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Sources close to Prime Minister Ehud Olmert have advised him over the past few days to seek the resignation of Finance Minister Abraham Hirchson, who is under suspicion of embezzlement and other financial crimes.

The sources said Olmert should personally ask Hirchson to leave, or fire him, since Hirchson's being summoned to the police for long questioning sessions every few days is damaging Olmert, his Kadima party and the image of the Finance Ministry and Israeli economy.

"Olmert, who prefers to wait for a directive from the attorney general on Hirchson even after the third questioning, and not bring about his unavoidable and regrettable resignation, appears a weak prime minister who decides not to decide, as he was with Defense Minister Amir Peretz right after the war," a source said.

The sources said Olmert has entered the same trap he fell into with Peretz, when he wanted to sack the defense minister after the war, but he put off the decision and was criticized for it. This time, the sources said, Olmert does not want to hurt Hirchson, who is a close friend, "and he also hopes Hirchson will resign."

Senior Kadima members said yesterday it would be better if Hirchson resigned and saved everyone the embarrassment. If he does not do so, Olmert should take the initiative. "It is clear to everyone that he is not functioning as finance minister. This is shameful for all of us. This is about the [Kadima] party too, not everything is about personal friendships," a source said.

Olmert is currently on vacation in the North and has not taken any action.

Hirchson, who was close to resigning last week, has changed direction and prefers to postpone the move, which seems inevitable, for as long as possible, senior treasury officials said. Sources in Hirchson's office said that his attorney, Eldad Niv, is leading the push for Hirchson to resign so he can devote himself to the investigation and not remain in a public position where he draws fire.

Suspicions of embezzlement and breach of trust against Hirchson are mounting, sources in the police told Haaretz, following his third questioning under caution yesterday.

During his eight-hour session with the police at the economic crimes unit in Lod, Hirchson was asked to explain deposits of hundreds of thousands of dollars in his back account. He was asked to respond both to bank records collected by investigators in recent weeks, as well as to testimonies of others involved in the affair, among them suspects of misappropriation of funds who claimed that money also went to Hirchson.

Hirchson denied the allegations and told the investigators that he was not involved in the financial matters of the various non-profit bodies associated with the National Labor Union. He said the money in his account had been deposited by his late wife's sister who lives in Italy, and his son Ofer.

Sources close to the investigation said yesterday that progress had been made in the probe and suspicions had been substantiated. They said the police would summon Hirchson to two more sessions after Passover.

Police said yesterday that Hirchson was being questioned on his actions already under investigation with regard to the National Labor Union and the Nili non-profit association, and no new suspicions had emerged.