Bermuda is at the centre of a $1 million-plus probe into alleged illegal fund-raising for Israel's ruling party which has rocked the Middle East country's government.

Now the Israeli Attorney General has ordered a major investigation into the campaign financing of Prime Minister Ehud Barak's One Israel Party -- which could involve local authorities.

The investigation centres around $1.3 million in donations -- claimed to be in violation of Israeli political donation laws -- some of which is said by the opposition Likud Party to have been channelled through companies in Bermuda, Panama and the US to avoid rules on the maximum size of contributions.

Acting Finance Minister Alex Scott confirmed the Ministry was aware of the controversy in Israel.

But he said: "We haven't received any formal requests from any quarter.'' Mr. Scott added: "As far as real information for us to proceed, there isn't any at this time. We're taking an active watching brief.'' And he said: "If asked, pending what we are asked, we certainly have the legislative tools there to respond appropriately.

"But the operative thing is we have to be asked -- until then, we don't have any hard information.'' Solicitor General and Acting Director of Public Prosecutions William Pearce added his chambers had not been approached by the Israelis either.

Israeli state comptroller Eliezer Goldberg has already slapped a $3.2 million fine on the One Israel Party.

His report to the Israeli parliament said the financing practices of the party had "trampled on the law''.

The report said One Israel had set up several non-profit organisations which channelled large contributions from non-Israeli donors.

Mr. Goldberg confirmed that his investigation had extended outside Israel -- but refused to confirm the Likud allegations that Bermuda or the other named countries had been used to dodge the financing rules.

Mr. Barak told reporters yesterday that he had been unaware of any illegal activities and added that the campaign fund-raising laws were unclear -- and he insisted he did not have "any problem with an investigation.'' The Comptroller's report claimed that associates of Mr. Barak -- including Cabinet Secretary Yitzhak Herzog and the Prime Minister's brother-in-law -- used money from the non-profit organisations for surveys, campaigning and door-to-door recruiting.

The non-profit organisations were created as a conduit for funds from a Swiss millionaire and a Canadian charity group to make contributions larger than the legal limit.

Attorney General Elyakim Rubenstein said potential violations to be explored would include fraud and breach of the public trust, which carry penalties ranging from fines to jail terms, depending on the seriousness of the offences.