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"The national police unit for international crimes is currently carrying out an investigation involving Azmi Bishara," confirmed spokesman Micky Rosenfeld after weeks of speculation in the Israeli media.
"The allegations are number one assisting an enemy during the war, handing over information to the enemy, being in contact with a foreign agent and number four a violation of money laundering laws."
The former MP denied the accusations in a statement published by his National Democratic Assembly party, better known by its Hebrew acronym Balad.
"Doctor Azmi Bishara and the NDA categorically deny the charges fabricated against Doctor Bishara. It is bare-faced libel inciting his blood to be spilt in Israel," the statement said.
A spokesperson for Hizbullah rejected claims that Bishara swapped information about Israel to Hizbullah for money.
"Our relationship with him is official. We welcomed him in the Dahiyeh in the aftermath of the war as we did all people," an Hizbullah spokesperson told The Daily Star. He added that Bishara "is an Arab patriot who condemned the Israeli offensive against Lebanon."
Before going abroad, Bishara was twice questioned under caution, which means any information he supplied could be used in court against him, Rosenfeld said.
Evidence was also being gathered into allegations that Bishara was personally handed large sums of money "from overseas sources," he added.
Rosenfeld said the gag order was lifted after Bishara reneged on an agreement to return for further questioning. The latest scheduled date for his return expired last Sunday, the day when the MP resigned.
With his taste for provocation and Arab nationalism, the 50-year-old Christian from Nazareth has long been detested by right-wing Jewish Israelis, who demanded that the "traitor" be forcibly brought back from abroad.
"The Bishara trial should become a public ruling against Israeli Arabs who masquerade as a fifth column among us," said Arye Eldad, an MP from the extreme right-wing National Union party.
Several weeks after Israel and Hizbullah ended their war in Lebanon last August, Bishara and two other MPs from his Balad party paid a controversial visit to Syria and Lebanon in defiance of an Israeli ban.
Israel is officially in a state of war with both countries. Its citizens are not allowed to visit "enemy states" without permission from the authorities.
On Monday, the secretary general of Balad, Awad Abdelfattah, told AFP that Bishara intended to whip up international support before any possible return from abroad to face the allegations against him.
A distinguished debater with a doctorate in philosophy who speaks Arabic, English, German and Hebrew, Bishara was in 1999 the first Arab Israeli to run for prime minister.
He has been a tireless defender of the concept of the State of Israel for all its citizens, and has campaigned relentlessly for the rights of the 1.2 million-strong Arab minority who account for 20 percent of the population.
Israel's Supreme Court in 2006 threw out legal proceedings against Bishara for backing "popular resistance" against Israel while on a visit to Syria in 2001, ruling that his statement was not an incitement to violence. - AFP