Israeli Red Tape Zaps Atari Venture

Bureaucratic red tape is being blamed for Israel’s loss of a major American investment project in what has become known here as the “Atari scandal.”

The Ministry of Industry and Trade only just approved Atari’s plans to establish. a computer assembly plant in Israel, announced here three months ago with much fanfare.

But the green light came too late. Jack Tramiel, chairman of Atari, had already informed the ministry he was taking his plant elsewhere because of delays in obtaining the necessary licenses in Israel.

The computer assembly plant, it is believed, would have provided as many as 3,000 jobs and generated as much as half a billion dollars of export sales a year.

Tramiel’s agreement to build an Israeli operation was premised on the creation of a government investment company that would muster local investment capital to build ancillary plants, which would in turn provide the assembly line with components and software.

The assembly plant alone was seen as capable of providing 600 immediate jobs, to be followed by 2,000 additional jobs at feeder plants. And everything to be made in Israel.

Immediately after the plans were announced at the beginning of April, the Cabinet agreed unanimously to authorize about $20 million to facilitate setting up the factory.

But the plan needed the approval of the government’s Companies Authority which, according to reports, failed to hold a single meeting to consider the project.

Meanwhile, Tramiel got offers from several countries eager for his new plant. Although he was interested in helping Israel, the industrialist lost patience.

Atari will now be producing computers somewhere in the Far East while immigrant engineers and electronic production workers in Israel draw unemployment benefits and search for jobs.