Jan. 4 (Bloomberg) -- Israeli police, investigating allegedly illegal campaign contributions, may have found evidence that Prime Minister Ariel Sharon's family received $3 million from an Austrian businessman who has a stake in a West Bank casino, court documents show.

Police last month seized laptop computers and other material from the Israeli family home of Austrian businessman Martin Schlaff and his brother James, according to a court document filed Jan. 3 at the Rishon Letzion Magistrates Court and faxed to Bloomberg today by the police spokesman's office.

``In the framework of the police probe, apparent evidence was uncovered pointing to the involvement of James Schlaff and his brother Martin Schlaff in transferring $3 million to the prime minister's family,'' according to the document, a response to a motion filed by James Schlaff's lawyers asking for the return of some of the material seized in the search.

Police allege some of the money may have been used to repay illegal campaign contributions that Sharon received, while the rest remained in the Sharon family account, the document says.

Raanan Gissin, an adviser to Sharon, declined to comment.

Navot Tel-Zur, the Schlaff family's lawyer in Israel, said James Schlaff was questioned by Israeli police investigating the affair 10 days ago ``not as a suspect, as a witness.''

``During the questioning, police did not present any evidence that showed Schlaff or his brother offered a bribe to the prime minister,'' Tel-Zur said in a phone interview today.

South African Loan

Police found the $3 million transfer while investigating a $1.5 million loan that a South African businessman gave Sharon to repay allegedly illegal campaign contributions, the daily newspaper Haaretz reported earlier today, citing court documents. It cited an unidentified senior police official as saying there is currently not enough evidence for an indictment against Sharon.

Martin Schlaff is the head of an investment group that sold Mobiltel EAD, Bulgaria's largest mobile phone company, to Telekom Austria AG in July for as much as 1.1 billion euros ($1.3 billion). The group owns a majority stake in Mobtel, Serbia's biggest phone company.

Schlaff also has a stake in the Jericho casino in the West Bank through a private foundation. The casino closed after an outbreak of Israeli-Palestinian violence in September 2000.

Omri Sharon, the prime minister's son, resigned yesterday from his seat in Parliament after admitting in November to a charge of falsifying corporate documents connected to his father's 1999 campaign for Likud Party chairman. He was also convicted of lying under oath and violating campaign financing rules in a plea bargain under which prosecutors agreed to drop charges of corporate fraud and a breach of trust. Sentencing may take place later this month.

The prime minister has said he had no knowledge of how his campaign for Likud leadership in 1999 was financed.

Sharon quit Likud in November to run for a third term as head of the new Kadima party, which is consistently leading the Likud and Labor parties in public opinion polls.

Police do not expect to complete the investigation of the Austrian money transfer before the March 28 elections, Haaretz said.

To contact the reporter on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

Last Updated: January 4, 2006 07:48 EST