Israel’s Defense Ministry has frozen some of the licenses of Aeronautics, preventing the firm from exporting its drones to Azerbaijan, one of its major clients.

The action comes in the wake of an investigation of the Israeli firm by the Ministry of Defense Security Authority which was examining a complaint that Aeronautics representatives demonstrated the use of a kamikaze drone in Azerbaijan, by attacking a manned position of the Armenian army.

On Monday night Aeronautics informed the stock market that the Defense Ministry had frozen the marketing and export licenses of its Orbiter 1k to “an important customer of the company in a foreign country.” The company didn’t mention the name of the country, but Azerbaijan has been the company’s most important customer in recent years.

The company cannot export the drone to Azerbaijan — as per its original contract— or demonstrate its use, or form any ties with representatives of the Azeri army involving the drone. According to Aeronautics, the contract for supplying the kamikazi drone, an armed unmanned aircraft, totals $20 million for the next two years.

Orbiter 1k simulation Credit: Practical Information

The Defense Ministry would not respond to Haaretz’s questions on the subject or confirm that the licenses have been frozen because of the investigation. The ministry said that the investigation of the complaint is in progress.

This is the first significant step taken by the Defense Ministry against Aeronautics Defense Systems since the reports about the use of its drone in the separatist Armenian enclave of Nagorno-Karabakh, which is a part of Azerbaijan. According to the complaint, a team from the company was asked to operate the device, which is armed with explosives, against a manned outpost of the Armenian army. Aeronautics vehemently denied the claim, and said that only the purchaser operates the device, and the company “never carries out demonstrations on live targets, as is true in this case as well.”

The Aeronautics licenses for Azerbaijan were frozen by the Defense Export Controls Agency in the Defense Ministry. This body is in charge of the implementation and monitoring of the Defense Export Control Law, which contains the rules governing the defense industries. Without a marketing license, the Israeli defense industry is not allowed to form ties with an official source in a foreign country involving Israeli weapons. Without an export license, it is forbidden to send the weapons outside Israel. The Defense Export Controls Agency is also supposed to monitor the activity of the defense companies and to ensure that they abide by the rules and regulations. Among other things, it was decided that demonstrations by Israeli companies worldwide, like that of drones, would be performed without firing or using ammunition, and would only demonstrate how they are flown.

The company announced that it believes that the license freeze is temporary, “and is being done in the wake of an investigation by the Defense Ministry relating to the company’s activity in the client’s country and the permits required for it.” They also said that the company is examining the issue with the Defense Ministry. The rest of the company’s activity was not restricted by the ministry, nor was its overall activity in Azerbaijan.

Details that have reached Haaretz in recent weeks indicate that on the day of the incident that is now being examined by the Defense Ministry, there was an attack by a suicide drone on the Armenian army. In the official journal of the Armenian army a senior army official discussed the attack, adding that two soldiers were slightly wounded in the incident. According to an Armenian source, it was the only attack recently by means of a suicide drone, but until now, there was no additional evidence connecting it to Israeli drone operators. The daily newspaper Maariv first reported on the Defense Ministry’s investigation about two weeks ago.