Minister Haim Katz’s Son Among Detained in Latest Israel Aerospace Arrests

Judge describes atmosphere of fear created by union officials at state-owned aviation company.

Haim Katz
Olivier Fitoussi

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, a Likud party leader, is suspected of blackmail and acting as a go-between for bribes. He allegedly abused his position as a member of the IAI’s workers’ committee to blackmail employees to join the Likud party.

“It appears that for years, employees of IAI lived in constant fear for their jobs,” said Rishon Letzion Magistrate’s Court Judge Amit Michaels, who extended Yair Katz’s detention by five days on Wednesday. “It also appears that a group of people belonging to the workers’ committee dedicated time and effort on the job to promote interests unrelated to IAI.”

Wednesday’s arrests brought the number of people arrested in the affair since it broke last week to 16. Thirteen were arrested last week, including a retired brigadier general and executives at both IAI and some of its subcontractors. Another two, Ehud Nof, chairman of the IAI workers’ committee, and David Peretz, a committee member, were arrested Tuesday.

Investigators from the fraud unit raided the homes of the two suspects Wednesday morning. The courts allowed the publication Wednesday of the name of Eli Cohen as one of those detained last week. Cohen also belongs the workers’ committee.

The arrests come amid accusations that state-owned IAI is run by its union as much as by management. While the allegations were routinely denied by management over the years, the fact that leading figures on its workers’ committee are alleged by police to have had such an influential role in the company and are at the center of the police probe suggests otherwise.

Sources close to the company said many employees are welcoming the police probe and hope the investigation will end the “union’s reign of terror,” as one called it.

“A lot of employees welcomed the police investigators when they came to the workers’ committee offices and the company,” said one former employee. “They hope somebody will finally clean up this company and weaken the clout of the union, which can ruin people.”

The former employee said workers 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 face the risk of getting 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.”

For Haim Katz, his son’s arrest comes at an awkward moment as he himself is under an Israel Securities Authority investigation for alleged insider trading in shares of Nitzba before the property company announced a merger with another company, Airport City, in 2015.

Haim Katz had been the workers’ committee head at IAI before he entered politics full-time. Sources said Yair Katz, an engineer who worked on missiles, was acting as his father’s representative at IAI in order to maintain his influence there.