Scandals: GE Brings Bad Things to Light

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There are at least two things that Israelis like to think they can lean on: their military, and the $1.8 billion they receive annually from the U.S. to buy arms. Both pillars trembled when the Justice Department, in a Cincinnati lawsuit unsealed last week, accused General Electric Co. of conspiring with Israeli General Rami Dotan to defraud Washington of $30 million in U.S. military aid by padding invoices and charging for work that was never done. Last March, Dotan was sentenced to 13 years in prison for his role in the scam, which investigators believe diverted into his bank accounts money earmarked for the purchase of F-16 engines.

GE, which is conducting its own investigation, has dismissed the engine division's international sales manager. But the company criticized Chester Walsh, the executive who exposed the scheme under a federal law that protects and rewards whistle-blowers, grousing that he should have reported his suspicions to the company first. Walsh may eventually be able to shrug off his bosses' disapproval. If the charges stick, he could receive as much as 30% of the amount recovered by the government from his company.