FBI Treasury Customs investigation of MILCO - Heli nuclear trigger smuggling to Israeli Ministry of Defense

"...also met Benyamin Netanyahu while Netanyahu worked at Heli Trading..."

Documents

California-based MILCO International Inc. shipped 15 orders totaling 810 krytrons to the Israeli Ministry of Defense between 1979 and 1983. Israeli movie producer Arnon Milchan's Heli Trading Company brokered the transactions. A krytron is a gas-filled tube used as a high speed switch. Export from the US requires a US State Department munitions license because krytrons can be used as triggers for nuclear weapons. The US rejected several requests for krytron export licenses to Israel. MILCO obtained the krytrons from EG&G Inc., but listed them as "pentode" radio tubes before shipment to Israel. The ruse was uncovered by the FBI in 1983.

A US Attorney tried to get MILCO President Richard Kelly Smyth to implicate Milchan in the illegal krytron export during plea bargaining. The negotiation failed, and in May, 1984, Smyth was indicted on 30 counts of smuggling and making false statements. In 1985 a Federal Grand Jury was convened in Los Angeles to investigate potential Atomic Energy Act and Arms Export Control Act violations, but no charges were ever filed against Milchan.

Smyth and his wife fled the US and remained at large until captured in Malaga, Spain in July of 2001 after Smyth applied for Social Security benefits. Smyth pled guilty to violating the US Arms Export Control Act. In November, 2001 Smyth was sentenced to 40 years in prison and a $20,000 fine, though he was paroled due to his "advanced age." In 2016, Arnon Milchan received a 10-year resident visa after Israeli Prime Minister Benjamin Netanyahu lobbied Secretary of State John Kerry to grant one over the objections of career State Department employees.

New file release May 3, 2017 (Download PDF)

A 2011 biography called "Confidential: The Life of Secret Agent Turned Hollywood Tycoon Arnon Milchan" claims Milchan was recruited into Israel's LAKAM economic espionage unit in his 20's and became a key operative for Benjamin Blumberg (head of LAKAM), and Rafi Eitan (who ran Jonathan Pollard and infiltrated NUMEC). Milchan is the confidant of Shimon Peres and Benjamin Netanyahu. According to the book, Blumberg taught Milchan how to establish front companies and secret bank accounts to launder millions in commissions obtained during LAKAM and Mossad transactions. Milchan encouraged Smyth in 1972 to incorporate MILCO to share profits on export sales with his Tel Aviv-based Milchan Brothers company. Milchan Brothers received purchase orders from Blumberg and sent them via secure telex to Smyth. MILCO did 80 percent of its business with Milchan, including transfers of other US technologies useful to Israel's clandestine nuclear weapons programs. (Gyroscopes, neutron generators, high-speed oscilloscopes, computerized flight control systems.) According to the book, after Smyth was ordered to appear before a federal prosecutor in Los Angeles, Milchan claimed "I felt bad, but I was ordered to cut all contact with Smyth." Milchan officially denies any knowledge of MILCO or Milchan Brothers roles in krytron smuggling

The following FBI files reveal the FBI's interest in Milchan after a confidential informant revealed his ties to Smyth in 1992. The declassified but heavily redacted "secret" communications detail the bureau's fascination with Milchan, from his entry in "Who's Who" to star-studded associates such as Robert Di Niro and an Iran-Contra operative. The final page of the FBI file is a clipping of Thomas Friedman's May, 1985 New York Times interview with Milchan who had quickly left the US for Jerusalem. Milchan told Friedman "that a krytron was a small little gizmo which anyone can go buy freely in the United States. You can use them or all kinds of things, including, incidentally, making cholent." Friedman clarified that "Cholent is a stew of beans, carrots, potatoes and beef that is a traditional Jewish dish prepared on Friday night for eating on the Sabbath. Mr. Milchan said that with a krytron timer a stove could be set to turn on automatically to heat up cholent on the Sabbath without anyone working to light the fire."