Ari Harow struck a deal to turn state's witness on Friday, which is widely being viewed as a potential turning point in police enquiries into the Israeli premier.
Mr Harow is under investigation himself for allegedly using his political connections to advance his own business interests. No formal charges have been filed against him, but lsraeli media reported that the ex-aide agreed to cooperate with the Attorney General in return for six months' community service and a £147,000 fine.
Late on Thursday Israeli police explicitly said for the first time that the cases concerning the prime minister include charges of “bribery, fraud and breach of trust". A spokesperson for Mr Netanyahu's office said the allegations are "untrue" and politically motivated.
"We completely reject the unfounded claims made against the prime minister," a statement said. "The campaign to change the government is underway, but it is destined to fail, for a simple reason: there won't be anything because there was nothing."
Police first talked to Mr Netanyahu at his Jerusalem home on 1 January as part of a huge corruption sting involving more than 50 influential Israeli business leaders and other public figures.
It is alleged that he received lavish and “inappropriate” gifts from wealthy supporters such as cigars and champagne, and offered commercial favours to Yedioth Ahronoth newspaper owner Arnon Mozes in return for positive coverage.
Recordings found on Mr Harow's phone of conversations between Mr Netanyahu and Mr Mozes are said to form the basis of the second investigation. He is expected to testify in both cases, having served as the premier's chief of staff during the time period covering both the proposed deal with Mr Mozes and the reception of thousands of pounds' worth of gifts.
The American-born political consultant and former aide worked closely with the prime minister and the Likud party between 2007 - 2015. He is believed to be very loyal to his former employer, leading Attorney General Avichai Mendelblit to spend months persuading him to testify.
Investigators have successfully secured a gagging order on both cases' details, which will remain in force until 17 September.
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