The investigation into kickbacks and embezzlement of Israeli state funds, focusing mainly on members of the Yisrael Beiteinu party, took a bizarre turn this week.

It emerged that one of the central suspects, a former press adviser to party leader Avigdor Lieberman, disappeared six months ago in Ukraine and may have been killed.

Mikhail Pelkov, a well-known figure in Israel's Russian-speaking media, was allegedly involved in laundering money that other suspects in the case, including deputy interior minister Faina Kirschenbaum, are suspected of funnelling out of the state budget.

A burnt and unidentified body was found in eastern Ukraine with Pelkov's passport, according to local reports. He had not been in Israel for at least six months.

While much of the attention has been on the Yisrael Beiteinu suspects, members of other parties are also involved, including Yisrael Yehoshua, a powerful leader of the Likud Jerusalem branch, who has been arrested.

Police found 12 million shekels in cash in his safe and believe the money is connected to kickbacks from fraudulent allocations of state money.

The settlement department of the World Zionist Organisation is also being investigated.

Some individuals and organisations under investigation are still the subject of a court gag-order. They include some of the most influential people in the Jewish world.