Acting State Prosecutor Dan Eldad on Thursday ordered a criminal investigation into a failed high-tech startup headed by Blue & White leader Benny Gantz.
Gantz acted as chairman of the board for "Fifth Dimension," which went bankrupt, before going into politics. There have been no allegations made against Gantz.
State prosecutors confirmed in November 2019 that they had requested documents from the state comptrollers' office in order to begin an inquiry into the company, following a court petition by right-wing organization Lavi.
In a statement released Thursday night, the Justice Ministry said the police will conduct the investigation.
Gantz's Blue & White Party is in a tight race with the Likud party headed by caretaker prime minister Benjamin Netanyahu', who has been charged with fraud, bribery and breach of trust following a series of corruption investigations.
The March 2 vote comes just two weeks before Netanyahu's trial is to begin.
Throughout the campaign, Gantz has tried to focus all attention on Netanyahu's legal troubles and presented himself as an honest and scandal-free alternative.
Netanyahu on Thursday evening praised the decision to investigate the company.
"The public must know the truth - here and now - and before the [March 2] election," said Netanyahu.
Earlier on Thursday, Gantz denied wrongdoing following reports of the pending investigation into his firm's financial dealings.
"It all sounds like political pressure to get this thing on the public's agenda," Gantz told Army Radio.
"I am totally at ease. This was checked in the past and no criminal suspicion was found."
Israel goes to the polls on March 2, the third vote in less than a year after two elections in 2019 ended inconclusively, with neither Netanyahu or Gantz able to forge a coalition government.
Pre-election surveys have predicted similar results in next month's vote, potentially extending the deadlock.
It's not clear if the reports over the affair will move the needle in any way. The months leading up to the campaign have been marked by other bombshells, including the unveiling of President Donald Trump's Mideast plan and the setting of a date for the beginning of Netanyahu's corruption trial, which have not dramatically affected opinion polls.
But it is an embarrassment for Gantz, a former military chief, who has made ousting Netanyahu his main message and has tried to present a squeaky clean image in the face of the long-serving leader's graft charges.
After retiring from the army, Gantz headed the cybersecurity company that entered talks with Israeli police over the sale of its product. According to the state comptroller, the police may have violated acquisition laws by forgoing a tender in its dealings with the company.
The Justice Ministry would not confirm the media reports, saying only that documents from the state comptroller were being looked into.
Netanyahu was charged last year with bribery, breach of trust and fraud in three cases in which he is accused of receiving lavish gifts from billionaire friends and of exchanging regulatory favors with media moguls, including Ynet publisher Arnon Mozes, for more palatable media coverage of him and his family.
Netanyahu denies wrongdoing and claims the charges have been trumped up by a hostile justice system, police and media out to get him.