Dozens detained over NIS 1 billion cartel for Defense Ministry construction tenders

Police seize luxury cars, watches during raids after undercover op; ministry employees, construction company owners, lawyers among those held; one linked to criminal organization

Luxury cars seized as part of an investigation into alleged corruption in the Defense Ministry construction tender process, February 13, 2023 (Israel Police)
Luxury cars seized as part of an investigation into alleged corruption in the Defense Ministry construction tender process, February 13, 2023 (Israel Police)

Dozens of people have been arrested in connection with a NIS 1 billion (approximately $280 million) cartel to corrupt the tender process for Defense Ministry construction projects, siphoning off state funds as part of a criminal racket, police said Monday.

Police said that those arrested on suspicion of bribery and corrupting the tender process included Defense Ministry employees, contractors, company owners and lawyers.

Anti-fraud officers have been conducting an undercover operation for a year after suspicions were initially raised by the Director of Security of the Defense Establishment that there was corruption within the tender process at the Defense Ministry.

According to police, it was suspected that officials in the engineering and construction wing of the ministry were accepting bribes in exchange for giving out inside information and biasing tenders for construction projects.

Police said that during searches of the homes of suspects, they seized luxury cars, luxury watches and cash.

Police said the investigations revealed that one of the contractors suspected in the case had business connections with the head of a criminal organization, as well as with other parties identified with that organization.

Luxury watch seized as part of an investigation into alleged corruption in the Defense Ministry construction tender process, February 13, 2023 (Israel Police)

The Ynet news site named the criminal entity as the Abu Latif organization.

Police carried out a massive raid against the criminal syndicate last week, arresting 21 members of the organization and seizing assets as part of an investigation connected to construction protection rackets.

Dozens of companies were suspected of involvement in the cartel, which police said operated in an orderly manner and grew over time as relations with corrupt officials strengthened.

“The suspects submitted bids in the tenders in a manner that would produce the average they were aiming for, which would also include the bid closest to the average that would win the tender,” police said.

“Using this method, the cartel cheated the Defense Ministry and the tender funds were fraudulently obtained and used illegally,” the statement read.

In other cases, contractors would fictitiously register ownership of companies that would compete for tenders, giving the impression that multiple entities were bidding for the work when in fact it was just one contractor.

The Kirya, IDF Headquarters, buildings seen from the Sarona Market in central Tel Aviv, on march 21, 2018. (Moshe Shai/Flash90)

The individuals detained are suspected of a number of crimes including taking bribes, giving bribes, fraud and breach of trust, receiving something fraudulently under aggravating circumstances and false registration of corporate documents.

In addition, there were allegations of multiple offenses committed under tax and anti-money laundering laws.

The Defense Ministry said in a statement that it viewed the situation “very seriously” and will show “zero tolerance” for any corruption.

The ministry said that its Engineering and Construction Division “leads large-scale national projects, including the rebuilding of the majority of IDF bases, the historic relocation of IDF bases from the center of the country to the Negev and the Galilee for the benefit of economic and urban development, the demarcation of the country’s borders, security projects, and more.”

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