Police arrest spy-tech firm officials suspected of fraud, money laundering

Police arrest spy-tech firm officials suspected of fraud, money laundering

Arrests made in Ability defense contractor case after the firm’s subsidiaries’ licenses were suspended six months ago

Judah Ari Gross is The Times of Israel's military correspondent.

Illustrative photo of a satellite dish (Nati Shohat/Flash90)
Illustrative photo of a satellite dish (Nati Shohat/Flash90)

Police on Sunday arrested a number of officials from two connected defense contractors on suspicion of fraud, smuggling and money laundering, following a lengthy investigation into the firms, police said.

In March, the Defense Ministry suspended the licenses of two subsidiaries of an Israel security technology company — Ability Computer and Software Industries, and Ability Security Systems — over concerns that they had illegally marketed and exported listening and positioning systems.

Following a continued investigation by the ministry and its Defense Export Oversight Department, along with the Israel Police, tax and customs officials and state prosecutors, a number of arrests were made and searches were carried out, police said in a statement.

The companies are suspected of “fraud, smuggling and also laundering large sums of money” through their business dealings, according to the statement.

The rest of the details of the investigation were placed under a court-issued gag order.

Ability Security Systems and Ability Computer and Software Industries manufacture various custom-made intelligence-gathering systems for government agencies, police and militaries, the companies say.

Ability, which was founded in 1994, specializes in intercepting cellular and satellite transmissions.

Israel’s defense exports are regulated by a 2007 law that requires defense contractors to consider what and where Israeli weapons will be used for. The law is designed to prevent companies from knowingly selling weapons to countries that intend to use them to commit atrocities.

While the contractors are legally required to take potential human rights violations into consideration, this requirement can be overruled out of diplomatic or security concerns.

Currently, Israeli law only prevents the sale of weapons to countries that are under an official embargo from the UN Security Council. However, such embargoes rarely happen, generally because of vetoes by China and Russia.

Israel has been accused of selling weapons and military services to human rights violators around the world for decades, including to apartheid South Africa, Rwanda during the 1994 genocide and in recent years to South Sudan, despite a near-universal arms embargo over the bloody civil war there.

The logo of the Israeli company NSO Group is displayed on a building where they had offices in Herzliya until 2016. (AP Photo/Daniella Cheslow)

Israeli company NSO Group is currently facing lawsuits alleging it sold spyware to governments with questionable human rights records. Channel 12 news reported last month that NSO hired controversial private investigation firm Black Cube to investigate those involved with the case. The NSO Group denied the claim.

Last week, NSO claimed it was adopting “a new human rights policy” to ensure its software is not misused.

Recently, Israel has also been accused of supplying Myanmar with “advanced weapons” during the country’s ethnic cleansing campaign against its Rohingya Muslims. The Foreign Ministry admitted last year that Israel had sold weapons to Myanmar in the past, but said that it had frozen all contracts earlier in 2017.

In 2018, controversial Philippines President Rodrigo Duterte told President Reuven Rivlin that his country would buy weapons only from Israel due to its lack of restrictions. He has said in the past that he sees Israel as an alternative supplier of weapons after the US and other countries refused to sell him arms over human rights violations.

The recent warming of ties between Israel and Chad was reportedly conditioned on Jerusalem’s willingness to sell arms to the African country, which critics say is guilty of human rights violations.

The Israel Aerospace Industries new Mini-Harpy kamikaze drone, which was unveiled at the Aero India trade show in Bangalore, India, in February 2019. (Israel Aerospace Industries)

Israel has also come under criticism for its cooperation with Azerbaijan, another country accused of human rights violations, despite it being one of the few majority-Muslim countries with which the Jewish state enjoys an openly positive relationship.

Azerbaijan is seen as an important ally given that it shares a border with Israel’s enemy, Iran. Last year, the country’s president, Ilham Aliyev, revealed Azerbaijan had purchased some $5 billion worth of weapons and defense systems from Israel.

In February, top officials in the Israeli drone manufacturer Aeronautics Defense Systems Ltd. were suspended over suspicions the company tested one of its “suicide drones” against the Armenian military on behalf of Azerbaijan in 2017.

Times of Israel staff contributed to this report.

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