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Israeli Industrialist Arrested; is Suspected of Spying for Egypt

An industrialist born in the Old City of Jerusalem who has had a checkered career in Israel commerce, was arrested under suspicion of working for Egyptian intelligence.

The suspect, Shmuel Baruch, studied textile engineering in Manchester, England for several years and married there. Returning to Israel, he tried to set up plants several times. When he proposed building a plant for production of silk and other fine textiles, in Kiryat Gan, he received a grant of 600,000 pounds ($200,000) from the Israel Development Budget and built a 120-spool plant.

For a variety of reasons, the plant failed to make money and Baruch obtained new investment funds mainly from England but the enterprise continued to founder. He made a final attempt to make his workers partners by turning the plant into a cooperative enterprise but this also failed and heavy losses forced closing of the plant.

Baruch asked to be declared a bankrupt but instead he was charged with receiving money under false pretences. He was nevertheless allowed to go abroad to seek additional funds. He was arrested last week while trying to leave Israel again and police said they found him in possession of documents of a highly secret nature and security value. He was said to be cooperating with police.

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