The Rishon Tours' affair entails allegations that Olmert was double and triple-billing trips abroad sponsored by Jewish institutions, and either pocketed the difference or financed trips for relatives. The AG's decision followed a lengthy and highly publicized police investigation.
The charges Olmert may face are fraud, breach of trust, falsifying corporate records, failure to report an income and receiving illegal benefits, to which an aggravated circumstances clause applies.
Shula Zaken, Olmert's former bureau chief, who was also implicated in the affair, was said to have received similar notification.
The final decision on whether or not to file criminal charges against the prime minister is subject to an Attorney General's Office judicial hearing. The hearing will allow Olmert's attorneys to present Mazuz with exculpatory evidence.
'Decision puzzling and unreasonable'
Olmert's attorneys, Navot Tel-Zur, Eli Zohar and Roi Belcher called the decision "puzzling and unreasonable," adding that the PM "categorically denies the allegations."
The three released the following statement in response to Mazuz's announcement: "The prime minister was amazed to learn of details and charges which were never brought up in any of his interrogations… contrary to the attorney general's announcement, Olmert was never confronted with any evidence suggesting he was aware of the alleged acts.
"It has been known for initial decisions made by the Attorney General's Office to be overturned following the hearing," added the statement. The three stand to receive a copy of the case file in order to study the evidence.
Olmert's communications director, Amir Dan, sounded slightly more emphatic Wednesday: "Now that they have impeached an acting prime minister, the Justice Ministry couldn’t settle for less (than an indictment).
"The State Prosecutor's Office was dealt a severe blow in the Talansky case, and just like they did then, they choose, again, to present a one-sided case, which will eventually fall apart."
Dan also slammed the Attorney General's Office's timing: "The fact that this statement was made now indicates improprieties... it's amazing how gung-ho they are, that they couldn’t even wait for the prime minister to come back from the US to make this announcement. This is an ambush sponsored by the law enforcement authorities. This is not the way to treat anyone, let alone a prime minister."
'Olmert must suspend himself"
Knesset Member Michael Eitan (Likud), head of the Knesset's State Control Committee, said in response to Mazuz's statement that Olmert should suspend all peace negotiations.
"A transit government headed by a man about to be indicted has no legal or moral legitimacy to lead the public through far-reaching political moves. Olmert should announce he is suspending all peace negotiations pending the formation of a new government, which would be capable of making such decisions," he said.
Zahava Gal-On, chairwoman of the Meretz faction urged Olmert to suspend himself, saying "each day he remains in office is redundant, since he has no mandate to forward any political moves."
MK Ophir Pines-Paz (Labor-Meimad) reiterated the sentiment: "This is a tragic day for the State of Israel and an unprecedented low point for us all.
"Olmert must suspend himself immediately, as he so publicly promised to do at the time. A man about to face criminal charges cannot be allowed to continue being the prime minister."
Following the calls for Olmert to suspend himself, Dan added that the PM had no intention of taking such measures: "Olmert has already stepped down as prime minister. Under these circumstances in is clear that there is no significance, legal or otherwise, to him suspending himself. The prime minister intends on carrying on with the duties of his office until the new government is formed."
Meanwhile it was also reported Wednesday that Raanan Dinur, the director-general of the Prime Minister's Office, was questioned under advisement by the National Fraud Unit on Wednesday.
Dinur is suspected of fraud and breach of trust while serving as director-general of the Industry, Trade and Labor Ministry, between 2003 and 2006.
The investigation is the first of its kind on Dinur's record.
Roni Sofer contributed to this report