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. Last Updated: 07/27/2016

Chernoi Arrested Over Telecom Sale

JERUSALEM — Israeli police have arrested Russian businessman Mikhail Chernoi on suspicion of illegally purchasing a part of Israel's strategic Bezeq telephone company for $630 million, officials said Monday.

Police also arrested Israeli businessman Gad Zeevi, who was seen entering Israeli police headquarters for interrogation.

Officials complained about police leaks naming Chernoi and Zeevi as sources of the money for the purchase, and linking Chernoi to the Russian mafia. An official police statement said only that there were arrests in the Bezeq stock purchase, and suspects were released on bail or to house arrest. No names were given.

Bezeq held a decades-long monopoly on telephone service here and is still the dominant company in telecommunications. It is considered a strategic element because its networks support the military and emergency services.

Following a policy of privatizing government companies, the government sold off part of the company, but demanded the right to approve the investors to keep Bezeq in Israeli hands.

According to media reports, police suspect that Zeevi fronted for Chernoi, who supplied $630 million for a 20 percent interest in the company. The Communications Ministry approved Zeevi's purchase but did not give him a seat on the Bezeq board of directors.

The state owns 54.6 percent of Bezeq's shares.

Two Cabinet ministers complained about publication of the suspects' names in Israeli media, and Yaakov Kedmi, former head of Israel's Nativ liaison office in Russia, complained that all Russian businessmen are automatically labeled "Russian mafia" here.

Israel radio reported that Chernoi is banned from entering several countries, but works under no limits in Israel. Neither Zeevi nor Chernoi would comment on the investigation.

Infrastructure Minister Avigdor Lieberman, who is also from the former Soviet Union, said Monday that he knows Chernoi well and is convinced that he is innocent. "I have more confidence in his decency and honesty than in that of the entire leadership of the police investigations department," he told Israel army radio.