U.S. Suspends Dealings With GE Engine Unit

The Pentagon has suspended future contracts with General Electric Co.’s aircraft engines division in Ohio because of alleged fraud in selling military jet engines to Israel, the government and a GE official said Monday.

The action stems from a scheme in which former Israeli Air Force Gen. Rami Dotan and a former GE marketing employee, Herbert Steindler, diverted millions in U.S. funds intended for Israel.

GE fired Steindler in 1991. The Israeli military demoted Dotan, and he is serving a 13-year prison term in Israel for criminal violations in connection with air force procurement.

The Justice Department alleges in a lawsuit that GE gave Dotan $7.85 million to influence his decisions regarding contracts for jet fighter engines. The suit was filed in federal court in Cincinnati.

GE will appeal the suspension, which the company feels was “lacking in both fair process and substantive merit,” said GE spokeswoman Jane Juracek.

Defense Logistics Agency spokesman Larry Wilson said the suspension stems from GE’s failure to spot the activities of Steindler and Dotan sooner.