Minister’s Son Arrested in Israel Aerospace Industries Corruption Probe

Yair Katz, the son of Social Affairs Minister Haim Katz, is suspected of blackmailing IAI employees to join the Likud party.

Yair Katz in court.
Ofer Vaknin

An Israeli minister’s son was among two suspects arrested Wednesday as part of the police investigation into corruption at Israel Aerospace Industries. Another 10 people were also taken in for questioning.

Yair Katz, the son of Social Affairs Minister Haim Katz, is suspected of blackmail and mediating bribery. He allegedly abused his position as a member of the IAI's workers' committee to blackmail employees to join the Likud party. 

Judge Amit Michaels, who extended Katz's detention by five days on Wednesday, said that "it appears that for years, employees of the Aerospace Industries lived in constant fear for their jobs. It also emerged that a group of people belonging to the workers' committee dedicated time and effort on the job to promote various interests that aren't related to the Aerospace Industries."

The number of people arrested in the affair now totals 16. Thirteen people were arrested last week, including a retired brigadier general in the Israeli army, and executives at both IAI and firms supplying services to the company. Another person was arrested Tuesday.

Police officers from the fraud unit raided the homes of the two suspects Wednesday morning. 

The arrests seem to finally expose the true organizational culture existing at the company. For years, claims have circulated that IAI is run by its union as much as by management. That allegation was refuted by management and chairmen over the years, but leading figures on IAI’s workers committee are among those arrested. These are IAI employees who didn’t hold executive positions, but nonetheless had major clout with management.

The courts allowed the publication Wednesday of the name of Eli Cohen as one of arrestees. Cohen is a member of the workers committee.

Sources close to the company say IAI is pleased by the police probe and its results thus far, adding they hope the investigation will end the “union’s reign of terror.”

“A lot of employees welcomed the police investigators when they came to the workers committee offices and the company,” says one former employee. “They hope somebody will finally clean up this company and weaken the clout of the union, which can ruin people.” The ex-employee noted that staffers had been afraid of what would happen if they didn’t cooperate with the union.

Their fear isn’t only that their promotion might get blocked, explained a retired IAI employee; they’re worried that they could get fired if they don’t cooperate. “There were workers who had no interest in politics but were forced to register with Likud,” said the ex-employee. “They were even forced onto buses to vote in primary elections,” the source added.