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State Committee of Inquiry Appointed to Probe Oil Scandal

November 17, 1971
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A State committee of inquiry into allegations of a major scandal in Israel’s operation of oil fields in the occupied Sinai peninsula was appointed today by the President of the Supreme Court, Dr. Shimon Agranat. Dr. Agranat acted at the request of the Cabinet which has been studying allegations of gross irregularities made against Mordechai Friedman, director of the government-owned Netivei Neft Co. that has been operating the Sinai oil fields since shortly after the Six-Day War.

The committee will be chaired by Supreme Court Justice Alfred Vitkon who, as a judge in the lower courts, specialized in financial and tax cases. The other two members are Reserves Maj. Gen. Meir Zoreah, a member of Kibbutz Maagan Michael, and Avraham Kalir, owner of one of Israel’s largest textile factories.

The charges indicating the possibility of a major scandal were presented to the Ministry of Development by an oil engineer, David Niv, last April. Friedman was accused of having sold equipment belonging to the government-owned company to another oil firm which he owns, at a very low price. Niv also charged gross mismanagement by Friedman including altering the books. He said that valuable equipment belonging to Netivei Neft simply “vanished” while the company’s directors and supervisors “turned a blind eye.”


Since the charges were brought, allegations have been made that certain high government officials were involved, at least peripherally with Friedman. The only name mentioned so far in the press was Dr. Zevi Dinstein, the Deputy Minister of Finance, whose resignation has been demanded by some newspapers on grounds that he was not sufficiently watchful over the Sinai oil operation.

Premier Golda Meir, who agreed that the complaints against Friedman warranted investigation, has warned that a line must be drawn at personal suspicions. Observers here said reports in some Western newspapers that Friedman purchased favors from government officials, held orgies at the remote Sinai oil fields and maintained a “feudal barony” there were gross exaggerations.

The charges of scandal brought into the open an aspect of Israel’s occupation of the Sinai which, while not secret, has been rarely discussed publicly here. It concerns Israel’s utilization of the Sinai’s mineral wealth, mainly oil. The oil fields operated by Netivei Neft were previously operated by an Egyptian-Italian firm. Israel is said to be extracting some 6 million tons of oil a year. According to some sources, Israel is selling the oil abroad, putting it in the ranks of the Middle East oil exporting nations. Other sources say, however, that the 6 million tons is barely enough to meet Israel’s domestic oil needs.

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