Isreali police are urging the attorney general to indict Prime Minister Benjamin Netanyahu in two corruption cases involving bribery, fraud and breach of trust.
The police also pointed to Milchan's partial ownership of Israel's Channel 10 and his desire to strengthen his holdings in Israeli media, promoting an idea to head up merged Channel 2 franchisers Reshet and Keshet Broadcasting, plus ensuring supportive news coverage for Netanyahu in the proposed new TV network.
Avichai Mandelblit, the attorney-general, will have to decide whether to press charges against the prime minister.
Netanyahu, prime minister for almost 12 years, addressed the nation as news of the recommendations broke, proclaiming his innocence and making clear he had no intention of resigning.
Police separated allegations against Netanyahu, who has been Prime Minister since 2009, into two cases.
Police say the luxury gifts include expensive cigars, jewellery and champagne in huge quantities.
The Australian Federal Police interviewed Mr Packer last December and he reportedly corroborated previous testimony by Milchan that the gifts were organised in response to demands by the Netanyahus.
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In a statement about what has come to be known as Case 1000, police said that in return for gifts from Israeli Hollywood mogul Arnon Milchan and others, Netanyahu sought legislation to extend by a further 10 years an existing 10-year tax exemption for returning Israelis on income earned overseas - which could have saved Milchan further millions of dollars.
On Tuesday, Netanyahu said everything he did was for the sake of the country, "not for cigars from friends and not for better media coverage".
Police determined that in file 2000 Netanyahu and Yedioth Ahronoth owner/publisher Arnon (Noni) Mozes had a clear give-and-take relationship, with both parties taking actions that followed the verbal understanding that had been reached between them.
Netanyahu is suspected of giving Milchan significant tax exemptions as a returning resident of Israel, and it has also been claimed he helped appeal for Milchan's visa extension in the United States after experiencing difficulty with USA officials. "They will eliminate all global efforts to save the political process", Nabil Abu Rudeina said.
"You know I do everything with only one thing in mind - the good of the country", he said.
He added that "our government will finish its term and I am sure that in the next elections (due in 2019), I will again win your confidence".
Mr Packer struck up a close friendship with Mr Netanyahu in 2014 after the pair were introduced by their mutual friend Mr Milchin, who is one of Israeli's richest men and produced Hollywood hits including LA Confidential and 12 Years A Slave.
Labor Party Chairman Avi Gabbay said that "the Netanyahu era is over, either at the ballot box or through investigations".
He has already faced a series of large protests in Tel Aviv over the corruption cases.