Israel's attorney general is expected to decide within a few days if there will be a criminal investigation into business dealings involving Prime Minister Ehud Olmert.

Menachem Mazuz has asked prosecutors to look into whether a full-blown investigation is warranted after receiving information from the state comptroller, a government watchdog agency, ministry spokesman Moshe Cohen said. 

"At this stage, no decisions have been made, no criminal process whatsoever is under way, and the Israeli police are not involved," said Cohen.

The suspicion surrounds the government's 2005 sale of controlling interest in Bank Leumi, one of Israel's largest financial institutions.

The allegations are that Olmert, finance minister at the time, interfered on behalf of a tender from two businessmen friends, Daniel Abraham and Frank Lowy.

Lowy, an Australian billionaire, has been represented legally in Israel by a firm headed by Yossi Gross, Olmert's father-in-law.

A government official in the Prime Minister's Office told Haaretz newspaper on Tuesday they were "astonished" to hear about the prosecution's investigation.

"Olmert's involvement in the tender proceedings was apparently very ineffective if he did not manage to cause his friend to win it," the official was quoted as saying.

Abraham is regularly in Forbes magazine's list of richest Americans. The high price he paid for Olmert's Jerusalem home in 2004 has led to allegations the deal wasn't strictly financial in nature.

The attorney who brokered the deal for Olmert has said it was a standard real estate sale.

with files from the Associated Press