Sun, Jun 05, 2005 - Page 11 News List

Couple held without bail over industrial espionage scandal


A British judge denied bail on Friday to a couple wanted by Israel for alleged involvement in the country's biggest business scandal in decades -- an alleged high-tech industrial spying ring.

District Judge Anthony Evans ordered Michael and Ruth Haephrati held without bail until the next hearing in their case, which he scheduled for July 1. Israel is seeking to extradite the pair.

They did not speak during the hearing at Bow Street Magistrates Court, only nodding to confirm their dates of birth.

The Haephratis' defense lawyer had said it was unnecessary to hold them without bail, since they had given up their travel documents. He said they had not seen one another or their daughter, who is being cared for by relatives, since their arrest last week.

Prosecutor John Hardy, acting for the Israeli government, said detention was necessary because Israel would not be able to extradite Michael Haephrati, who is German, if he flees to Germany.

Because the couple's alleged crimes were committed in cyberspace, Hardy said, "they could go anywhere in the world" and continue those activities.

The Haephratis are at the center of a scandal that has shaken Israel's business world. Top Israeli blue-chip companies are suspected of using illicit surveillance software to steal information from their rivals and enemies. Alleged victims include the local operations of the Ace hardware chain and Hewlett-Packard Co.

Police said more than 20 people had been arrested.

Israeli investigators believe Michael Haephrati, 41, designed the spying program and sold customized copies to three Israeli private investigators.

The private investigators allegedly then sneaked the program into the computers of their clients' major competitors via seemingly benign e-mail attachments.

The case is attracting the attention of top security software makers. Software firms in the US have been updating their products to defend against similar outbreaks.

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