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'MOD dir.-gen. violated defense export laws'
By YAAKOV KATZ
01/05/2012
Udi Shani ignored Foreign Ministry in granting export licenses, State Comptroller's semi-annual report reveals.
 
Defense Ministry director-general Udi Shani violated defense export laws and regulations when approving a number of defense deals in recent years, State Comptroller Micha Lindenstrauss found in a report on defense exports released Tuesday.

In his defense, Shani argued that the cases probed by the State Comptroller’s Office were not significant and therefore he decided to rule on them independently and without following the regulations or first consulting with Defense Minister Ehud Barak.

Defense officials familiar with the report said that it was “one of the most severe reports ever written about the [Defense Ministry]” and that it was possible that Shani would need to step down.

Lindenstrauss noted in the report that Defense Minister Ehud Barak informed him that he would be willing to take “all steps necessary” to correct the problems discovered during the investigation.

In his report, Lindenstrauss revealed that Shani changed the ministry’s policy in 2010 in the way it provides export licenses to companies seeking to sell their systems overseas.

Until then, the ministry granted all companies licenses even if they were going to compete against one another for the same tender. In 2010 though, Shani announced that he would refuse to grant licenses in such cases.

According to Lindenstrauss, Shani should not have been allowed to change the policy on his own and should have consulted with other government agencies outside of the defense establishment. In addition, Lindenstrauss criticized Shani for not incorporating the new policy into official Defense Ministry procedures.

The state comptroller’s investigation into defense exports was considered sensitive and involved all of the relevant Defense Ministry agencies that approve sales to foreign customers. Israel is considered a world leader in the defense market and traditionally has exports ranging between $7-8 billion on an annual basis.

In three cases, the comptroller found, Shani ignored export procedures and decided to grant export licenses to companies to sell military platforms overseas despite opposition from the Foreign Ministry.

According to export regulations, in the event that there is a disagreement between the Foreign Ministry and Defense Ministry regarding an export licenses, the issue will first go to a meeting between two department heads from the two ministries. If they fail to agree, it will then be brought before the directors-general of both offices. If they fail to agree, it will be brought before a ministerial committee led by the prime minister.

Lindenstrauss wrote in his report that he uncovered three cases when Shani ignored procedures and decided to accept the Defense Ministry’s recommendation to grant the license while ignoring the Foreign Ministry’s opposition.

“The director-general and head of the [Defense Ministry] export agency overstepped their authority and acted against the law,” Lindenstrauss wrote.

In another case, the state comptroller discovered that Shani and head of the Defense Ministry export agency decided to ignore the personal opposition of Foreign Minister Avigdor Liberman to a specific deal and granted an export license.

“The director-general of the [Defense Ministry] cannot decide what the law will be on his own... There is no justification for unilateral steps by him that are against the law,” Lindenstrauss wrote in his report.
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