ISRAEL’S finance minister is to be questioned this week by police investigating the funding of an annual march at Auschwitz in memory of Holocaust victims.

The police have already interviewed Abraham Hirchson, one of the most senior members of the cabinet, under caution over allegations in the Israeli press that £662,000 was embezzled from Nili, a nonprofit wing of the National Workers Union that he once headed. They talked to him for seven hours last week.

As the investigation has widened, police have been examining a web of American and Israeli charitable foundations controlled by Hirchson, 66. Some are linked to the March of the Living, an annual event in Poland that he founded in 1987, long before he joined the government.

The March of the Living sees several thousand young Jews and dignitaries from America, Europe and Israel walk a mile from the Auschwitz concentration camp to the Birkenau gas chambers in memory of the estimated 1m Jews killed there by the Germans during the second world war.

Officers are now preparing to ask Hirchson about revelations in Israel’s media that he was caught boarding a plane from Poland in 1997 with $250,000 in cash stuffed into suitcases that he planned to bring into Israel.

The Movement for Quality Government in Israel, a watchdog, has promised to petition the High Court tomorrow for Hirchson’s suspension if he does not step down pending the outcome of the investigation. “We believe after such very severe allegations against the finance minister he should suspend himself,” said Eliad Shraga, the group’s chairman.

Yaakov Weinrot, Hirchson’s lawyer, confirmed the minister had indeed been caught illegally trying to smuggle the cash into Israel and had been fined by a Polish court. But he said Hirchson had only done so because of the technical problems of transferring money to Israel from a Polish bank.

Weinrot said Hirchson intended to deliver the cash to the March of the Living foundation in Israel but it had been confiscated.

“The police found the money in his suitcases,” said Weinrot. “It was only a symbolic fine.”

The story of the suitcases stuffed with cash emerged as Hirchson was already facing hard questions about his political future because of the Nili case.

A police spokesman confirmed Hirchson “had been questioned on suspicion of charges of aggravated fraudulent gain, theft, fraud, breach of trust and forging documents” by the national financial crimes unit in connection with the Nili allegations. Sarah Amrani, the head of his private office, is also under investigation.

Hirchson, who sports a trimmed grey and white beard and is a close ally of Ehud Olmert, the prime minister, faces further accusations of embezzlement and fraud in several unconnected cases.

Hirchson’s lawyer insisted that money paid into his account in the past had come from the minister’s son Ofer, a businessman.

Some of the money allegedly taken from Nili, which runs nurseries for its members’ children, was allegedly used to finance primary campaigns for Likud, the right-wing party Hirchson belonged to before joining Kadima, the centrist party founded by the former prime minister Ariel Sharon, which now holds power.

Hirchson has been a member of the Knesset, the Israeli parliament, since 1981. He is also a member of the Board of the Special Swiss Committee for Needy Holocaust Survivors.

A Filipino nurse who once tended Hirchson’s late wife told police she had seen envelopes filled with cash being delivered to him at home.

Ovadia Cohen, the chairman of Nili, has already confessed to embezzling funds from the organisation. Hirchson has denied any suggestion of wrongdoing, saying: “I concealed nothing and I covered up nothing.” The scandal is the latest to hit Olmert’s government. The prime minister is under investigation over the sale of a house and the privatisation of a bank when he was finance minister. He has not been charged in relation to any of the claims made against him.

Haim Ramon, the minister of justice, was forced to resign last year after being accused of forcibly kissing a young female army recruit. The case, which ended with his conviction, scandalised Israel not only because of the assault but also because he committed it on his way to the cabinet meeting at which the decision was taken to declare war on Lebanon last summer.

In addition, Moshe Katsav, the president, faces charges of rape and sexual assault and has been suspended from office. He also denies any wrongdoing.

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