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Foreign Ministry and Defense Ministry sources adamantly denied yesterday that they were in any way involved in arms shipments to Somalia.

Spokesmen for both ministries were responding to news of the arrest in the U.S. of Hanoch Miller, an Israeli arms merchant, for allegedly illegal arms sales to Somalia, forging documents, money laundering and violating the UN arms embargo on Somalia.

A Defense Ministry spokesman said there is a ban on arms sales to Somalia and Miller did not have permission to sell arms there, and even if he had asked in Israel he would not have received such permission.

According to the charges brought against Miller at a Florida district court, he was arrested with an unnamed American partner for alleged involvement in the sale of hundreds of AK-47s to the government of Somaliland, a breakaway district in Somalia since 1991. Miller and his American partner allegedly organized arms shipments, which apparently included arms bought in Bosnia, and had planned to fly them from there in cargo planes to Somalia. The indictment also mentions a shipment that was sent from Panama.

The suspect allegedly presented "end user" documents of the defense ministry of Chad. Arms shipments to that African country are not forbidden.

The two were arrested in a sting operation of the U.S. Customs, when one of their contact persons, whose help they sought in organizing the air shipments, turned out to be an undercover Customs agent.

Miller, 53, is an aerospace engineer who served in the Israel Air Force in a unit that designed aircraft. He left the military with the rank of major and worked for a short while in the Israel Aircraft Industries. With two partners he set up Radom Aviation Systems, a company that dealt with the upgrading of aircraft, mostly in the installation of avionics. The company functioned in line with licenses issued by the Defense Ministry, and at times served as a subcontractor for IAI.

One of the last deals of Radom in which Miller was involved was with Chad. The company upgraded Soviet-made Mi-17 helicopters as well as Swiss-made, propeller-driven Pilatus aircraft, used for training but also as combat aircraft against rebels in the country. The deal was valued at $10 million.

Three years ago Miller left Radom and established an independent firm in Yehud, which he said worked on electronic warfare and night vision equipment, but it now appears that he was also involved in firearms.

Even though the indictment does not mention him by name, Joseph O'Toole, a former colonel in the U.S. Army who was arrested in the 1980s for allegedly illegally selling arms to Iran along with Israeli Ari Ben-Menashe, is mentioned in the case. In 1991, O'Toole was exonerated of suspicions against him. Ben-Menashe left Israel and now lives in Canada, having falsely claimed for years that he was a secret adviser of Prime Minister Yitzhak Shamir.

Attempts to get a response for this article from Miller failed, and his office assistant disconnected the telephone and refuses to give details on his whereabouts.

The strategic location of the breakaway territory, which borders on the Gulf of Aden and the sea routes of the Indian Ocean from Iran, Saudi Arabia, Yemen and through the Red Sea, have always been important for Israel's geo-strategic interests. In the past Israel has shown great interest in the countries of the Horn of Africa, and the Mossad had secret links with some countries there.

The significance of the region has become all the more important because of the growing presence of Islamic fundamentalists there, and because it is used as a transit point for the shipments of arms to Hamas, as well as for the training of terrorists.