Two Israel Lands Authority (ILA) officials were arrested Wednesday on suspicion of receiving bribes in exchange for information on lands that had no owners.
Five additional suspects were also detained, among them two attorneys, and their houses and offices were searched.
A businessman suspected in the case has admitted in his questioning to giving NIS 70,000 as a bribe to a senior ILA official in return for assistance in having a road passing through his lot approved.
His lawyer, Uri Kenan, saw he was "confident that after the end of the investigation, when the facts become clear, the case against him will be closed."
The Israel Police said that "seven suspects were arrested Wednesday morning and were taken for questioning under caution on suspicion of bribery, fraud, breach of trust, and conspiring to commit a crime."
The police added that the officials are suspected of receiving bribes in exchange for unlawfully providing information to benefit others.
"As part of our ongoing fight against offenses relating to ethicality and public corruption ... and in light of evidence indicating other offenses have allegedly been committed, the National Unit for Combating Economic Crime in Lahav 433 launched an overt investigation, after concluding its covert investigation into the matter," police said.
"We will continue investigating and uncovering misconduct and conflict of interest," the police added.
A lawyer representing one of the suspects said that "the serious and abstract suspicion attributed to my client has no ties to reality. I am certain that my client will be released after his version will be reviewed and the court will examine the evidence in this case."