In 1992, Israel’s government created the Yozma Program at the urging of Chief Scientist of Israel’s Ministry of Industry and Trade – Yigal Erlich – as Erlich moved to leave that position. The Yozma Program aimed to “incentivize venture investment” by creating state-linked venture capital funds, which later spawned a myriad of Israeli hi-tech start ups with merging them with major, foreign technology companies. According to Erlich’s website, he had lobbied Israel’s government to launch Yozma because he had “identified a market failure and a huge need in Israel to establish for the first time a professionally-managed venture capital industry that will fund the exponential growth of high tech ventures coming out of Israel.” He then “convinced the Israeli government to allocate $100 million for his venture capital vision.”
Erlich’s vision would also result in the fusion of Israel’s hi-tech sector, which he helped to create, with Israel’s intelligence apparatus, with numerous Israeli hi-tech conglomerates created with funding from the Yozma program and its successors doubling as tools of Israeli espionage. Notably, not long before Erlich convinced Israel to place $100 million into this program, Israeli intelligence, thanks largely to the work of infamous spymaster Rafi Eitan, had learned the benefits of placing backdoors for their intelligence services into commercial software through the theft and subversion of the PROMIS software. As noted in Part I of this series, Israel’s bugged version of PROMIS was largely marketed by Robert Maxwell.
After the Yozma program was established, the first venture capital fund it created was called Gemini Israel Ventures and Israel’s government chose a man named Ed Mlavksy to lead it. Mlavksy, at the time, was the Executive Director of the Israel-U.S. Bi-national Industrial Research and Development Foundation (BIRD), where Erlich was Chairman of the Executive Committee. Mlavsky states that, while heading the BIRD foundation, “he was responsible for investments of $100 million in more than 300 joint projects between U.S. and Israeli high-tech companies.” BIRD’s connections to Gemini Israel Ventures and the Yozma Program in general are interesting, given that – just a few years prior – it had come under scrutiny for its role in the one of the worst spy cases in U.S. history – the Jonathan Pollard affair.
Jonathan Pollard had been a naval intelligence analyst turned Israeli spy who passed troves of documents regarding U.S. military technology (specifically nuclear technology) as well as clandestine U.S. intelligence operations to Israeli intelligence, specifically to the now defunct spy agency Lekem. Pollard’s handler was none other than Rafi Eitan, who had engineered Israel’s outsized role in the PROMIS software scandal. In the indictment of Pollard for espionage, it was noted that Pollard delivered documents to agents of Israel at two locations, one of which was an apartment owned by Harold Katz, the then-legal counsel to the BIRD foundation and an adviser to Israel’s military, which oversaw Lekem. Government officials told the New York Times at the time that they believed Katz “has detailed knowledge about the [Pollard] spy ring and could implicate senior Israeli officials.”