Ex-Israeli spy and Hollywood producer, Arnon Milchan, with alleged ex-arms merchant, Bibi Netanyahu and Shimon Peres (Photo: David Silverman/Getty)

by Richard Silverstein

August 17, 2012 (TSR) – This story sort of snuck up on me.  I admit I read Grant Smith’s original story at Antiwar.com and at first it seemed so outlandish that it was hard to credit.  But now Israeli media is picking up on the story and that lends it much more credibility.  The gist is this: in the 1970s, Hollywood producer Arnon Milchan, who then worked for Israeli intelligence, recruited a U.S. engineer, Richard Smyth, to become an arms smuggler on Israel’s behalf.  With the help of Israeli intelligence and Ministry of Defense (MOD) funding, the two establish a front company which began trading with an Israeli company, Heli Trading.  At the time, according to FBI report, Bibi Netanyahu worked for the company and met Smyth frequently:

Smyth was also put in contact with Benjamin Netanyahu, who worked at Heli Trading Company.  According to the FBI report, “Smyth and [Netanyahu] would meet in restaurants in Tel Aviv and in [Netanyahu’s] home and/or business. It was not uncommon for [Netanyahu] to ask Smyth for unclassified material.”

One of the ways Milchan cultivated his spy recruits, including Smyth, was by wining and dining them at fancy restaurants and inviting them to star-studded Hollywood parties.  Suitably enough, one of Milchan’s biggest hits was Pretty Woman.

Ex-Israeli spy and Hollywood producer, Arnon Milchan, with alleged ex-arms merchant, Bibi Netanyahu and Shimon Peres (Photo: David Silverman/Getty)

Milchan and Smyth’s ring secured highly sensitive krytron triggers which were shipped to Heli Trading and then given to the MOD to be used for development in Israel’s nuclear weapons program.  The operation was called “Project Pinto.”  Smith claims that Israel has slapped a gag order that prevents the “ringleader” of the Heli Trading smuggling scheme from speaking about it.  I’ve asked Smith to identify this individual and verify the claim of a gag order, but haven’t yet heard a reply from him.

Keep in mind that these are precisely the sort of triggers that the MEK and Mossad trumpeted to the Times of London that Iran was seeking for its nuclear program.  The documents the Times produced were found to be fakes.  Yet another example of the trustworthiness of the MEK as an intelligence source.  What’s important here is that in the 1970s Israel was doing precisely what it falsely claimed Iran was doing only a few years ago.  The only difference is that there are incontrovertible facts supporting Israel’s smuggling project, while there are fabricated Israeli-inspired claims regarding Iran.

The basis for Grant Smith’s charges are recently declassified FBI reports of an investigation of the ring that lasted from 1985-2002.  In 1972, Smyth set up a U.S. front-company, which bought over 800 triggers and exported them to Heli Trading.  According to The Marker, Milchan was the president of Heli Trading.  The deal was financed on the Israeli end directly by the Ministry of Defense.  In addition, Smyth procured chemical propellants for use in Israeli ballistic missile program.

The FBI discovered the scheme and began questioning both Smyth and the Israeli government.  Once the U.S. engineer realized he’d been exposed, he appealed in vain for help from the Israeli government, which turned him down, since it was being asked about the deals too.  Before he could be charged, Smyth fled the U.S. to Spain.  In the 1980s, he was arrested there in 2001 as the subject of an Interpol Red warrant.  On his return, he cooperated with the government, which convicted and sentenced him to 3 1/2 years in prison for violation of the Arms Export Control Act.  As an aside, it’s instructive that a U.S. citizen who sold nuclear triggers to Israel got a jail sentence only slightly longer than the 20-month sentence Shamai Leibowitz received.  Who did more damage to this country and endangered the security of the Middle East more?

Milchan’s role is also interesting.  He worked for Israel’s economic espionage agency, LAKAM, under the direction of Mossad master-spy Rafi Eitan.  Eitan also “ran” Jonathan Pollard and had a short tenure as Israel’s political flavor de jour where he founded the short-lived and now defunct Pensioner’s Party.  He later went on to produce the Power Rangers movie franchise and 120 feature films.  One wonders whether it was Israeli intelligence which set him up initially in the film business as a front for whatever activities he was doing on Israel’s behalf.  Shimon Peres was also one of Milchan’s proteges.

The Marker notes that Netanyahu denies ever having worked for Heli Trading (at the time, the newspaper says, he worked for a furnishings company called Rim), though his statement makes no reference to Smyth and the claims that he met him regularly and asked for unclassified materials from him.  If Bibi is telling this truth (a dubious proposition), it would make Smyth the liar.  While that’s possible, keep in mind that the man is being debriefed by the FBI, who are weighing how heavy a jail term he should receive.  He’d have very little motivation to lie.  Bibi, whoever, would have every motivation to do so.

Bibi further claims he never met Arnon Milchan until the 1990s, which is of course irrelevant and non-responsive.  It’s Bibi’s relationship with Smyth which concerns us and concerned the FBI.  Although Milchan owned Heli Trading while Netanyahu allegedly worked there, the former was undoubtedly an absentee owner given his residency in Los Angeles.  Not to mention that Bibi may be lying outright.

One also wonders what role Bibi was playing in Heli Trading.  If the company was serving as a conduit for illegal arms deals with the U.S., what other skullduggery was it involved in, and how did Bibi fit in?  What precisely might have been his relationship at the time with Israeli intelligence?  As a fluent English speaker and son of Vladimir Jabotinsky’s former personal secretary, Bibi would’ve been a desirable catch.

Of course, it wouldn’t be the first time an Israeli prime minister aided his country by engaging in acts of dubious moral or legal merit.  Begin and Shamir were terrorist commanders who ordered the assassination of UN and British diplomats, and massacred unarmed Arab villagers in pre-State days.  At least one can say on Bibi’s behalf that he merely aided and abetted espionage, rather than murdering people in cold blood.  Though were he Iranian and doing the same thing, it might earn him a Mossad bullet in the head or a sticky bomb on his windshield.



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