Egypt's foreign minister has paid a rare visit to Israel, offering his country's help to revive peace talks with the Palestinians.
Sameh Shoukry's visit, the first by an Egyptian foreign minister in nine years, was a sign of a closer engagement with Israel partly driven by shared alarm and security cooperation over common regional threats that include Islamist insurgency.
Egypt was the first of a handful of Arab countries to recognise Israel with a U.S.-sponsored peace accord in 1979, but Egyptians' attitudes to their neighbour remain icy.
In a press conference with Shoukry, Netanyahu called on the Palestinians "to follow the courageous example of Egypt and Jordan and join us for direct negotiations".
"I wish to inform you that in light of information received regarding affairs that pertain to the prime minister, among others...the attorney general has conducted a number of discussions... made a decision to instruct that an examination of the matter be opened", the Attorney General's office said in a statement.
In addition to the Palestinian case, both sides also discussed bilateral relations including counter- terrorism.
Israeli PM Benjamin Netanyahu has said he welcomes Egypt's efforts.
He added that peace between Israelis and Palestinians "would have dramatic and positive results and on the situation in the entire Middle East", and warned of maintaining the status quo, which might ignite further escalation.
Shoukry's visit was orchestrated by Netanyahu's confidant Isaac Molcho, who traveled to Egypt in recent weeks and met with Egyptian officials, the Ha'aretz daily reported.
Following Al-Sisi " s declarations in May, Netanyahu expressed a willingness to participate in peace talks with the Palestinians and any other Arab country that can take part in the negotiations.
Shoukry was in Ramallah last month to discuss the peace proess with Palestinian leaders.
France organized a peace conference that met in June, though Netanyahu rejected the French initiative, and neither Israel nor the PA were invited to the conference's meeting in Paris.
Violence has escalated recently, and 35 Israelis have been killed in a wave of knife, gun and car-ramming attacks since October. In particular, the two are now sharing intelligence in a common battle against Islamic State militants operating in Egypt's Sinai desert and the Gaza Strip.
Palestinian leaders say years of direct talks with Israel have not ended the almost 50-year occupation of Palestinian territories, and they have instead chosen to pursue worldwide diplomacy to reach a deal.
The ministry's statement said the media reports were "incorrect to say the least" and that the attorney general had not yet launched a full-fledged criminal investigation against Netanyahu, a probe that could lead to charges.