Israel Accused of Arms Transfer Violations : Weapons: The inspector general’s report also criticizes the State Dept. for failing to stop the transactions.

The State Department’s independent inspector general accused Israel on Wednesday of “a systematic and growing pattern of unauthorized transfers” of U.S. weapons technology to other countries and scolded the department for failing to take adequate steps to stop the illegal commerce.

Some of the violations went back as far as 1983, the report said.

Although the name of the offending country was deleted from the heavily censored public version of the report by Inspector General Sherman Funk, sources familiar with the more detailed classified version said that Israel was the target of most of the criticism.

While the censored report does not cite any specific weapons system, it says, “A major recipient of U.S. items and technology (the phrase used to identify Israel) has reportedly sold and transferred significant quantities of these items while continuing to provide assurances that it would not.”

The report said it monitored arms sales programs to Brazil, Singapore, Italy, France and Taiwan as well as Israel. But the sources said Israel is the only country on the list that meets the definition of “major recipient.”

Although Secretary of State James A. Baker III and other top department officials refused to comment on Funk’s findings, release of the harsh criticism is sure to intensify tensions between the Bush Administration and Israeli Prime Minister Yitzhak Shamir’s government. The dispute has already become an issue in the campaign leading up to Israel’s June general election.

Funk’s report was already nearing completion early last month when Administration sources revealed intelligence information indicating that Israel had sold Patriot antimissile technology to China in violation both of the contract under which the weapons were sent to Israel and of a U.S. embargo on the transfer of sophisticated arms to China. The embargo was imposed in the wake of the June, 1989, massacre of pro-democracy demonstrators in Beijing.

A team of Administration inspectors has just returned to Washington from Israel after a weeklong investigation of the Patriot reports, but its findings have not been made public.

Funk recommended that the department penalize Israel for the transfers by either demanding reimbursement for the value of the diverted items or by deducting their cost from Israel’s regular $1.2-billion-a-year military aid payments.

Deputy Secretary of State Lawrence S. Eagleburger rejected the suggestion because “it would be virtually impossible to determine the value of the alleged transfers in question. And if we cannot determine a value, we certainly cannot collect it.”

In many ways, the report was more critical of the State Department agencies responsible for enforcing laws against transfer of U.S. weapons than it was of Israel.

Funk said the department’s Office of Defense Trade Controls and the Politico-Military Bureau that supervises it received documentation of Israeli violations but did nothing to stop the abuses.

“The alleged violations include sales of sensitive U.S. items and technology to countries prohibited by U.S. law from receiving such items,” the report said. “Despite receiving this information over the past few years, (Politico-Military Bureau) did not initiate steps to report the violations to Congress and did not inform senior department officials of the reported violations. Only recently, and only after (inspector general) involvement, has (the bureau) taken action to curtail the reported unauthorized transfers.”

In a written response, Assistant Secretary of State Richard A. Clarke, chief of the Politico-Military Bureau, said that the criticism was too harsh. He said the Reagan Administration had no program at all to stop illegal transfers.

“The report ignores the fact that this Administration inherited a situation of gross nonfeasance,” Clarke wrote. “There was NO compliance program for defense trade licenses.” (Emphasis in text.)