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Query About Defense Contractors Puts Dotan Back in the Spotlight

The case of Rami Dotan, the Israeli air force general who was convicted of taking millions of dollars in U.S. aid money, is making headlines again here.

This week, a congressional subcommittee heard additional testimony about how Dotan’s relationships with American defense contractors through the mid- and late 1980s resulted in his diverting approximately $40 million in U.S. military aid originally earmarked for Israel.

The General Accounting Office, a congressional investigative body, said Wednesday that it found that U.S. aircraft engine-maker Pratt & Whitney and officials from Israel’s Defense Ministry were involved in diverting U.S. foreign military assistance funds from their intended use for Israel’s military.

The role in the Dotan affair of another American company, General Electric, was reviewed last year by the same subcommittee, the House subcommittee on oversight and investigations.

Richard Stiener, director of the GAO’s Office of Special Investigations, testified Wednesday that Pratt & Whitney and Israeli defense representatives “facilitated the diversion of $12.5 million of U.S. foreign military assistance funds through an overpricing scheme organized by” Dotan and others.

“We believe that Pratt & Whitney should have known, or strongly suspected, that government of Israel officials and other Israelis were diverting U.S.funds,” Stiener said.

Israeli officials said Wednesday that the issues raised in the hearing were not new and that Dotan’s involvement with Pratt & Whitney was one of the issues on which he had been tried and convicted.

CURRENT PURCHASING SYSTEM EXTENDED

The officials said that since the Dotan affair, Israel has been working to ensure that it not be repeated.

Israel was also a victim of the affair, and the Israeli Defense Ministry was not aware of what Dotan was doing, the officials said.

The Dotan case reinforced concern among American officials that foreign military contracts were not being properly monitored.

Partly as a result of this concern, the Pentagon announced earlier this year that, as of January, it would end the commercial sales channel of the Foreign Military Financing program, under which Israel buys much of its equipment.

Currently, some recipients of Foreign Military Financing, such as Israel and Egypt, but through one of two channels.

In the government channel, the United States buys items on behalf of the recipient. The alternative is the commercial channel, in which the foreign government engages in direct commercial contracts with suppliers.

But at Wednesday’s hearing, Glenn Rudd, deputy director of the Defense Security Assistance Agency, said that the current system would be extended an additional six months until July 1, 1994, while the parties affected by the changes continued to discuss the issue.

The Israeli government had expressed concern about the elimination of the commercial sales channel because of “its extensive reliance on this channel to meet its procurement needs,” he said.

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