18 in Isreal Accused of Spying
Israeli authorities have cracked a large
industrial-espionage ring in which top business executives and investigators
allegedly used sophisticated software to infiltrate their competitors'
computers, police said Sunday.
The probe implicated car importers, cell-phone
providers and the nation's main satellite television company. Police said they
were still sifting through documents and computer files to figure out the extent
of the damage.
"This is one of the gravest scandals in ...
industrial and market espionage in Israel," said police Superintendent Roni
Hindi, head of the special fraud investigation team.
Police said 18 people are in custody, including the
software programmers, an Israeli couple living in London.
According to police, a computer programmer developed
special software, called a Trojan horse, on behalf of three of the country's
largest private investigation firms. The private investigators then sneaked the
program into the computers of their clients' major competitors via seemingly
benign e-mail attachments.
The Trojan horse gave the private investigators
complete access - over the Internet - to their victims' computers, police said.
Police accused a car company that imports Volvos of
spying on another company that imports Volkswagens. Two cell phone companies,
Cellcom and Pele-phone, were accused of spying on a third company, Partner, the
local branch of Orange, police said.
Other victims included the main TV cable company,
called HOT, a leading bottled water company and the local branch of Ace
Victims lost competitive bids and thousands of
customers because of the spying, police said.
Police were unable to estimate the extent of the damage
from the espionage, but "it appears we are talking about a lot of
money," Hindi said. "There are also companies abroad that were
damaged. This is still being investigated," he said.
Many of the 18 people arrested in recent days in the
case denied breaking the law. The case was under a gag order until Sunday.
"The software is totally legal. The question is if
the use that my client made of the software was illegal - and the answer is
definitely not," said Ofir Katz Neriah, a lawyer for one of the suspects.
Those arrested included a top executive from the YES
satellite television company, security officials who worked for Pele-Phone and
Cellcom, and several private investigators. Shares in Bezeq, which owns Pele-Phone
and controls YES, dropped as much as 3.4 percent on the Tel Aviv exchange
following release of the news.
The program was allegedly designed by Michael Haephrati,
41, who was arrested last week in Britain along with his wife, Ruth Brier-Haephrati,
28, police said. The two were detained pending a June 3 extradition hearing.
Police were first tipped off to the espionage when
author Amnon Jackont began discovering that excerpts of a book he was in the
process of writing were showing up on the Internet. More documents from his
computer began appearing on the Internet, and someone tried to use his bank
details to make transactions.
Jackont realized his computer had been invaded and told
police he suspected the spy was his stepdaughter's ex-husband - Michael
Rami Shalmor, a top executive at Shalmor Avnon Amichai
advertising, said the program was planted on the computer of one of his account
executives and was in their system for two or three weeks before it was
"Even if it is planted for 10 minutes, it is
liable to wreak terrible damage by draining all the information on the
computer," Shalmor told Army Radio.
Shalmor said the spies, whom he declined to identify,
tried to find out about marketing campaigns of their competitors so they could
He said he had no idea how much damage was done, but
"I imagine there will be civil suits here."
by Ken Sanders
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