A diplomatic cable released by whistleblower website WikiLeaks has shed new light on the mysterious activities of Israelis selling Dead Sea beauty products at malls in New Zealand and the US.

The cable, prepared by the previous US ambassador to Israel, James Cunningham, alleges immigration fraud, illegal labour, money laundering and worker exploitation in an industry now worth a billion dollars.

The Sunday Star-Times revealed in April how Israeli workers selling Dead Sea creams in malls had come to the attention of Immigration NZ and other government agencies. When immigration officers visited the Sylvia Park shopping centre in Auckland in February, they shut down one kiosk where three salespeople were working illegally on visitor visas, but by the time they arrived at a second kiosk at the other end of the mall, the workers had fled.

The Star-Times approached several workers who claimed they were unpaid "volunteers" who were selling the products "for Israel". They could not say who they worked for.

We later discovered the company behind the kiosks was Dead Sea Beauty (2006) Ltd, an "administrative provider" to another company, LVS Retail.

The company structure matches that detailed in Cunningham's lengthy and previously secret report, which tells how young Israelis, generally those who have completed mandatory military service, are deceiving customs officers, claiming they are tourists when they are planning to work in mall kiosks in New Zealand, the US, Canada, Europe and Australia.

The aim is to make as much money as they can quickly, before returning to Israel. They are attracted to the scam because post-army jobs are scarce and salaries low and they need a way to finance their studies or travels.

Cunningham says the "Dead Sea fraud" began in a low-key fashion several years ago but has escalated in the past three years. The report says the Israelis are recruited over the internet, are "well-coached" for their immigration interviews and are given instructions on which airports are likely to turn them around.

He says the workers are promised a commission on sales, and offered discounted housing and assistance with plane tickets, but there is evidence they are being exploited. In some cases, their employer holds their passports, they are not paid unless they sell products, they are paid minium wages and they often work 12-hour shifts. "With the huge amounts of cash the industry generates, money laundering could well be part of the scene," Cunningham writes.

He said an Israeli was recently stopped at a US airport for failing to declare $US23,000 he was carrying back to Israel, and in February, customs agents caught the parents of a kiosk owner at an east coast airport with $US17,000, having declared only $US7000.

Cunningham described it as a "hydra-headed problem" and says Tel Aviv has implemented a variety of measures to combat the fraud. But he recommends international law enforcement agencies get together for a "Dead Sea conference" to compare information. In an odd post-script, Cunningham says Tel Aviv is becoming increasingly concerned that the Dead Sea model is also being applied to the locksmith industry.

New Zealand has so far taken a relatively soft stance on the Dead Sea kiosks, only issuing warnings to those running them.

Last week, Israeli workers were still approaching shoppers at malls in Auckland. The Star-Times went to Dead Sea Beauty's offices in central Auckland, where an "administration manager" was working alone. As soon as we arrived she left the office, refusing to answer questions and threatened to call police.

Do you have more information on the Dead Sea kiosks? Email mailto:tony.wall@star-times.co.nz