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Jason L. Miller
Thursday: June 02, 2005

Busted: Israelis Arrested For Industrial Espionage

It all began with Israeli author, Ammon Jacont, suspecting his ex-son-in-law of spying on his computer and distributing unpublished works on the Internet. The ensuing police investigation unraveled a much larger case of industrial espionage that indicated blue chip Israeli companies.

The gag order was lifted Monday by Israeli courts and 22 people have been arrested at the conclusion of a six month investigation. The alleged offenders are suspected of using Trojan horse software to spy on their competition.

Security firm, 2bSecure led police to a server that held loads of secrets from top Israeli companies.

The trade secrets were mostly about corporate strategies and were obtained with Trojan software sold by Michael Ha'efrati to private detectives Modi'in Ezrahi, Krochmal Zyika, and Pelosoff-Balil, who then relayed the information to clients.

Corporate entities, YES satellite TV and mobile carriers Pele-Phone and Cellcom have been indicated as three of those clients.

As for those spied upon, the list includes Hewlett-Packard, Ace Hardware, Strauss-Elite food group, ad agencies Shalmor-Avnon-Amichav and Reuveni-Pridan, PR agency Rani Rahav, water-cooler maker Tami 4, Shekem Electric, Ace Buy & Build, Mayanot Eden, and Malam Systems.

"It's getting bigger every day," said Nir Nateev, head of the police computer and cyber crime department in Tel Aviv. "In the end, there will be dozens involved."

The alleged Trojan horse creator, Israeli Michael Ha'efrati, 41, who is currently living in London, was arrested with his wife, Ruth Brier-Ha'efrati. Israel is expected to ask for extradition.

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Some spy software versions posed as a package of confidential documents delivered through email. Once installed the program recorded keystrokes, collected documents and emailed the data back to the London registered server.

The potential consequences, because of the scope of companies involved, including subsidiaries of giant Bezeq, are potentially devastating as it may cause many international firms to be leery of doing business in Israel.

"People don't like to invest in countries where companies do some very unethical things," said Sever Plocker, a leading Israeli economic commentator. "I think it is bad for Israel, bad for the image of Israel and nothing to be proud about."

About the Author:
Jason L. Miller is a graduate of the University of Kentucky with a B.A. in Communication. After a recent stint in Japan, he has returned to his home in Lexington, KY.

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