Israeli court sees possible graft charges in cases involving Netanyahu

An Israeli court said on Thursday that two police investigations in which Prime Minister Benjamin Netanyahu has been questioned could result in corruption charges, and that prosecutors were in talks with one of his former top aides.

The disclosures, made in an court order limiting media coverage of the cases, did not name Netanyahu. But they ramped up speculation among Israeli legal analysts that he could face indictment if ex-chief of staff Ari Harow turns state's witness.

Netanyahu has denied any wrongdoing, and his spokesman said in a statement on Thursday that the premier was the target of "a witch-hunt, now at its peak, aimed at changing the government".

"This is destined to fail, for a simple reason: Nothing will happen because nothing happened," the spokesman said.

Netanyahu had been questioned under caution by police over so-called Case 1,000, dealing with gifts given to him and his family by businessmen, and Case 2,000, related to conversations he held with an Israeli publisher.

Harow did not return a call from Reuters seeking comment. His lawyer declined to respond to Israeli media reports this week that he was in talks about testifying against his former boss.

Thursday's order by Rishon Lezion Magistrate's Court said the two cases involved "suspicion of the commission of the felonies of bribery, fraud and breach of trust".

The court order further barred publication of "any details from the negotiations under way with Ari Harrow and counsel and the substance of matters relayed during the negotiations".

Harow served as then-opposition leader Netanyahu's chief of staff in 2008, a post he held for two years. He returned in 2014 to serve as the premier's chief of staff, but resigned a year later amid corruption allegations that he denied at the time.

Odelia Carmon, a Netanyahu ex-aide who worked with Harow, said that if he turns state's witness it would be a "bombshell".

"He dealt with raising donations, he dealt with the finances, he dealt with state secrets," Carmon told Israel's Army Radio on Wednesday. "So this is not someone that Netanyahu can disavow, and I further believe he has everything documented."

If charges are brought, political upheaval in Israel would be likely, with pressure on Netanyahu, 67, to step down after 11 years in office, spread over four terms.

Case 1,000 involves Netanyahu and family members receiving gifts on a regular basis from two businessmen. Israeli media have reported that the gifts included cigars and champagne. [nL5N1F249D]

Case 2,000 involves a deal Netanyahu allegedly discussed with the owner of one of Israel's largest newspapers, Yedioth Ahronoth, for better coverage in return for curbs on competition from a free paper owned by U.S. casino mogul Sheldon Adelson. The latter paper has long promoted the prime minister.

Israeli media said Harow had recorded Netanyahu's conversations with Yedioth publisher Arnon Mozes.

Under Israeli law, Netanyahu would not be obliged to resign were he charged. Opponents are calling for him to do so.

Netanyahu is not the first Israeli leader to face criminal investigation: former prime minister Ehud Olmert was convicted of breach of trust and bribery in 2014 and Ariel Sharon was questioned while in office over allegations of bribery and campaign financing illegalities.

Israeli police are also investigating a $2 billion deal to buy German submarines, in which Netanyahu's personal lawyer also represented the local agent of the German manufacturer. Netanyahu, who is not under investigation in the case, has given his full backing to his lawyer