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Police said yesterday they do not have sufficient evidence to charge outgoing Prime Minister Ehud Olmert in the corruption investigation over the purchase of a house on Cremieux Street in Jerusalem.

A spokesman for Olmert said he did not understand why it took three years to investigate such a minor matter, only to reach the conclusion that the case was groundless.

"It was clear already from the first day that there was nothing to this case," Amir Dan said.

Olmert was suspected of paying well below market value for a home he purchased on Cremieux Street. In return, Olmert allegedly abused his position as mayor of Jerusalem to extend favors to Alumot, the firm that built the home.

A police spokesman said they will transfer the investigation file to Attorney General Menachem Mazuz for a final decision on whether to close the case against Olmert.

Not out of woods

In February, police sources said there appeared to be substantial evidence to indict Olmert on charges of cronyism during his term as minister of industry, trade and employment and in what has been dubbed the Investment Center affair. Olmert allegedly granted benefits to a plant represented by his associate, attorney Uri Messer.

Police are still investigating suspicions of numerous political appointments Olmert made in the ministry's Small Business Authority while he was minister.

Police have also recommended that Olmert be indicted in the Rishon Tours affair, in which he is suspected of having billed multiple public organizations, including charities, for dozens of trips that his family took abroad.

A source close to Olmert lashed out at State Comptroller Micha Lindenstrauss, who was the first to investigate some of the allegations against Olmert.

"This is the second case in which a police probe that was launched following the comptroller's inquiry ends with no results," the source said.

The first case against Olmert that was closed was the Bank Leumi affair, in which Olmert was suspected of trying to help his friend, Australian real-estate magnate Frank Lowy, buy the controling shares in Bank Leumi. Olmert, who was acting finance minister in 2005, was suspected of trying to change the tender conditions for buying the bank.

The attorney general has decided to indict Olmert for three of the affairs he has been suspected of being involved in. The first is the "cash envelopes" affair, in which Olmert is suspected of advancing the business interests of businessman Morris Talansky in exchange for considerable, and illicit, sums of money.

The Jerusalem District Attorney yesterday asked the city's District Court to set a date after Passover to continue hearing Talansky's testimony. Talansky said a few days ago that he intends to return to Israel to continue his testimony despite the investigation conducted against him in the United States and the limited immunity he received from American authorities.