U.S. Joins Suit Against G.e. on Misuse of Funds for Israel

The Justice Department has joined a lawsuit alleging that the General Electric Co. conspired with an Israeli general to defraud the U.S. government of $33 million of military aid to Israel.

The civil suit charges that between 1985 and 1988, several high-ranking G.E. employees conspired with Israeli air force Brig. Gen. Rami Dotan to present fraudulent claims for work supposedly done on G.E.-made engines for F-16 fighter planes.

The money came out of the $1.8 billion in U.S. military aid that Israel receives each year, much of which goes to U.S. arms contractors.

In March, Dotan pleaded guilty in Israel to 12 counts of corruption and bribery, including having illegally acquired $12 million in Defense Ministry funds from the United States. Under a plea-bargain agreement, he was sentenced to 13 years in prison.

The lawsuit originally was filed last November by Chester Walsh, former head of G.E.’s Israeli engine operations. Under U.S. government whistle-blower laws, the suit could not be made public until after the Justice Department decided the case was worth pursuing.

On Aug. 14, the suit was unsealed by U.S. District Court Judge Carl Rubin in Cincinnati, home to G.E.’s jet-engine operations.

According to the Washington Post, Walsh’s suit alleges that an Israeli firm, Ingbir Engineering, “sold parts and test kits to G.E. at grossly inflated prices for eventual resale to the Israeli air force, which paid for them with U.S. military aid.” The Post said that Dotan had a secret ownership interest in the company.

The suit also alleges that G.E. employees used U.S. aid money to purchase International Business Machines Corp. personal computers and communication scramblers for Israel.

U.S. funds were also allegedly used to pay for unauthorized purchases of power station upgrades at two Israeli air force bases.

A Pentagon spokesman, Cmdr. Phil Cogan, had no comment on the suit.