Israeli Prime Minister Benjamin Netanyahu acknowledged on Monday that he had received $40,000 from a French tycoon on trial for alleged fraud, but said the contribution was not political and was used for promoting Israel.
During his trial in France, Arnaud Mimran said he had given one million euros ($1.1 million) in campaign contributions to Netanyahu in 2001, when the Israeli leader was not in public office.
Israeli law limits individual campaign contributions to parliamentary candidates to 11,480 shekels (2,670 euros) and 45,880 shekels for party chairmanship races.
The allegation has received widespread attention in Israel, with the country's attorney general examining Mimran's testimony.
"The claim that Arnaud Mimran contributed one million euros to the election campaign of Mr. Netanyahu is a baseless lie," a statement from the prime minister's office said.
"There was no contribution by Mimran to Netanyahu's election campaign.
"In August 2001, when Mr. Netanyahu was a private citizen, Mimran contributed $40,000 to the fund for public activities for Mr. Netanyahu, which included media appearances and numerous educational campaigns abroad in favour of Israel, and made in accordance with the law."
In an earlier statement, Netanyahu's office said that "Mr. Mimran, who is on trial for fraud in the range of several hundreds of millions of dollars, is trying to divert attention by means of another fraud" by accusing the prime minister.
An Israeli justice ministry spokeswoman said Attorney General Avichai Mandelblit had ordered an examination of Mimran's testimony "immediately after he became aware of it."
If the donation was not a campaign contribution, tax authorities would have to verify whether it was declared, said Moshe Negbi, legal expert for Israeli public radio.
Netanyahu left the prime minister's office in 1999 after being defeated by Labor’s Ehud Barak. In 2002, he became foreign minister in then-prime minister Ariel Sharon's government.
Mimran is one of the main defendants in a trial in Paris over an alleged scam amounting to 283 million euros involving the trade of carbon emissions permits and the taxes on them.
The tycoon's allegations against Netanyahu are the latest focused on his spending.
Last month, the Israeli state comptroller issued a critical report on Netanyahu's foreign trips, some with his wife and children, in 2003-05 when he was finance minister.
"Trips by Mr. Netanyahu and his family, funded by external bodies during the period in which he served as finance minister, deviated from regulations on the subject and as such could give the appearance of obtaining a benefit or of a conflict of interest," the report said.
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