The Financial Department of the State Prosecutor’s Office informed 10 individuals and three companies on Monday that they would be indicted on serious security offenses linked to selling missiles to China without approval.
According to the State Prosecutor’s Office, the deal in question was brokered by Ephraim Menashe, an Israeli drone entrepreneur and founder of the Solar Sky company, who then hired Tzvika and Ziv Naveh, owners of the Innocon drone company, and other unnamed suspects.
“The suspects were investigated as part of a large-scale security case in which it was suspected that they manufactured, brokered and exported cruise missiles for military use, without a permit,” said prosecutors.
The suspects will be summoned to a pre-indictment hearing before facing a range of charges, including security offenses, weapons offenses, money laundering, violating the Defense Export Control Law and more.
The Defense Ministry’s Defense Export Controls Agency (DECA), established in 2006, manages the export and licensing of all Israeli-made defense equipment and technologies, and relevant companies are required to apply for a permit before brokering any overseas deals.
According to prosecutors, Menashe and the other suspects “manufactured dozens of cruise missiles and carried out different tests in Israeli territory, endangering people’s lives.”
Once the missiles were manufactured, Menashe allegedly exported dozens of them to China in a covert manner in exchange for millions of dollars that he hid from authorities, prosecutors allege.
News of the case was first exposed in February, when the Shin Bet revealed that it was investigating 20 individuals for selling such missiles to what was identified at the time as an unnamed Asian country.
Israel is home to some 1,600 licensed arms exporters, which employ 150,000 to 200,000 people. In addition, there is a large supply chain of subcontractors who supply software, hardware, raw materials, and other goods necessary for arms production.
DECA is supposed to watch over this massive system, guided by strict rules governing Israel’s arms export industry. The body, which operates with nearly no transparency, is supposed to vet deals to ensure that arms do not go to enemy countries, endanger Israel in any way, include classified technology, or stand to harm Israel’s international standing.
The DECA mechanism was created in 2007, years after an Israeli fighter jet deal got tangled up in US-China tensions.
In the late 1990s and early 2000s, the US demanded Israel Aerospace Industries cancel separate deals with China for Phalcon airborne early detection radar systems and Harpy drones. Israel complied both times, after numerous threats from the US, and agreed to stop selling military hardware to China, drawing anger from Beijing and damaging ties.
Since then, Israel will not export security products to China without Washington’s okay.
Menashe was tangled up in a similar case in 2006, when he was investigated for attempting to sell drones to China without a permit. The munitions allegedly developed in the current affair use a more advanced version of the technology at the center of the older case, according to information obtained by The Times of Israel.
Tal Schneider contributed to this report.