Defense Ministry to suspend drone maker executives' export licenses

Under Israeli law, no person is entitled to receive a defense marketing or export licence unless he or she is registered with the ministry's defense export registry.

Aeronautics' Aerostar Tactical UAS  (photo credit: Courtesy)
Aeronautics' Aerostar Tactical UAS
(photo credit: Courtesy)
The Defense Ministry intends to temporarily suspend three senior employees of Israeli drone maker Aeronautics from the country’s defense export registry, the company announced Sunday.
Subject to a hearing, the ministry plans to suspend Aeronautics CEO Amos Matan, VP business division Meir Rizmovich and a third unnamed employee, barring them from conducting any marketing or defense-related activities with foreign entities.
In a statement issued at the Tel Aviv Stock Exchange, Yavne-based Aeronautics said the decision follows the Defense Ministry’s suspension of the company’s marketing and export permit for the sale of its Orbiter 1K model UAV to “a significant customer” in August 2017.
The Orbiter 1K is a loitering suicide drone capable of carrying a 1 to 2 kg. special explosive payload.
Under Israeli law, no person is entitled to receive a defense marketing or export license unless he or she is registered with the ministry’s defense export registry. The licensing authority may not cancel, suspend or restrict a license prior to affording the license holder an opportunity to voice his or her arguments.
The company’s dealings with the foreign customer is currently under police investigation, with the State Attorney’s Office prosecutors summoning company executives, including Matan, for a hearing pending indictment on charges of fraud and export violations in August 2018.
A gag order has been issued covering most of the details of the case, and the company has rejected any grounds for initiating criminal proceedings.
While the foreign customer has not been named, The Jerusalem Post’s sister publication Maariv reported that a Defense Ministry investigation was launched after complaints were received regarding a team belonging to Aeronautics that arrived in Azerbaijan in mid-2017 to finalize a contract worth $20 million for the sale of the Orbiter 1K suicide drone, and was asked to strike an Armenian Army position.
According to the report, the two Israelis operating the UAV refused to hit the position and senior representatives of the company took control and operated the craft themselves, ultimately missing their targets. Armenian media reported that two soldiers were lightly wounded in a suicide drone incident.
Aeronautics strongly denied that the event ever occurred, releasing a statement at the time stating that the company “never performs demonstrations using live fire and that was true in this case as well.”
Earlier this month, Israeli defense giant Rafael Advanced Defense Systems and businessman Avihai Stolero made a joint offer to acquire Aeronautics in a deal worth NIS 850 million.
Aeronautics received the offer, the company said, to open negotiations for the acquisition of all the company’s shares by means of a reverse triangular merger via a company jointly owned by Rafael and Stolero.
Upon the completion of the merger, Aeronautics’ shares will be delisted from the TASE and the company will become a private entity.
Despite Aeronautics announcing a six-week exclusivity period in conducting negotiations with Rafael, financial daily Calcalist reported Sunday that Israel Aerospace Industries was weighing up making a bid for the company after holding initial talks regarding possible investment earlier this month.
Anna Ahronheim contributed to this report.