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Former justice minister Ya'akov Ne'eman, who brokered Ehud Olmert's 2004 sale of his home to an offshore company controlled by an American billionaire, said Wednesday that the disputed deal was "strictly Kosher."

State Comptroller Micha Lindenstrauss is looking into the sale of Acting Prime Minister Olmert's house in Jerusalem to an offshore company registered in the British Virgin Islands. His lawyers told Haaretz that the man behind this company is the American billionaire Daniel Abrams, who has made contributions in the past to Olmert and other politicians.

The State Comptroller launched the probe following questions submitted by Haaretz last Thursday.

The comptroller also plans to look into Olmert's ties to Abrams, who contributed NIS 193,000 to Olmert ahead of Olmert's campaign in the Jerusalem mayoral elections. Lindenstrauss is already investigating a $120,000 contribution from Abrams in 2004 to Shimon Peres' campaign for the Labor Party primaries last November.

Olmert has denied any wrongdoing. A statement issued by his office said that Olmert had made a full disclosure of the sale to the state comptroller's office 18 months ago. Olmert did report the sale to the state comptroller, but failed to inform him that the company which purchased the house belonged to Abrams.

On Wednesday, Ne'eman, a prominent attorney who was justice minister and later finance minister under then-prime minister Benjamin Netanyahun in the late 1990s, told Army Radio:

"The sale was made at market value. This deal was strictly Kosher. The intrusion of this deal into an election campaign is, in my view, an illegal attempt to harm a public figure."

Olmert's home on Kaf Tet BeNovember Street in Jerusalem was sold in January 2004 for $2.7 million. Despite the sale, Olmert has continued living there and paying Abrams rental fees of $2,600 a month.

Ne'eman described the rent being paid by Olmert under the deal as "realistic."

Appraisers said on Wednesday that the rental fee Acting Prime Minister Ehud Olmert had been paying to Abrams was less than half the market price, particularly considering the increasing prices in the area.

Apraisers said the price Olmert received for the apartment was reasonable, and reflect price levels in the area during the time the deal was made.

But Jerusalem land appraiser Kobi Bier said that a house of this size and in this location could now easily rent for double that amount.

A survey of homes in the area indicates that the sale price Olmert received was relatively high, but not completely unreasonable.

After selling his home, Olmert purchased an apartment in Jerusalem for more than NIS 5 million.

Asked about the fact that Abrams lives abroad and not in Israel, Ne'eman replied "Everyone in the United States understands that a day will come that the Messiah will come, and apartment prices will rise greatly, and therefore it's worthwhile to invest in Jerusalem housing."

A statement issued by Olmert's office said that he sold the house in January 2004 after his children had moved out and he and his wife wanted to move to a smaller place. "The price of the house was determined in accordance with value estimates from two different and independent assessors. The house was sold to a foreigner, a United States citizen, who preferred for reasons of his own to purchase the property through a foreign corporation, registered in the Virgin Islands."

The statement added that the parties signed an agreement permitting the Olmerts to go on renting their old home "at full price" until the new apartment was ready. "Rental payments are made to the owner's lawyer. Needless to say, that except for the rental agreement at appropriate market rates. Mr. Olmert does not have and has never had any business dealings with this corporation or its owners," the statement concluded.

Olmert says that he acted with full transparency in this matter, reporting the sale to the state comptroller as part of the annual statement of capital that all ministers have been required to submit since 2003.

Lindenstrauss will have to check whether Olmert was indeed forthcoming in his report, and also ascertain whether he was legally obligated to name the purchaser of his home. Olmert's lawyer, Eli Zohar, said that Olmert reported to the comptroller the name of the company that had purchased his home, although he was not required by law to cite this information.

A spokeswoman for Lindenstrauss, Shlomit Lavi, told Haaretz on Thursday that the state comptroller's office has already begun investigating and has requested additional documents from Olmert. Lavi added that the probe will be completed shortly.

She added that an inquiry was previously begun by Lindenstrauss' predecessor, Eliezer Goldberg. "The new details that have now been brought to the attention of the state comptroller, Judge Micha Lindenstrauss, led him to a decision to examine the matter personally from the beginning, in an in-depth and thorough manner and with the utmost urgency, in keeping with his position on conducting real-time reviews," Lavi said.