updated 10/14/2007 3:18:53 PM ET 2007-10-14T19:18:53

Israel's attorney general on Sunday ordered a new criminal investigation into Prime Minister Ehud Olmert, the latest in a series of probes that threaten to weaken the Israeli leader during ongoing peace efforts with the Palestinians.

The Justice Ministry said the investigation would look into suspicions that Olmert acted improperly while he was trade minister earlier this decade. The state comptroller, a watchdog agency, has alleged that Olmert steered a government grant to a friend in 2001.

"The suspicions pertain mainly to Olmert's involvement in the investment center and political appointments, and helping his political friends in public bodies."

Police spokesman Micky Rosenfeld said the police would in the coming days appoint a team of investigators to handle the case.

Olmert's office swiftly denied the allegations. "These are unnecessary investigations. It's clear beyond any doubt that the investigation will yield nothing," it said in a statement.

Olmert has been dogged by corruption allegations throughout his three-decade career in politics, but has never been convicted of any wrongdoing.

Last week, he was twice interrogated by police on suspicion he tried to rig the sale of Israel's second-largest bank in favor of two associates while he was finance minister.

Political witch hunt, Olmert says
He also is suspected of buying a Jerusalem home from a real estate developer at a substantial discount in return for helping the builder obtain construction permits from Jerusalem authorities.

Olmert has dismissed the various investigations as a political witch hunt. But the probes have threatened to undermine him just as his public approval ratings have begun to rebound from last year's inconclusive war in Lebanon.

The attorney general's announcement came as Olmert was hosting U.S. Secretary of State Condoleezza Rice, who is in the region trying to prepare for next month's U.S.-hosted Mideast peace conference in Annapolis, Md.

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