Storage Soup

Feb 2 2009   7:29PM GMT

EMC officials mum on Israeli corruption story

Beth Pariseau Beth Pariseau Profile: Beth Pariseau

EMC was prominently featured in a story from Israeli news story Haaretz.com about a recent secret investigation into corruption in the bidding process for Israeli government contracts, but company officials declined comment today.

According to Haaretz,

A secret seven-year investigation at the Defense Ministry has raised concerns that senior ministry officials used inside information to help certain American companies win more than $100 million in security-equipment tenders advertised in the United States.

Cisco, Juniper and Hewlett-Packard were also mentioned in the article, but EMC was named in the only specific example of a corrupt bidding process outlined by the piece:

The first deal that raised concerns related to a tender issued at the start of the decade for digital storage for the Israel Defense Forces. Three U.S. firms made bids: EMC, HP and Hitachi Data Systems. EMC won the tender. Haim Adar was in charge of the defense procurement office in New York at the time of the tender. Since his retirement from the ministry several years ago, he has served as external adviser to EMC and other firms who do business with the Defense Ministry.

“As early as the next day [after EMC had won the tender], I knew that our competitors had known everything about our price bid,” Yehuda Cohen, who at the time was in charge of procurement at HP, told Haaretz.

The article goes on to say:

Shortly after the deal with EMC, during Operation Defensive Shield in 2002, various problems were found with the system the company was providing. The technical problems made it difficult to analyze intelligence during the West Bank operation. It took 24 hours to correct the problems and restore the intelligence systems to working order.

Nonetheless, the IDF continued to work with EMC, and over the next few years the firm won several other contracts for data storage systems worth tens of millions of dollars.

According to the article, which was first brought to my attention today by Storage Monkeys, the probe that unearthed these alleged instances of corruption was shut down by the Israeli Defense Ministry in 2007, “citing insufficient evidence, after the ministry stalled the probe due to fears it would harm Israel-U.S. ties.”

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