Toledo, a shoeshine boy turned economist who plays up his indigenous roots, inspired scores of Peruvians to vote for him in 2001 as an antidote to widespread graft in the government of Alberto Fujimori, who is now serving a 25-year prison sentence for corruption and human rights abuses.
Israel's Foreign Ministry said that Peru's fugitive ex-president Alejandro Toledo was not aboard a Sunday evening flight from San Francisco that landed at the country's main worldwide airport.
Toledo has a long friendship with Israeli businessman Yosef Maiman, who prosecutors accuse of acting as a middleman for at least $10 million in alleged bribes, Reuters reports.
The government of President Pedro Pablo Kuczynski, who served as Toledo's finance minister and prime minister a decade ago when the contracts were awarded, said it would offer a reward for information leading to Toledo's capture if he did not turn himself in.
Toledo lives in the United States and is now in Paris.
Dozens of Brazilian business leaders and politicians have been indicted for corruption, money laundering and racketeering over the scandal in Petrobras, a semi-public oil and gas company.
If captured, Toledo will be detained for up to 18 months as prosecutors prepare charges against him.
Peru had been informed by US authorities on Saturday that they were not planning to keep Toledo from boarding a flight to Israel from California that was scheduled to land in Tel Aviv on Sunday.
An arrest warrant and hefty reward was issued through Interpol on Thursday night for his alleged role in an global scandal involving Odebrecht, a construction conglomerate from Brazil.
Alejandro Toledo is alleged to have taken a United States dollars $20 million bribe for awarding a lucrative contract to Odebrecht (La Mula).
"Former Peru President Toledo will be allowed into Israel only when his matters are settled inPeru", a Foreign Ministry spokesman said, without elaborating.
Peruvian authorities have also contacted Interpol, which issued an alert to its 190 member states.
"US authorities have been asked to cooperate in detaining and deporting him", it said.