Dozens were detained Monday morning on suspicion of biasing Defense Ministry tenders as well as suspicion of bribery involving officials in the Engineering and Construction Division of the Defense Ministry. Police officers of the Lahav 433 economic crimes unit and the security official in charge of the security apparatus conducted an undercover investigation over the past year, which resulted in Monday morning’s wide arrests.
The Lahav 433 investigations reveal that one of the suspected contractors has a business relationship with one of the biggest and most dangerous organized crime families in Israel.
Suspects in the investigation include contractors, attorneys, company owners, employees, and civil servants in the engineering and construction department at the defense ministry. They are suspected of taking bribes, giving bribes, fraud and breach of trust, receiving goods and services fraudulently under aggravating circumstances, conspiracy to commit a crime, false registration in corporate documents, offenses under the Money Laundering Prohibition Act, offenses under the Competition Act, and offenses under the Income Tax Ordinance.
The investigation followed information that was provided by the investigation unit at the defense ministry and the Competition Authority, the military police, and the economic department at the State Attorney’s Office. Investigators suspect that dozens of companies that were involved in the cartel submitted hundreds of biased tenders worth one billion shekels ($283 million).
A great deal of property was seized in searches of the suspects’ homes and offices, including luxury cars, luxury watches, a lot of cash, documents, rubber stamps, and more. Police also seized bank accounts and real estate deeds.
Investigators suspect that the cartel operated in an orderly manner and over time intensified due to corrupt relationships with officials in the defense ministry and the army. And as part of those connections, the suspects received inside information and various benefits. The suspects submitted bids in defense ministry tenders that produced the average sums the ministry was aiming for, which came nearest the sum that would win the tender. Using this method, the cartel cheated the defense ministry and obtained tender funds fraudulently and illegally.
The cartel also flooded each tender with fake bids from fictitious companies that helped position the intended, biased bid, at the top of the list.
