Engineer at Israeli defense contractor probed over massive fraud

A senior engineer at El-Op Electro Optics Industries is under investigation for fraud, breach of trust and conflict of interests spanning more than a decade.

The gag order on the investigation was lifted after Haaretz appealed to the Petah Tikvah District Court against a lower court's decision to bar publication of the probe.

The engineer was part of a team that received the Israel Security Prize. This means he probably was involved in projects on a national level.

The police and Defense Ministry security chief Amir Kain launched their probe due to information Kain's department received from El-Op contractors and suppliers.

Judge Menachem Finkelstein acceded to Haaretz's petition to allow publication of the fact that the investigation was underway, despite the objections of the Defense Ministry's security department. However, he did not allow the publication of the individual's name or exact position, due to national security concerns.

Hearings were underway over lifting the gag order in the Magistrate's Court and the District Court for almost two months. Nir Ben-Moshe, deputy directory of the Defense Ministry's security department, told the court that even the most minor release of information could damage state security.

El-Op said the engineer was dismissed after an internal probe revealed possible ethical improprieties. He is suspected of taking advantage of internal information about El-Op, which allegedly enabled him and his relatives to benefit from consulting contracts and from equipment and services supplied to El-Op for 10 years. The engineer and his relatives are believed to have closed deals worth millions of shekels in a manner that involved a conflict of interest and breach of public corporate trust.

Shortly after the investigation began, the Defense Ministry's security department and the police's International and Serious Crimes Division asked the Petah Tikvah Magistrate's Court for a sweeping gag order on the affair.

When questioned by Superintendent Aviezer Dor-Hai, the suspect denied the allegations. He said he was asked to sign El-Op's ethical code two years ago, and refused. He therefore was not guilty of breach of trust nor acting in a conflict of interests, he said.

In granting Haaretz's petition Wednesday, Judge Finkelstein said the proper balance had to be found between the public's right to know, the right to publish and national security. On the judge's recommendation, the parties came to an agreement to lift the gag order but not to release the name of the suspect or the equipment connected to the project in question.

El-Op, located in Rehovot, is a private company owned by Elbit that makes advanced fiber-optic military equipment.

Attorneys Yair Regev and Ronen Rosenblum, representing the engineer, said their client denies any wrongdoing. They noted that El-Op is a private company and therefore a charge of breach of public corporate trust is not applicable.

El-Op responded, "Following an internal company investigation, suspicions were raised of potential ethical improprieties by an employee. The company reported everything to the law enforcement authorities. The employee was given a hearing, after which he was dismissed. The company is assisting the authorities in their investigation."