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Former Bank Hapoalim chairman Danny Dankner was given five days' house arrest yesterday on suspicion of graft uncovered during the investigation into the Holyland corruption affair.

Also arrested for five days, on suspicion of accepting bribes, is former Israel Lands Administration director Yaakov Efrati, the first arrest of an ILA official in the Holyland affair.

Dankner is suspected of paying at least NIS 1.5 million in bribes via Israel Salt Industries to advance a land deal between Israel Salt Industries and the state.

The police base their suspicion among other things on Israel Salt Industries invoices written out to Meir Rabin, a relative of Efrati whom the police suspect was a conduit for bribe money, and to Shmuel Dachner, who was employed by the developers to advance the project.

The invoices show that about NIS 1.5 million were paid, defined as "mediation fees." As far as is known, the money was paid between 2003 and 2004 and the phrase on the receipt was meant to disguise the real purpose of the payment.

Police suspect that the money was intended for Efrati, as well as to other officials in the ILA and outside it.

At that time, former prime minister Ehud Olmert was responsible for the ILA.

In the court hearing yesterday, police Superintendent Tzachi Havkin said that from evidence and documents in the possession of the suspects, witnesses and banks, Dankner is suspected of conspiracy to commit a crime, paying a bribe, fraud, breach of trust, falsification of corporate documents, tax evasion and money laundering.

Efrati is suspected of accepting a bribe from other developers when he was ILA chief.

When Dankner entered the courtroom yesterday, he told journalists he "felt bad, but I am confident my hands are clean and my conscience is clean."

Rishon Letzion Magistrate's Court Judge Abraham Heiman said after studying a confidential police report that there was a reasonable basis for the suspicions against Dankner, mainly the bribe, and that it was in the public interest to allow the investigation to proceed without concern it would be impeded.

A senior law enforcement official said Dankner was questioned several weeks ago and police decided not to arrest him, despite the gravity of the affair.

The arrest now hints at the strength of the suspicions against Dankner.

Efrati, who served as ILA chief from 2001 to 2008, is suspected of accepting bribes, fraud and breach of trust in the matter of a number of real estate projects. The suspicions revolve around significant benefits given involving a real estate deal between the Israel Salt Industries and the state, the Ayalon Park apartment project, the Hazera company's land near the Hiriya dump and the Manara Cliffs real estate project.

Efrati was questioned yesterday only about his involvement in the Israel Salt Industries and Ayalon Park projects; however, he is expected to be questioned in the coming days on other affairs, including the Holyland project.

Police suspect that Efrati, in exchange for hundreds of thousands of shekels, made moves at the ILA that benefited businessmen and real estate developers, among them Dankner, Hillel Charney and Avigdor Kelner, who have also been implicated in the Holyland affair.

Police suspect that Rabin transfered hundreds of thousands of shekels to Efrati to advance the projects in the ILA. Efrati allegedly considered the transfer of money relatively safe, since a relative was involved.

Police yesterday said they had uncovered a well-oiled machine of bribery at senior and junior levels to advance real estate interests.

According to Efrati's attorney, Yaron Kosteliz, Efrati has agreed to a police-arranged confrontation with any official trying to implicate him, and to undergo a polygraph test.

Kosteliz said the purpose of interrogating his client while under arrest was to "break his spirit."

Yesterday Efrati reportedly told police he was not involved in some of the projects they alleged he was. He said decisions on projects were made by his predecessors or a lower official at the ILA.

Police: Zaken skirting questions

Meanwhile, the state prosecution and the police say Shula Zaken, Olmert's former bureau chief and confidant, is constantly trying to avoid questioning.

"Zaken has changed her return date to Israel three times. This in itself raises questions," a law enforcement official said yesterday of Zaken's trip to the United States. Zaken is expected to return next week.

Zaken is suspected in the Holyland affair of receiving bribes, among others from Shmuel Dachner, and giving them to Olmert. Zaken's lawyer, Micha Pettman, yesterday called a press conference to reject a claim that negotiations were underway for his client to turn state's witness. Police and the prosecution also denied the claims.