Minister’s son arrested in Israel Aerospace Industries corruption scandal

Two arrested and ten detained on suspicion of corruption, fraud, and breach of trust.

March 22, 2017 10:01
2 minute read.

A "Bird Eye-650" Long Endurance mini-UAV system developed by Israel Aerospace Industries (IAI) is displayed at the Unmanned Vehicles Conference 2015 on November 9, 2015, in the Israeli coastal city of Tel Aviv. (photo credit: JACK GUEZ / AFP)

Police arrested two suspects, including the son of Welfare Minister Haim Katz on Wednesday, on suspicion of corruption, fraud and breach of trust in the ongoing investigation of officials in Israel’s largest government-owned aviation manufacturer, Israel Aerospace Industries.

Among multiple suspicions, police are investigating the possibility that Yair Katz, 36, promoted or granted benefits to IAI employees in exchange for them joining the Likud party.

Katz, who is chairman of the engineering sector of the IAI workers’ committee, is suspected of corruption, fraud and breach of trust along with a second suspect, David Peretz.

An additional 10 suspects were detained by police on Wednesday for questioning; they join the 13 arrested last week, and one prominent businessman arrested on Tuesday.
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Both suspects had their remands extended by five days in the Rishon Lezion Magistrate’s Court on Wednesday. In court a police official who was quoted by Hebrew media alleged that Katz, “Was politically active and caused people to register for the Likud by blackmailing them with threats.” Police painted the minister’s son as an abusive boss who “exploited his position together with others by instilling fear and exploited their position to advance personal interests and the interests of others.”

David Peretz, chairman of the technicians sector of the IAI workers’ committee was attributed similar accusations.

Judge Amit Michlas, who extended the suspects remand stated that “IAI employees seem to have been working in fear for years and concerned with their future employment.”

Attorney Illan Bombach, who represents Katz, told The Jerusalem Post that his client denies the allegation against him and is cooperating fully with the police investigation. Bombach argued that the investigation is motivated by “interests seeking to overthrow” Katz and that his client has no control over IAI employees’ futures. Furthermore, Bombach argued that police provided no evidence of any correlation between Likud membership and career advancement at the IAI.

The arrests came after a nearly yearlong “extensive” undercover investigation by the Lahav 433 antifraud unit, termed Case 630, in cooperation, with the Tax Authority, the director of security of the Defense Establishment, an internal investigation branch of the Defense Ministry, accompanied by the State Attorney’s economic office.

The investigation comprised “a large number of sub-allegations raising suspicion of corruption offenses including aggravated fraud, money laundering, theft by a public servant, fraud and breach of trust,” the police’s Intelligence and Investigations Division said in a statement last week.

According to police, the investigation raised the suspicion of “systematic criminal behavior and deep corruption seemingly commonplace in Israel Aerospace Industries.”

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