Through Soundproof Glass: Israel Refuses Direct Questioning

by Frank Collins

Readers of the Washington Report will remember the case of former Israeli General Rami Dotan, reported in the issue of August/September 1992. Dotan diverted tens of millions of U.S. military aid dollars from a General Electric contract to unauthorized Israeli military projects and to secret Swiss bank accounts set up by an Israeli intelligence operative.

As the result of revelations by a whistle-blowing American General Electric employee, Chester L. Walsh, Dotan was convicted by an Israeli court and sentenced to 13 years in prison. American investigators suspect Dotan's actions were part of a scheme to launder U.S. aid money for use in clandestine Israeli intelligence operations, and were in fact approved at the highest levels of the Israeli government.

In the United States, General Electric pleaded guilty and was fined $69 million for its part in the thefts. Herbert Steindler, a resident of Israel and the GE official in charge of contracting with Israel, was discharged from the company. Several other GE employees were disciplined.

However, no criminal charges have been placed against the GE employees involved, nor have any public announcements yet been made of investigations of other companies and individuals believed to have been involved in similar diversions of U.S. military aid funds under other contracts entered into by the government of Israel. The Washington Report has been informed, however, that U.S. investigations are underway of alleged similar misconduct at Pratt and Whitney, General Motors and Teledyne.

Under terms of annual military aid agreements between the U.S. Department of Defense and the Israeli government, where fraud is suspected the Israelis are required to provide American investigators access to all records relating to military contracts as well as to Israeli officials and Israeli nationals having knowledge of activities under the contracts. When the diversions of U.S. taxpayer funds to unauthorized Israeli military programs and to secret Swiss bank accounts by Dotan and Steindler were revealed, the U. S. Departments of Justice and Defense made some half-hearted efforts to investigate but were rebuffed by the Israeli government on the pretext that, because Israeli security was involved, Israeli law forbade access by U.S. investigators to Israeli government personnel, regardless of the terms of the U.S. government-funded contract. It must be understood that, under these circumstances, the original Israeli government act of signing a contract with whose terms it did not intend to comply was a breach of trust.

The Dingell Investigation

Under prodding by Congressman John Dingell, who threatened to shut down the entire military aid agreement until Israel complied with its terms, U.S. investigators insisted upon interviewing Dotan—now demoted from general to private and serving his sentence in an Israeli military jail—and Harold Katz. Katz, who holds U.S. and Israeli citizenship, is an Israeli intelligence official who was implicated in the case of U.S. Navy counter-intelligence specialist Jonathan Jay Pollard, convicted of espionage against the U.S. on behalf of Israel. Now Katz is believed to have masterminded the transfer of funds siphoned from GE contracts through U.S. dummy corporations to a number of Swiss banks, presumably for clandestine Israeli intelligence purposes in Europe or the U.S.

The whole matter of the GE scandal might have passed into oblivion had it not been for the efforts of Michigan Democrat Dingell, chairman of the Subcommittee on Oversight and Investigations of the House Committee of Commerce and Energy, which Dingell also heads. In a letter to the Department of Defense, Dingell pointed out that the military aid contract signed by Israel stipulated that if fraud is suspected in the use of the funds, the recipient government must cooperate fully in any U.S. investigations.

In its response, the Department of Defense acknowledged that, failing this cooperation, the United States can declare a default on the contract and declare that all notes payable to the U.S. are immediately due and payable with interest. Thus the U.S. has ample enforcement power.

In late September, the government of Israel announced that it would allow U.S. questioning of Dotan. However, the questioning of the American citizen Harold Katz, resident in Israel, was not mentioned. The procedures proposed by Israel for the interrogation of Dotan were agreed upon by the U.S. government and made public in Washington. They lead to the suspicion that the questioning will be a travesty of judicial procedures, and is designed to close rather than break open the case, which has the potential to reveal more intelligence operations in the U. S. or Western Europe comparable to the Pollard case.

Journalists have discovered that after Dotan pled guilty and was sentenced for diverting the U.S. funds, a whole new prison wing was built to accommodate him and he was permitted to choose a prison mate. He chose a man who is serving three months for the murder of several Palestinians. While the Israeli authorities are allowing Dotan's family liberal access to his prison quarters, they are denying any direct access to the U.S. investigators.

Instead the U.S. investigators sent to interrogate Dotan will be placed in a room separated from Dotan and Israeli officials by soundproof glass. The questioning, to be conducted via an audio system, will involve translation into Hebrew of the questions, although Dotan, as a long-term resident of the U.S., is fluent in English. Dotan then will answer in Hebrew, but not directly to the U.S. investigators. Instead, the Israeli officials will translate into English only those portions of his answers that they deem admissible on security and other grounds. Thus the Americans investigating Israeli government complicity in Dotan's diversion of U.S. funds will hear only the parts of Dotan's testimony that officials of that same Israeli government choose to let them hear.

At the time of writing, a team from the U. S. Department of Justice is in Israel and the questioning of Dotan is imminent. Asked by the Washington Report whether he was satisfied that justice will be served, Congressman Dingell replied, "The agencies are aware of the potential for problems. We will have to wait to see the results before drawing any conclusions."