Foreign Jewish investors have paid millions of dollars to buy two large properties at Jaffa Gate in Jerusalem's Old City through a secret deal with the Greek Orthodox church, an Israeli newspaper reported on Friday.

The highly controversial deal, details of which appeared in the Maariv daily, saw a group of Jewish investors paying millions of dollars for a tract of land in Umar Ibn Khatib Square just inside Jaffa Gate, which lies at the main entrance to the Old City.

The article did not give an exact purchase price for the deal.

Reacting to the report, Father Ata Allah Hana, spokesman for the Orthodox Church in Jerusalem, accused Israel of trying to take over Jerusalem.

"There has been a very great conspiracy ... selling lands in Jerusalem to Jewish investors living abroad," he said in an interview with Aljazeera.   

The site is currently home to two landmark properties managed by two well-known Palestinian families: the Imperial and Petra hotels. A row of Palestinian-run shops selling tourist trinkets is situated on the ground floor of the two compounds.

Neither the hotel managers nor the shop owners had any knowledge of the sale, which the newspaper said was carried out with money transferred through various European banks.

Rogue lawyer?

Asked to comment, a source close to the Greek Orthodox patriarchy told AFP the church was unaware of the land sale and that "an internal investigation" was underway.

The source said the patriarch, Irineos I, would never have agreed to such a transaction and that suspicions were growing that it had been carried out by a Greek Orthodox lawyer who had acted outside the bounds of his authority and then fled the country to avoid detection.

Irineos and about 20 priests visited the Church of the Holy Sepulchre in the Old City under police escort on Friday, as about 50 people brandishing copies of the Maariv newspaper held a silent protest outside the church, an AFP correspondent reported.

"Umar Square in our hands" read the headline of the article, which said the purchase was made by ideological Jews looking to "liberate the lands of Jerusalem".

Jewish settlement

Purchasing property in the Old City, which is situated in occupied and annexed east Jerusalem, is fraught with political tensions as Jewish groups often try to obtain properties in the heart of Palestinian areas in a major settlement drive.

In order to avoid detection, Jewish investors often use Palestinian middlemen who operate in utmost secrecy and at great risk to their own lives in exchange for huge sums of money.

The Greek Orthodox patriarchy owns considerable real estate land in the Holy Land and has often been accused by Palestinians of selling or renting it to Israel.

At the end of the 1990s, about 70 sq km of land belonging to the patriarchy, including the Abu Ghunaim hill in east Jerusalem, were sold to Israel for the construction of the new Har Homa settlement.

Three ultranationalist organisations, including Ateret Cohanim, have in recent years bought land and homes from Palestinians through various means in order to place Jews in the Palestinian neighbourhoods of Jerusalem, including the Old City.

In 1997, three Palestinian property agents who sold land to Jewish investors were found murdered.

Jewish settlement in the Old City and east Jerusalem is a deeply controversial issue as the Palestinians want east Jerusalem as capital of their future state.