The Defense Ministry continued to issue export licenses to arms exporters being investigated by the FBI because the ministry was never informed of the probe, an Israeli defense source said.
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The Justice Ministry was updated on the investigation, but not the Defense Ministry, the source said. The Defense Ministry is the agency with the authority to grant export licenses for security-related goods and services.
On Friday, Haaretz reported that over 20 Israelis doing arms deals around the world — including the new candidate for police commissioner, army Brig. Gen. (res.) Gal Hirsch — were subjects of the investigation. The police received the information and materials from an undercover FBI investigation in 2013, which included documents and audiotapes.
The materials allegedly indicate the involvement of arms dealers in bribery and tax evasion regarding deals in Africa, Europe and South America. Hirsch’s appointment may be held up by Attorney General Yehuda Weinstein while the allegations are being looked into.
Among the deals under investigation were some by Hirsch’s Defensive Shield Ltd., which has been consulting, particularly on defense and internal security, since 2007. Many deals under FBI surveillance involved former Georgian Defense Minister Davit Kezerashvili, who is sought by international law enforcement agencies for questioning and who fled Georgia a few years ago.
Kezerashvili was the defense minister in office when the deals were made with companies owned by Hirsch. In addition, the FBI examined deals done with Kazakhstan, another country where Hirsch’s firm did security business.
None of this information from the FBI was provided to the Defense Ministry before it was reported by the media. The FBI investigation started because American funds were involved in some of the deals, said a source in the Israeli Defense Ministry.
The information only came to light after the police passed the information on to Attorney General Weinstein at the end of last week. Weinstein is now set to examine the evidence, which relates to two separate defense deals that allegedly took place in Georgia and Kazakhstan, in 2008 and 2013, respectively.
The FBI sent the Israel Police material on the deals in 2013, but the police did not launch an investigation into the incidents.
Israel has signed an international convention that obligates it to enforce the law and report illicit arms deals in which bribes are made. The company Defensive Shield holds an export permit from the Defense Ministry and is subject to Israel's Defense Export Control Law.
The Defense Ministry is working with the defense industry and arms dealers on programs to prevent corruption and ensure that there is no bribery in security deals in foreign countries. In some cases, implementing such a program is a prerequisite for receiving a defense export permit. Israeli authorities began working on the matter after Israel joined the Organization for Economic Cooperation and Development and the grouping's Anti-Bribery Convention in 2010.
Defense Ministry regulations enacted in 2010 state that weapons and defense-technology exporters must declare they have “not dealt in the past, and will not deal in the future with the offense of giving bribes to foreign public employees.”
These regulations require the security export licenses granted by the Defense Ministry to include a special section banning bribery — and violating this ban could lead to the loss or suspension of the export license. This is why information on such suspicions and investigations is very important to the Defense Ministry.
Even though Israel has signed the Convention on Combating Bribery as a member of the OECD, the organization says Jerusalem does not actively work to find and investigate suspicions of bribery abroad. The OECD’s latest report on the matter, released in June, says Israel does not initiate enough such investigations and has not put companies and businesspeople on trial in such cases for the past seven years.
According to the OECD, bribery claims have been made against six Israeli defense exporters, but only one has had its export license suspended. The OECD says no steps have been taken against five of the arms and technology exporters despite investigations by foreign countries, and no one has been convicted and no company blacklisted.
Large defense exporters are required to implement plans to prevent corruption and bribery. According to the Defense Ministry, these firms are responsible for some 90 percent of defense exports. The ministry says that by March, such plans to prevent corruption and bribery will be a precondition for receiving an export license for 96 percent of Israeli weapons and defense-technology exports.
But the recent OECD report says the ministry’s division for supervising defense exports does not even check whether these plans are actually implemented at defense-export companies — but only whether the company has declared it has launched such a program.
In January, Defense Ministry Director General Dan Harel sent a letter to Israeli defense exporters. “The Defense Ministry reiterates the importance of formulating anti-corruption compliance tools to maintain international standards accepted in this field, due to the requirements of Israeli law and the marketing and export license conditions,” he wrote.
The Defense Ministry declined to comment on the OECD's claims of alleged bribery by defense exporters. According to the OECD report, Israeli authorities say the suspect deals cited in the report all took place before Israel signed the anti-bribery convention.
The Defense Ministry spokesman’s office said: “The Justice Ministry and Israel Police are the government bodies coordinating the cooperation with foreign country's investigative authorities. Therefore, for now, we do not intend to comment on the matter.”
On Sunday, the Defense Ministry told Haaretz its export control division had received no information on any improper deals made by Hirsch’s company. “We have not received an update,” the ministry said, adding that “beyond that, as is well known, we do not comment on information from the security exports registry.”