview that Danziger's law firm was one of "dozens" the municipality hired to deal with various issues, and "some of them were people I had met over the course of my life. I won't disqualify anyone just because I once had contact with him."