Firm Suspected of Selling Drones to China Without a Permit

Police raid Israeli factory, question owner over suspicions that the drones were to be exported via third nation.

The police and the Defense Ministry are investigating suspicions that an Israeli company sought to transfer defense-related reconnaissance drones to China without permits.

The company under investigation, Emit, manufactures Remotely Piloted Vehicles (RPVs) for reconnaissance purposes. The police's Serious and International Crimes Unit, which has been probing the company for several months, Monday raided its offices in Moshav Kadima in the Sharon area and took its owner and director, Menashe Ephraim, to the Petah Tikva police station to give his version of events. Ephraim was later released on bail; his passport was confiscated and he is barred from leaving the country.

Emit and Ephraim are suspected of illegally transferring RPVs to China, as well as of income tax infractions and attempts to tamper with evidence. The head of security in the Defense Ministry, Yehiel Horev, and customs officials are also involved in the investigation.

Emit, a 20-year-old company, counts Israeli firms among its clients, particularly the Rafael Armament Development Authority, according to Ephraim's attorney for civil matters, Shlomo Wertheim. Most of the company's products are manufactured for export. In the past, it had dealings in Europe and Latin America.

In 2002, Emit allegedly signed an agreement with a firm in a country in Southeast Asia for joint development of an RPV. However, it is suspected that the intention was to sell the RPVs to China. Officials' suspicions grew after the company sent one RPV to the Southeast Asian company, ostensibly for display at a weapons show, in apparent violation of the customs laws and without declaring it as defense equipment. Following this incident, the Defense Ministry decided not to renew the company's permits to negotiate with potential customers over sales of this equipment.

The investigation also revealed that a few days ago, Ephraim traveled to the Southeast Asian country in question together with a number of Emit employees, and according to a statement by the police spokesman, police suspect that the purpose of his trip was to "tamper with and eradicate evidence, among other things by changing and forging contracts that he signed with clients."

Ephraim denied the allegations and said that his activities were lawful and carried out with permits. Wertheim told Haaretz that "the mountain will turn out to be a molehill."

Ephraim is also being represented in the case by attorney Devorah Chen, who until recently was head of the department for security investigations in the State Prosecutor's Office. Chen could not be reached for comment.

Haaretz also learned that while he was being investigated, Ephraim invited a number of Israel Defense Force generals to join Emit's board of directors or to serve as consultants. In addition, Haaretz has learned, despite the suspension of the company's permits, Emit was allowed to continue talks over the sale of its products to Sri Lanka, after alleged intervention by senior IDF reserve officers.

Defense Ministry sources responded that the permits were given because Emit had preexisting contracts to supply components to other defense industries.

Emit's work force of 60 has been reduced to 30 as a result of the withdrawal of its permits.

The issue of security exports to China is particularly sensitive because of the revelation not long ago that Israel had exported RPVs to China without the permission of the United States. This caused a crisis between the two countries.