Jon Swain - writer and foreign correspondent

Israel in secret missile deal with China


The Sunday Times, 3 April 1988

THE SUNDAY TIMES has uncovered an Israeli operation to sell advanced missile technology to communist China.

In conditions of high secrecy, a deal has already been struck to supply the Chinese armed forces with new missile warheads and armour-piercing devices developed by Israel.

There are also indications that Israel has been helping China to develop its own multi-role combat fighter, using technology derived from the cancelled US-backed Israeli Levi fighter.

Western intelligence agencies have suspected for some time that there is a link between Israeli expertise and the China has shown in developing advanced weaponry. Street co-operation may have begun as long as 1980.

The Sunday Times now has proof that last November Israel clinched a covert defence agreement with China by sending a team of high-powered military specialists to Peking. The team's members flew to China using false Philippine passports.

Every aspect of the mission was supervised by reven Merhav, Israel's consul-general in Hong Kong, Merhav, who is a former member of Mossad, Israel's secret service, worked closely with a Hong Kong-based company that acts as the Far East marketing arm of Israel's state-owned weapons industry.

Exposure of the operation underscores the enormous effort Israel is now making to sell sophisticated weapons and defence technology to other countries. In this instance, Israel has been shown to be dealing with a communist superpower with it has no diplomatic relations. If the deal remains in place, it could lead to new Israeli arms sales to China worth hundreds of millions of dollars.

China has already demonstrated its capacity as a supplier of high-technology weapons by providing silkworm missiles deal with saudi Arabia.

The secrecy surrounding the Israel-China arms deal began to unravel when Zvi Gafni, an Israeli businessman who had helped Merhav to arrange the transaction, was arrested by Hong Kong police last December.

Gafni, who also used the name Spock, was found to be in possession of the false passports that the Israeli defence team had earlier used to travel to Peking. A member of the secret Israeli mission has admitted to The Sunday Times that he took part in it.

The project to send a defence team to China got under way in 1985 when the Israeli foreign ministry selected Merhav, who had acquired a reputation as a skilled Mossad troubleshooter during a mission to war-torn Lebanon, to re-open its consulate in Hong kong that it had closed 10 years earlier as an economy measure.

The Foreign ministry in Jerusalem declared publicly at the time that its purpose in re-opening the consulate was to boost Israel's trade with the Far East. It is now clear, however, that it posted Merhav, with his intelligence and military backgroung, to Hong Kong to develop secret arms links with China. Merhav went to Hong Kong with the backing of David Kimche, the then director-general of Israel's foreign ministry.

To strengthen the arms sales initiative, the foreign ministry sent Rear Admiral Benni Telem, 59, a recently retired commander of the Israeli navy, to Hong Kong. He arrived shortly after Merhav.

In Hong Kong, Telem heads a company called Palindent. The Sunday Times has established that palindent acts as the marketing arm in Asia of Israel's state-owned Israel Military Industries (IMI) and that Telem is IMI's vice-president for marketing and that Telem IMI's vice-president for marketing.

IMI is the major supplier of arms and ammunition to the Israeli armed forces. It specialises in rocketry and is a major weapons exporter.

Once Merhav and Telem were in place, Zvi Gafni, who has a minor criminal past, was brought into the deal as a middleman. Born at Ramat Gan, Israel, in 1951, and educated in America. Gafni came to Hong Kong seven years ago. He has his own company in Hong Kong, called Lerik International, which has been involved in international arms deals.

Previously, Gafni traded through a Hong Kong registered company - Expert New International - and another company, Advanced Technology Centre. Both have records of small-scale arms sales to Thailand and the Philippines.

Of more significance is his connection with a Liberian-registered company called Dubia which works out of Lerik's shabby eight-floor offices at 166-8 Des Voeux Road, Hong Kong. One member of Dubia's staff is the adopted son of a member of the Chinese politburo. Another is a relative of a senior figure in the communist Chinese hierarchy. Dubia was the crucial link in the secret arms chain between Israel and China.

In the past, Gafni has negotiateed on Israel's behalf with communist Chinese officials in Hong Kong. Merhav used him to obtain the false passports. But by picking Gafni to act as middleman, the consul-general chose the wrong man. As a result of his arrest - he will appear in a Hong Kong court next month - there is now deep embarrassment in Peking and Tel Aviv.

For on December 19, Gafni was picked up by the Royal Hong Kong police while trying to leave for the Portuguese enclave of Macao. Gafni has a previous conviction for possession of a small amount of dangerous drugs in Hong Kong.

He had first come to the Police's attention in 1984 in connection with illegal movement of computers to the communist bloc, cocaine smuggling into Mexico and America, and the distribution of counterfeit US dollar banknotes.

After his arrest, police searched Gafni's flat in Hong Kong's Discovery Bay. They found a forged Singapore passport, a forged Bolivan passport, and a small amount of marijuana.

The Singapore passport showed that Gafni had travelled twice to China and also to Thailand, Britain and Denmark. The Bolivian passports contained a Chinese multiple entry visa. Both were in the name of his alias, Spock.

A police team then searched the permises of Lerik International, Gafni's office, and found five false Philippines passports and an electronic stun gun.

The police took away 18 sealed sacks containing papers relating to Gafni's arms business together with a computer and discs. Gafni was charged with various offences, including the possession of forged documents, and is at present free on HKDollars 100,000 (Pounds 6,812) bail. He has pleaded not guilty.

The crucial phase of the Israel-China arms deal began last year when Merhav and Gafni approached Norinco, China North Industries Corporation, which has 1m workers, and is the world's biggest arms dealer with offices at 7 Yue Tan Nan Jie, Peking. They made their approach through communist Chinese officials in Hong Kong and proposed an Israel-China arms deal. Once Peking's interest was established, Admiral Telem became part of the operation.

Gafni was home in Israel at the beginning of November, and flew back to Hong Kong on November 6, two weeks before the five Israeli experts arrived in China.

The Sunday Times has identified all five members of the Israel delegation and interviewed one of them.

Israel Rodomsky, who lives at 15 Poaley Tsion Street, Herzilyya, Israel, is IMI's programme manager. When confronted by a Sunday Times reporter he relunctantly admitted that he and his team travelled to China on false Philippines passports. He also said that, far from being a rogue operation, the covert mission to China had been cleared at the highest levels of Israeli government.

The other members of Radomsky's team who went to China on the false passports are Willie Zalmon, 58; Chanoch Ayalon, 40; Shmuel Elad, 52; and Asa Ziv, 42. The Sunday Times has established that they are all experts in the missile division of IMI and live near Tel Aviv close to the IMI headquarters.

Using their own Israeli passports, they flew from Israel to Peking. They took a roundabout route via copenhagen, Bangkok and Hong Kong because it passes through countries considered 'friendly' to Israel. In Hong Kong the group checked in to the Ramada hotel in Wanchai and were briefed by Merhav, Gafni and Telem. According to Radomsky then handed them five Philippines passports.

The passports carried the Israels' photographs and usual personal details, but to maintain the fiction that the owners were Filipinos they said the Israelis were born in the Philippines.

Radomsky's passport, number F519401, issued on October 23, 1987, described him as an engineer born in Davao City in the Philippines on July 30, 1948 (his correct date of birth). He was in fact born in Poland.
the passports also carried Chinese visas issued through the official China Travel Service in Hong Kong.

On Sunday, November 22, the five men flew from Hong Kong to Peking. On arrival in Peking they presented their Philippines passports. In the Chinese capital they were guests of Norinco.

They demonstrated Israeli missile technology to the Chinese army. On November 27 the five IMI men flew out of China on their Philippines passports and returned to Tel Aviv a few days later. At this point Israel thought it had made a major breakthrough in its efforts to increase its penetration of the profitable Chinese defence market. Exposure of the clandestine deal puts into perspective a number of observations made in recent years by Western intelligence experts.The US State Department says that clandestine defence co-operation between Israel and China began in 1980.

At a military parade in Peking in 1984 Western experts spotted a sea-launched missile similar to Israel's Gabriel missile. In recent months there have been reports of Israeli technicians working at China's military aviation centre at Chengdu. Western military experts have been studying a picture of a prototype of a new Chinese fighter being developed by the Chengdu Aircraft Corporation. Chengdu. They have noticed similarities in designed to the Isaeli Lavi multi-role combat fighter.

The demise of the Lavi project, which had been heavily funded by the US, forced widespread cutbacks in the workforce at the government-owned Israel Aircraft Industries. Some Lavi technicians went to south Africa. Western experts believe others could be working on a three-month rotation basis in China.

China has always sought to keep its military with Israel secret for fear of harming its position in the Middle East. Israel has wanted secrecy because any known missile deal with China was bound to antagonise the United States, which has been voicing its concern over China's secret sales of silk-worm anti-ship missiles to Iran. Such missiles could be used to stop the flew of oil to the West.

Israel still officially denies its arms ties with China, although Jane's Defence Weekly, the authoritative military affairs magazine, estimates the trade is already worth as much as Dollars 3 billion.

The Israel-China agreement was made with Norinco. It was signed on Norinco notepaper and refers to a meeting held in peking from November 22-27. It says agreement was reached on a new concept of trajectory-corrected missiles of unspecified designation, laser-guided, armour-piercing wareheads, and shells for 155mm, 152mm, 130mm, and 122m calibre heavy artillery.

The Chinese negotiating team was said to have shown great interest in Dubia's 'advanced and sophisticated' weapons technology.

The signators on the Chinese side were Yao Ming Duan, manager of Norinco' import department, and Wang Wei Ha, manager of its intertrade development department. On the Dubia side there were two signatories: Henry Lai, who describes himself as a director, and K B Blumenthal, who calls himself an adviser. The Sunday Times understands that Blumenthal is an alias used by Admiral Telem, who accompanied the Israeli team to China.

When Gafni was arrested, Admiral Telem, apparently as a precaution, left Hong Kong almost immediately. Until recently he was at his home near the Israeli resort of Netanya.

As consul, Merhav tried to put pressure on the Hong kong political authorities to drop or amend the charges against Gafni. His approaches were rebuffed.

Following Gafni's arrest, Merhav was summoned to Jerusalem for high-level consultations. He returned to Hong Kong in the middle of last month. The Sunday Times understands that the decision has been taken to withdraw Merhav from his Hong Kong post this summer.

When questioned about his role in the Gifni case, Merhav said: 'I am not responsible for any information you may have.' He went on: 'The only thing I can tell you is that Gafni was given the pretection he was due by virtue of his being an Israeli citizen in all procedures which were conducted meticulously by the Hong Kong authorities. The appropriate department in this consulate took charge of that.'

However, in Israel, Radomsky, the leader of the defence team that travelled to China, said: 'It should not have happened this way. All the false passport arrangements were made by our people in Hong Kong. It is very unfortunate.'

Radomsky said the Israeli defence experts used the passports to comply with Chinese wishes that the mission be carried out in conditions of absolute secrecy.

(c) Times Newspapers Ltd. 1988