Recon/Optical Industrial Theft

Summary

In 1986, the security staff of an Illinois Pentagon contractor caught three Israeli Air Force officers in the act of stealing its secrets — and found the theft had been running for more than a year. The officers were present at Recon/Optical, Inc. under a Foreign Military Sales contract to build a reconnaissance camera for Israel, and had been using that access to funnel the company’s proprietary technical documents to a competing Israeli firm, El Op Electro-Optics Industries. An international arbitration panel later found Israel’s conduct “perfidious” and ordered it to pay $3 million in damages.

Background

Recon/Optical, Inc., headquartered in Barrington, Illinois, was a long-established Pentagon contractor specializing in airborne cameras and electro-optical reconnaissance systems — the kind of equipment used by U.S. military and intelligence agencies for aerial surveillance. The company had been awarded a contract through U.S. Foreign Military Sales provisions to develop a reconnaissance camera system for the Israeli Air Force, giving Israeli technical representatives legitimate access to Recon’s facilities for purposes of overseeing the contracted work.

El Op Electro-Optics Industries was an Israeli defense firm and direct commercial competitor to Recon/Optical in the airborne reconnaissance camera market. The Israeli Air Force officers present at Recon’s facilities under the Foreign Military Sales contract arrangement were, according to the arbitration findings, simultaneously conducting a parallel operation to transfer Recon’s proprietary technology to El Op.

What Happened

In 1986, Recon’s security guards caught three Israeli Air Force officers stealing 50,000 pages of the company’s proprietary technical documents. It was not a single incident but a sustained operation: using the routine access their Foreign Military Sales arrangement granted them, the officers had spent more than a year systematically copying Recon’s documents and passing them to El Op Electro-Optics Industries.

The case became public in August 1986, reported by both the New York Times and the Washington Post.

Rather than face criminal prosecution, the matter proceeded to international arbitration. The panel, reviewing the documented conduct of the Israeli officers, found that their actions constituted “perfidious” illegal acts — a term carrying specific legal weight in the context of deliberate abuse of authorized access.

Key Figures

Recon/Optical, Inc. — Barrington, Illinois defense contractor; victim; producer of Pentagon airborne surveillance systems.
Three Israeli Air Force officers — Names not made public in available records; present at Recon facilities under Foreign Military Sales contract access; caught stealing documents.
El Op Electro-Optics Industries (Rehovot, Israel) — Israeli defense firm and commercial competitor to Recon; recipient of the stolen technical documentation.
William Owens — Recon/Optical executive who pursued the case and subsequently lobbied his Illinois congressional delegation for government assistance in recovering damages.

Official Response

The U.S. government did not pursue criminal charges against the Israeli officers. The case was resolved through civil arbitration rather than law enforcement action.

Recon/Optical executive William Owens pleaded with his Illinois congressional delegation to help him recover from what Israel had done, indicating that the company sought but did not receive meaningful U.S. government intervention on its behalf.

The Israeli Embassy, when the case became public in August 1986, denied the espionage characterization. Israeli officials framed the matter as a contract dispute rather than industrial theft, a position inconsistent with the arbitration panel’s subsequent “perfidious” finding.

Consequences

The arbitration panel ordered Israel to pay Recon/Optical $3 million in damages — partial compensation for documents developed at significant cost for Pentagon-contracted work. The stolen designs, meanwhile, went to El Op, which continued to compete against Recon/Optical in the same market with technology it had not paid to develop.

Significance

The Recon/Optical case illustrates a form of Israeli intelligence collection that operates below the threshold of traditional espionage — the exploitation of legitimate commercial and military access arrangements to conduct systematic industrial theft against American defense contractors. The use of Foreign Military Sales access rights as cover for the operation meant the Israeli officers were physically authorized to be in the facility; what they were doing with that access was not. The arbitration panel’s use of the word “perfidious” — meaning deliberate bad faith in abuse of trust — is the tribunal’s own characterization, not an editorial judgment. That no criminal prosecution followed, and that the U.S. government response consisted primarily of a civil damages award, is consistent with the pattern established in the Pollard and Kadish cases: documented Israeli intelligence operations against U.S. targets resolve without criminal accountability for the Israeli nationals involved.

Sources

New York Times, “Illinois Company Charges Israel Tried to Gain Technology Secrets,” August 19, 1986
Washington Post, “Firm Says Israel Tried to Steal Technical Secrets; Embassy Denies Charge Involving Reconnaissance Camera and Blames Contract Dispute,” August 20, 1986
Duncan L. Clarke, “Israel’s Economic Espionage in the United States,” Journal of Palestine Studies, Vol. 27, No. 4 (Summer 1998), pp. 20–35 — cites Wall Street Journal reporting and National Center for Manufacturing Sciences documentation
U.S. General Accounting Office, Defense Industrial Security — referenced in Clarke’s sourced account