The ISA and Israeli police are questioning the five suspects over their alleged involvement in a plot whereby the Communications Ministry supposedly crafted industry rules to benefit Bezeq Israeli Telecommunication Corp in exchange for positive coverage of Netanyahu and his wife on its wholly-owned news outlet Walla!, the person said.
Of the seven people arrested Sunday, two are close confidants of Netanyahu - one is his former spokesman and the other is reportedly a close friend.
Police have already concluded investigations into two separate cases involving the prime minister and their recommendation that charges be pressed is now in the hands of the attorney general.
Israeli police on Tuesday said they suspect a close confidant of Prime Minister Benjamin Netanyahu of offering a sitting judge a top posting in exchange for dropping a corruption case against Netanyahu's wife.
He has denied wrongdoing in what are now four separate investigations, including two in which he is personally a suspect. Avichai Mandelblit, who did get the job, announced in September that he meant to indict Sara Netanyahu on fraud charges, accusing her of misusing some $100,000 through her management of the prime minister's official residence in Jerusalem.
"As part of the investigation, suspicions accumulated of felonies concerning ethics, fraud, money-laundering and securities violations, conducted over extended periods of time, frequently and systematically as part of relationships between Bezeq executives and public servants and their associates", Tuesday's police statement said. Netanyahu's coalition partners have stuck by him, though some said their calculations could change if the attorney general indicts him.
Handler's lawyer said she cooperates with the investigators and denies the allegations.
"I didn't mention the prime minister in connection with anything, I said that there were persons sniffing around the investigators working on these cases", Alsheich told committee members, several of whom admitted not having seen the broadcast.
The police identified the pair as Nir Hefetz, a former Netanyahu spokesman, and Shlomo Filber, the ex-director of the communications ministry under Netanyahu.
Two other suspects in the affair, Bezeq CEO Stella Handler and the company's strategy and business development manager Amikam Shorer, have been remanded until Wednesday.
Netanyahu is not a suspect in that case but Israeli media said he was likely to be questioned soon.
According to the police, Netanyahu and his family received goods, including jewelry, cigars, and Champaign, worth about one million shekels (282,800 USA dollars) from Israeli businessman and Hollywood tycoon, Milchan and the Australian businessman, James Packer. The second involves discussing a deal with the publisher of Israel's best-selling newspaper for better coverage in return for curbs on a rival newspaper.
Mandelblit is weighing indictments in those investigations, with a decision possibly months away.