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industrial espionage: Israel style

May 29, 2005 by Saar Drimer

There is a big scandal going on in Israel regarding the trojan horse fiasco that just broke out. It seems that everyone was spying on everybody else. If you are interested in the progress of this security drama, I suggest that you read the Israeli news papers rather than CNN or NYT. You will get a lot more insight with the Israeli outlets.

The “adversary’s” goal was to acquire strategic information about competing companies from their advertising agencies rather than attacking them directly. Many high profile companies are involved and there is a likely potential of a major shakeup in the Israeli economy.

The interesting twist of the story is how the police purportedly got a break in the case. The alleged author of the trojan horse, Michael Ha’ephrati, had a vindictive obsession with his x-parents in law. He wanted to destroy their book authoring careers and aggressively harassed them over the internet by acquiring personal information from their PC using his software. He also published work in progress of a book and other sensitive data including editing his personal entry (now revised) on Wikipedia. This went on for months until the couple gave the police a CD with a manuscript from an individual they previously spoke with (some social engineering action here.) This CD contained the malicious code that aided to singling out Ha’ephrati. This code was to be installed on the PC when they used the CD; they never did. Bottom line? No matter how advanced the technology is, it’s basic human traits, greed and revenge, that bring people down.

While reading the related articles bear in mind the following:
1. Israel is a very small country and basically, everybody knows everybody. For example, if I wanted to talk to a government minister, I would have to make 2 phone calls to talk to him/her directly; it’s all about who you know. What this means is that it is very hard to keep secrets and there is much more than meets the eye at this early stage and a lot more information will creep/leak out in the next few weeks so keep tuned.
2. Israel is a “little” behind on privacy legislation. It is my belief that most of the people arrested would get away with these crimes (or be lightly fined) since it will be argued that what they did was not a crime by law. Also, remember that these are people who stand at the top of very big corporations, and like in many other countries stand a much better chance of getting away with financial crimes than the regular joe schmoe. Hopefully, that will be rectified in the future. Ha’ephrati and his wife, Ruti, were arrested in the UK and are expected to be extradited; however, there is still a chance they will be prosecuted there for their alleged UK crimes.

Here’s a list of Israeli news sites to visit for coverage:
Haaretz, YNET, Jerusalem Post and Globes (financial.) You can also try debka news where you will usually find more detailed/”insider” information than other sources. However, the information is typically un-sourced and many times questionable. It is a fun read and riddled with conspiracy theories… I would not take it too seriously though.


  1. The whole affair is so juvenile and reflects poorly on those involved. I am glad I didn’t see Check Point or any other well known Israeli company mentioned. How large and representative are the cited companies? The extent of this sort of unprofessional conduct and the reaction by Israel and the community will help determine the amount of damage (to reputation) that Israel will incur collectively.

  2. Saar Drimer says:

    These are all major companies in their industry and there are several industries involved (from food/drink to cell phones to cars.) Some people call it the “Yom Kippur” of the Israeli financial market. It is THAT bad. The police currently believe the CEOs knew of the illegal activity and there are more companies involved that are yet to be announced. The corporations now blame the “private eyes” for obtaining the information illegally without their knowledge. This is ridiculous because that information could not have been obtained by any Kosher means.
    It was also found that the police’s own computers were compromised by the very method they were investigating!

  3. Arik says:

    Companies stock prices have changed due to this, and I think I heard Teva’s name (NASDAQ:TEVA) mentioned.

    — Arik

  4. Frank says:

    Interesting reading

    I think the common tecknology of today makes spying even easier.
    Take the guys over at chaosprojects they proved how the cellphone could well be the favorite toy for spies:

    – Frank

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