"Bloomberg" reports that Allot Communications Ltd. (Nasdaq:ALLT; TASE: ALLT) indirectly sold Internet-monitoring solutions to Iran. The report said that the company's equipment was exported to Denmark, where it was transferred to a contact person, who changed the name of the product and sold it to Iran. The "deep-packet inspection" technology can monitor e-mails and messages, and locate people through mobile phones.
Allot's share fell 4.07% in morning trading on the TASE today to NIS 60.49, after falling 5.6% on Nasdaq on Friday to $15.75, giving a market cap of $463 million.
"Bloomberg" claims that the Israeli security establishment, customs and trade authorities had no knowledge of the indirect sales of Allot products to Iran. This violation of the trade embargo on Iran went unnoticed, since all purchase agreements were prepared in Denmark. The Allot equipment was destined to be used to track citizens in Iran, Tunisia, Bahrain and Syria.
In response to the report, Allot said, "Allot’s corporate policy is to comply fully with Israeli and non-Israeli laws, including all applicable export laws and regulations. The company’s products are not defense items and are designed and intended for the civil market.
"Nevertheless, the company believes it is important to note that the Bloomberg article contains a number of inaccuracies. While Allot’s equipment is best in class network optimization and monetization, it is not designed for intrusive surveillance purposes.
"Its intent is to optimize internet traffic for Enterprises and Internet service providers by identifying and prioritizing applications. Our equipment lacks any capability to analyze or extract knowledge on the actual content of internet traffic."
Allot concluded, "Allot sells its products through a network of distributors and resellers worldwide. Each distributor is generally assigned with a specific territory and is authorized to market Allot’s products only within that territory. Beyond the contractual measures there is no electronic way for Allot to locate or disable its products after shipment, unless the end-user proactively initiates a connection.
"The company is investigating the claims contained in the Bloomberg article."
On Thursday, the Ministry of Defense ordered Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) to cancel a $140 million contract signed in 2009 with the Turkish Air Force for the supply of airborne intelligence gathering systems out of concern that it could cause a security breach to elements that are hostile to Israel.
Burt Solomon, who heads the New York Axis organization for Internet freedom, said that the fact that the most vicious regimes are using western tracking technologies illustrates that current efforts to prevent trade with them are simply not working. How many innocent civilians in Syria and Iran will have to wait until the US and the EU turn their words into actions, Solomon asked.
Western countries have a way to prevent the leakage of sensitive technologies. Most companies that sell sensitive equipment have ways of tracking their customers. Governments can demand they do so by toughening export laws. "Companies can keep in contact with customers in order to provide software updates and other services, and can also locate their product users," said John Allstake, a US security expert.
Published by Globes [online], Israel business news - www.globes-online.com - on December 25, 2011
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