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State Comptroller Micha Lindenstrauss is looking into the 2004 sale of Acting Prime Minister Ehud 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.

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.

The Jerusalem land appraiser Kobi Bier said that a house of this size and in this location could 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.

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.