The Israel Aircraft Industries Ltd. (IAI) bribery affair is spreading. Israel Police suspect that two businessmen acting as IAI procurement and marketing agents heavily bribed senior IAI executives to obtain exclusivity in carrying out contracts in certain countries, and larger commissions. The police claim that the two suspects defrauded the state of millions of dollars.
One suspect is a millionaire former Israeli resident with close ties to the Labor Party. His name is being withheld. The second suspect is the father of IAI president and CEO Moshe Keret’s office manager.
The Israel Police National Serious and International Crimes Unit have arrested the two men and searched their residences in Tel Aviv and Ashkelon. The police have also searched IAI’s offices and factories, including the Elta Electronic Industries Ltd. factory in Ashdod.
Chief of the National Serious and International Crimes Unit security and economic crimes section Chief Superintendent Yair Regev told “Globes”, “The investigation is now focusing on examining the deals. We’ve collected many documents, and we’re now examining them, which will take a long time. Later, we’ll investigate and interrogate everyone involved in the deals, approval of the payments, and finances.”
A senior police source said there was no alternative to questioning Keret and other IAI executives. “Who approves multi-million dollar deals? Junior clerks? Unquestionably, the highest executives at IAI approved the deals. That’s how the defense industry is run.”
The investigation was initiated by the Ministry of Defense security officer on the basis of findings by the State Comptroller, who raised suspicions of criminal acts at IAI. The investigation was transferred to the Police National Serious and International Crimes Unit six months ago, and it began to gather evidence.
The millionaire suspect was allegedly involved in deals worth $150 million, including IAI’s purchase of Russian Ilyushin Il-76 planes for the Phalcon AWACS system. The Phalcon planes were due to be sold to China, until the US shot down the deal. The planes were later sold to India for several billion dollars.
Published by Globes [online], Israel business news - www.globes.co.il - on October 2, 2005