The Israel Police suspect that a Trojan Horse virus uploaded into Malam Systems Ltd.'s (TASE:MLAM) was used to distort the company's bid in a large tender, the results of which were due to be published in a few days. An unknown person is suspected of monitoring Malam's computer files. The tender in question, published by the Ministry of Finance for the management of foreign trade, is estimated to be worth hundreds of millions of shekels. The police do not yet know who commissioned the hacking of Malam's computers.
Police sources say there was no doubt that material disclosed so far was only the tip of the iceberg of industrial espionage in Israel. Investigators still have to decode many encrypted files, which will reveal those who asked for information about competitors.
Meanwhile, the affair is spreading overseas. Israeli investigators went to Germany and the UK last week to pursue the investigation, when it was realized that some foreign commercial companies were also the targets of the Trojan Horse spyware.
Police sources insist that there is no doubt that the company executives who ordered the business information knew that it had been obtained by illegal means. Sources close to the investigation predict that CEOs of more companies will be asked to give evidence in the coming days, and some of them may be questioned under caution.
Cellcom president and CEO Dr. Yitzhak Peterburg was questioned yesterday, after his name appeared as the addressee on documents allegedly stolen from Bezeq (TASE:BZEQ).
Bezeq notified the Tel Aviv Stock Exchange (TASE) yesterday that the police had taken in for questioning several senior employees to "identify confidential documents found at competitors, and to assess the likely damage to Bezeq." The police suspect that Cellcom spied on Bezeq.
In its statement to the TASE, Bezeq added, "Bezeq has had no information to date, and has no information, concerning this investigation or the subjects of the investigation, except for a request to question senior employees to help the police with their inquiries." Bezeq added that its subsidiaries Pele-Phone Communications Ltd. and satellite broadcaster YES denied having any role in the affair.
The files, including material obtained, was held in computers belonging to the investigation agencies. The material was encrypted with 13-character codes that the police have been unable to break, which is why the identity of most of the companies commissioning the business information about their competitors is still unknown.
"When the police crack these codes, they'll realize that they've only uncovered 40% of the material present," said one source involved in the matter. "There are clients and clients of clients there, and one client leads to another. In some cases, the police will be surprised to discover actual mechanisms for the automatic distribution of the material."
The few codes the police have been able to break so far were mainly those of Modiin Ezrahi Ltd. The police have not yet been able to break the codes used by Zvi Krochmal Investigations. "When a lot of people know the secret, it's not difficult to break the codes. But when only the software operator knows the code, there's no chance of discovering it," said the source.
Another detail uncovered by the investigation is that Michael Haephrati's wife, Ruth Brier-Haephrati, penetrated the computer of a leading Israeli company, precisely when police investigators had taken over the computer as part of their investigation. She exploited the opportunity to hack the police computer that was linked to the company's computer, where she saw documents and testimonies related to a very large and sensitive investigation involving another police unit. The investigation is linked to suspicions against very senior intelligence targets who were attempting to take over the same company.
Apparently carelessness on the part of a police officer enabled the police computer to be hacked. The police are concerned that Brier-Haephrati tried, and may have succeeded, in selling the material she discovered to the targets of the investigation.
Published by Globes [online], Israel business news - www.globes.co.il - on May 30, 2005