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Police recommended yesterday that Prime Minister Ehud Olmert not be tried over his role in the privatization of Bank Leumi, citing a lack of evidence.

Fraud squad head Yohanan Danino said he was adopting the conclusions submitted yesterday by an ad hoc team of investigators probing the case. The police have stated their recommendation to close the criminal probe against Olmert was reached "unanimously."

Olmert was suspected of altering the terms of a government tender to sell the controlling share in the bank to suit his long-time friend, the Australian real estate magnate Frank Lowy. Lowy eventually withdrew his bid.

In their report, the fraud squad investigators stated that while Olmert, then finance minister, should have revealed his conflict of interest and disclosed his acquaintance with Lowy, and that he did not "go by the book," he was not guilty of breach of trust.

They added that Accountant General Yaron Zelekha's version of events did not refute that of the prime minister.

"There's more than one way of telling the story. Some of the explanations offered [by Olmert] were much more plausible than those presented by Zelekha," they wrote. "The investigation team believes that the evidence does not necessarily support one single version of events."

The State Prosecutor's Office, which had ordered the police to investigate Olmert, said it would not comment on the police's recommendation to close the case. It added that the police recommendation was not binding and that incoming state prosecutor Moshe Lador can order follow-up investigations if he deems them necessary.

"We do not see the police recommendation as the last word on the matter, and we are awaiting Lador's decision," a state prosecution source said.

The tender for Leumi's privatization was issued in November 2005, about four months after Olmert replaced Benjamin Netanyahu as finance minister. On Olmert's insistence, several changes were made to its terms, including how the price of included options would be calculated.

Olmert said the changes were designed to encourage strategic investors to bid on the bank. However, suspicions later arose that the changes had in fact been aimed at aiding Lowy, an old friend of Olmert's.

The prime minister was questioned under caution about the affair last month.

During his interrogation, Olmert produced documents and other evidence backing his claim that did not help any of the bidders. Police accepted Olmert's claim that he changed the terms of the tender in the belief that a strategic investor would be better for the bank.

Opposition members yesterday were sharply critical of the police recommendation.

"The police has missed its purpose when it decided to lay down a red carpet for the prime minister upon his return from Annapolis," said National Union-National Religious Party MK Zevulun Orlev. "It is neither its responsibility nor within its authority to submit recommendations after an investigation. The overenthusiasm police displayed in this case is bizarre."

MK Shelly Yachimovich (Labor) said: "The announcement by the police covers up the differences of opinion among the investigators, and it ignores evidence and unequivocal testimony that professional, dedicated investigators gathered."

She called on Lador to give the evidence a "real legal examination," because "justice was not served in this case."

Members of Kadima, Olmert's party, expressed their satisfaction with the decision. Kadima MK Otniel Schneller said: "The people of Israel should be happy that our prime minister probably will not be tried. The police decision will permit the prime minister to continue taking care of national interests and seeing to Israel's strength and security."

Zelekha and Ometz, an organization for quality government, have announced that they will petition the High Court of Justice if the Bank Leumi case is closed.

"We expect the state prosecutor to examine the evidence with prudence," an Ometz spokesman said. "One wonders how the police did not see what the state comptroller saw. Even if no indictment is filed over the Bank Leumi affair, there is not one citizen in Israel who fails to understand that there is a heavy cloud of criminal suspicions hovering over the prime minister, and it is inappropriate that he stay in office."