Ethics Newsline®

TEL AVIV
In a sprawling scandal that continues to spread, Israeli investigators say as many as 60 national and international firms may be tangled in a web of corporate espionage sparked by a vengeful divorcé.

Since last November, police and computer experts have been finding “Trojan horse” programs secretly installed on computers of some of the country’s top companies, with pilfered information showing up in the possession of their rivals.

A “Trojan” is a program that is hidden within an apparently harmless message or program, secretly doing its work within the recipient’s computer. Trojans are often a form of spyware, a computer program that secretly sends data back to the author of the malicious program.

Local divisions of Ace Hardware and Hewlett-Packard are among the victims. The Bezeq phone monopoly has been hacked, though three of its subsidiaries are suspected of sponsoring Trojan attacks on rival companies, reported the Associated Press.

“It’s getting bigger every day,” Nir Nateev, who heads the Tel Aviv police computer and cybercrime department, told the AP. “In the end, there will be dozens (of companies) involved.”

Though no charges have been filed yet, police have placed 12 people in jail and eight others under house arrest, questioning CEOs, CFOs, and other executives who allegedly profited from stolen information.

Three of Israel’s top private investigative firms have been implicated in the scandal, accused of using software that stole company secrets and put the information on a server computer registered in London.

Police suspect that a vengeful ex-husband, Michael Haephrati, installed the program on the computer of author Amnon Jackont, his former father-in-law, posting Jackont’s in-progress manuscript and other files to the Internet. Haephrati reportedly then sold the program to private investigators and others.

British, German, and U.S. authorities have been cooperating with the Israelis in tracking down the extent of the corporate espionage, Israel’s “biggest business scandal in decades,” according to the AP.

Business professor Amir Barnea of the prestigious Interdisciplinary Center University, last week said part of the problem could be the country’s fiercely competitive approach to business dealings.

“Unfortunately some managers may lose the distinction between a legitimate fight for survival and doing illegal acts,” Barnea told the AP.

Leading Israeli economic commentator Sever Plocker added that the scandal may have far-reaching implications for the country’s corporate climate.

“People don’t like to invest in countries where companies do some very unethical things,” Plocker said. “I think it is bad for Israel, bad for the image of Israel, and nothing to be proud about.”