A string of corruption scandals led to Ehud Olmert's resignation as PM
Former Israeli Prime Minister Ehud Olmert has been named as a prime suspect in major corruption scandal.
Mr Olmert is accused of taking bribes when he was the mayor of Jerusalem to speed up a controversial residential development in the heart of the city.
Appearing on television, Mr Olmert - who is on trial in another corruption case - denied any involvement and urged people not to jump to conclusions.
His successor as mayor, Uri Lupolianski, was arrested on Wednesday.
A judiciary spokesman said Mr Lupolianski was suspected of receiving bribes, money laundering, fraud, breach of trust, tax avoidance and conspiracy, in connection with the Holyland property development.
The controversial circle of high-rise luxury apartment blocks in West Jerusalem is regarded by many Jerusalem residents as an eyesore.
Mr Olmert was plagued by multiple corruption scandals while serving as prime minster between 2006 and 2009 - and has so far been indicted over three separate cases. Police have closed two others.
In a pre-recorded statement shown on television on Thursday, he applauded the decision to lift the court order barring publication of details about the investigation into the "Holyland affair" and denied any wrongdoing.
"I praise the decision to lift the gag order," he said. "In any event, my name had appeared throughout the media and nobody had any doubt who was the person mentioned that everybody was talking about."
Israeli media had reported that a high-ranking official, named only as AA (the same letters as his initials in Hebrew), was alleged to have received, through intermediaries, 3.5m shekels ($940,000) in bribes.
Mr Olmert said the allegations were "baseless rumours" and that he had been the victim of "unprecedented character assassination".
"I was never offered bribes and I never took bribes from anybody in any matter, in any form, either directly or indirectly," he added.
"I am ready to be questioned by the police, and I am at their disposition at all times, whenever they consider it useful."
Many Jerusalem residents regard the Holyland complex as an eyesore
Mr Olmert said he had "supported the Holyland project from the start, when it was just three hotels meant to strengthen tourism in Jerusalem" and a number of homes for middle-class non-Orthodox Israelis, but that the plans were changed after he ceased to be mayor in 2003.
Police say a major change to a zoning law was made to allow residential units rather than just hotels to be built, and that the number of homes in the high-rise development was increased twelvefold after bribes were paid.
Mr Olmert has not yet been questioned by investigators, and no charges have been filed against him or any of the seven people - including Mr Lupolianski and Mr Olmert's former lawyer, Uri Messer - who have been arrested in connection with what they say is a "vast affair", of which the Holyland scandal is part.
Police say Mr Lupolianski, an orthodox rabbi who was deputy mayor under Mr Olmert from 1993 to 2003 and then served as mayor himself until 2008, received more than 3m shekels ($810,000) in bribes from the developers in return for helping to advance the project.
He denies the allegations, telling Channel 10 news on Wednesday: "This was 20 years ago. I don't know why everyone suddenly remembers now. A deputy mayor has no responsibility."
"The mayor is the one who decides... who chooses the path."