Jerusalem ? Israel’s attorney general on Monday ordered police to open a criminal investigation into allegations that Prime Minister Ehud Olmert fraudulently purchased a Jerusalem home well below market value.

The move dealt a blow to the Israeli leader at a time when he has begun to rehabilitate his image following a series of scandals and missteps.

It also came at a sensitive time for Mideast peace efforts. Olmert has been holding talks with Palestinian President Mahmoud Abbas aimed at agreeing on the framework for a future peace deal ahead of a U.S.-sponsored Mideast conference later this year.

Attorney General Meni Mazuz ordered the investigation at the recommendation of the state comptroller, a government watchdog agency that suspects Olmert bought the house from a Jerusalem developer “at a discount,” the Justice Ministry said. Olmert, a former mayor of Jerusalem, was a senior government minister at the time of the sale, in late 2004.

In return, Olmert is suspected of helping the developer obtain construction permits from Jerusalem authorities.