The CEO of a company suspected of funding anti-Israel terrorism and assisting in the establishment of terror groups could be released to house arrest as early as Monday night following negotiations between a police representative and the CEO's lawyer. Shalom Hatouka, CEO of Shintraco Ltd., was arrested Sunday morning during one of two raids aimed at cracking down on two Ramat Gan-based companies - Shintraco, Ltd., and Mayan Overseas Ltd., - suspected of helping to divert funds to Hamas and Islamic Jihad. Police, together with the Israel Tax Authority and the Shin Bet (Israel Security Agency), entered the offices of both companies in the early morning, arresting employees of both companies. In a hearing at the Petah Tikva Magistrate's Court later in the day, Hatouka's attorney, Boaz Koenig, argued that his client's cooperation with investigators and poor medical condition warranted his release from police custody. According to Koenig, Hatouka "is cooperating with interrogators, offering his version of events, and denies all of the suspicions against him." The attorney added that his client's medical condition was "not good" and he was supposed to have undergone medical tests on Sunday. Judge Lea Lev-On ruled that, in accordance with the agreement, Hatouka would be released no later than 2 p.m. on Tuesday, barring any dramatic development in the investigation. Shintraco, which deals with importing and advertising food staples, is accused of illegally assisting Palestinian company Abu Akkar. The Palestinian company, which is also involved in importing and marketing foods, was outlawed by the Defense Ministry in December 2005 after it was discovered providing financial aid to Hamas and Islamic Jihad members in the Palestinian Authority. Hamas and Islamic Jihad members abroad would purchase merchandise on behalf of Abu Akkar. In exchange, the company would transfer the value of the goods, including commission, to the terrorist organizations' representatives in the PA. Following the Defense Ministry's decision in 2005 to outlaw Abu Akkar, Shintraco allegedly began helping the company bypass the import restrictions that had been imposed on it. Together with Mayan, a freight forwarder, Shintraco susposedly assisted Abu Akkar in importing goods into the Gaza Strip. Security officials said the terrorists use of the Abu Akkar company demonstrated "the creativity and originality" of their attempts to smuggle funds into the Gaza Strip and the West Bank. Police reported an increase over the past year in the flow of illegal funding to terrorist groups squeezed by a financial blockade imposed by international aid donors since Hamas took control of the PA. According to Dun and Bradstreet, Shintraco is the 12th largest general import agency in Israel, and had operating revenue of $58 million in 2006. The company listed a total of nine employees last year.