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Israeli Prime Minister Benjamin Netanyahu chairs the weekly cabinet meeting at his office in Jerusalem November 7, 2017. REUTERS/Ariel Schalit/Pool


JERUSALEM (Reuters) - A top confidant of Prime Minister Benjamin Netanyahu has been questioned as part of an investigation into a $2 billion (1.52 billion pounds) submarine deal with Germany, police said on Tuesday, bringing a cascade of corruption scandals closer to the Israeli leader.

Yitzhak Molcho, an attorney who has long doubled as the premier's envoy in negotiations with the United States, the Palestinians and Egypt, was detained on Sunday and his name withheld from publication for 48 hours under a court order.

Police said Molcho was questioned along with Netanyahu's personal lawyer, David Shimron, who had already been named as a suspect in the investigation of a 2016 purchase of German submarines, after it emerged that he also represented the local agent of the vessels' manufacturer, ThyssenKrupp Marine Systems.

Molcho and Shimron are partners in a prominent Jerusalem law firm and relatives of Netanyahu, who Israel's attorney-general has said is not a suspect in the submarines affair.

The publicity around it has, however, amplified separate investigations in which Netanyahu has been questioned, regarding gifts from businessmen and his alleged bid to broker more favourable media coverage through contacts with two newspaper publishers.

The conservative prime minister, now in his fourth term and topping opinion polls despite a narrowing lead over his rivals, has called the allegations a political gambit to unseat him.

Shimron also has denied any wrongdoing. Contacted by Reuters, Molcho's law firm offered no comment about his questioning by police. Israel's Channel 13 TV quoted Molcho as saying: "All actions that I have taken over the years have been solely for the sake of the country."

Molcho resigned as Netanyahu's emissary last month after a private petitioner asked Israel's Supreme Court to determine whether remaining in that position while running a law firm with alleged links to the submarine deal was a conflict of interest.

Berlin's discounted defence deals with Israel tend to be linked to wider regional concerns, such as German submarine sales to Egypt and pressure on the Netanyahu government to make progress in peace talks with the Palestinians.

(Writing by Dan Williams; Editing by Jeffrey Heller, Larry King)

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