ILLINOIS COMPANY CHARGES ISRAEL TRIED TO GAIN TECHNOLOGY SECRETS
By RICHARD L. BERKE, Special to the New York Times19 August 1986The New York TimesLate City Final EditionCopyright 1986 The New York Times Company. All Rights Reserved.WASHINGTON, Aug. 18 -- Justice Department and Customs Service officials said tonight that they wereinvestigating a dispute in which an Illinois company has accused the Israeli Government of trying to take itstechnological secrets.The company, Recon Optical Inc. of Barrington, Ill., was to produce aerial reconnaissance cameras for Israelunder a five-year, $40 million contract signed in October 1984, according to Larry G. Larson, the company's president and chief executive officer.Mr. Larson said in a telephone interview tonight that the company ended the contract in May and filed a civillawsuit in Federal District Court in Manhattan, charging that Israel had not paid its bills and had breached theagreement in other ways.In researching the civil case, Mr. Larson said, his company found evidence that undercover agents from Israelhad infiltrated the plant ''and were routinely transferring data to a company in Israel.'' He said Recon had filed asupplemental complaint with those allegations.Asher Naim, a spokesman for the Israeli Embassy, denied tonight that Israel was looking for secrets. Hedescribed the situation as nothing more than ''an argument between a supplier and an orderer.'' He called thecompany's allegations ''completely groundless.'' Israeli Charges Intimidation''I personally feel that the whole thing is intimidation by the company,'' Mr. Naim said. ''We do 3,000 purchasingcontracts a year. There's only an argument with about 1 percent or a half percent of them.''Government officials said they had no evidence of any Israeli violation of Federal law.''The Israelis had the proper licenses and went through the proper channels in their contract,'' said a JusticeDepartment official. Nevertheless, Federal officials said they began a preliminary investigation of the dispute because of the sensitivenature of Israeli-American relations on security issues.''The State Department has a vested interest in this,'' a Federal official said, ''and so does the Justice Department.''Mr. Larson said he approached Federal authorities after he found documents indicating that Israel was spying onthe company. No Security Breach Is SeenFederal officials monitoring the dispute said they had found no indication that United States security had beenthreatened.They speculated that Israel, without breaking any laws, might have been trying to gain more from the contractthan Recon wanted to provide.''Instead of trying to settle just for the product, they were trying to take the technology, too,'' a United StatesCustoms official said of the Israelis.Israeli officials contend that Recon has not fulfilled the contract and must turn over the equipment that it agreedto provide.Recon specializes in surveillance devices and precision optical lens equipment. It has annual sales of about $100million and employs 1,150 people.In the past, the company has had many contracts with the United States Government and foreign nations, and ithas done business with Israel for 20 years, Mr. Larson said.