Police end couple's 'Trojan horse' ride

Dan Williams

JERUSALEM: An Israeli couple suspected of masterminding a computer virus that set off a major industrial espionage investigation was repatriated for trial on Tuesday under an extradition deal with Britain, police said.

Michael and Ruth Haephrati were arrested in their London home last year over allegations that a "Trojan horse" programme they had developed was bought by private investigators who helped top Israeli corporations spy on each other's computers.

Israeli police spokesman Mickey Rosenfeld said the couple flew in overnight after Britain approved their extradition. Tel Aviv Magistrate's Court ordered them placed in custody for 10 days so that they could be interrogated by police.

Computer hacking carries a maximum 5-year jail term in Israel, which can be increased if data theft is involved.

Israeli media said the Haephratis had offered to testify against their alleged clients in exchange for a reduced sentence. Their lawyer, Eli Zohar, confirmed only that contacts were under way with prosecutors at the State Attorney's Office.

"As of now, they (Haephratis) are facing a whole package of charges," Zohar told Israel's Army Radio. "Our goal is to narrow down the proceedings as much as possible."

At least 18 other Israelis have been questioned in the Trojan horse case, including corporate executives. Several private investigators have been indicted on related charges.

Among companies probed by police in connection with the case were Israel's top mobile phone operator, Cellcom, and two subsidiaries of phone company Bezeq Israel Telecom -- cellular operator Pelephone and the satellite television provider YES. All of the firms denied any wrongdoing.

Police said the Trojan horse infiltrated the HOT cable television group that competes with YES, as well as foodmaker Strauss-Elite and the Rani Rahav public relations agency, whose clients include Partner Communications, Israel's second biggest mobile phone operator.

"Trojans" refer to malicious software often presented as an innocuous weblink or email attachment that can infect a computer when opened.

Israel's Channel Two television, which interviewed the Haephratis by telephone last week from the British prisons where they were being held, said Michael originally developed the Trojan horse as a prank targeting his ex-wife's family.

According to the report, the Haephratis tried to market the virus to Israel's defence agencies before Ruth decided alone to sell it to private investigators representing corporations.

"I take full responsibility for my mistakes," she told Channel Two. "Michael always told me, 'Don't do it. Don't get in touch with the investigators. I have a feeling they are misusing the system.'"

Ericsson reveals record Q4, but below forecast

The traffic growth in the world's mobile networks is expected to continue due to new services and new subscribers

STOCKHOLM: Ericsson, the world's largest supplier of mobile phone network equipment, said on Tuesday its fourth-quarter pretax profit rose 16 percent to 10.1 billion crowns ($1.32 billion), just below forecast.

The average of forecasts in a Reuters poll was for pretax profit of 10.4 billion crowns after 8.7 billion in the fourth quarter of 2004 and 8.0 billion in the third quarter of 2005.

But fourth-quarter 2005 sales came in above expectations at 45.7 billion crowns versus a forecast 43.8 billion crowns.

Gross margin was 44.2 percent, versus a forecast 45.3 percent, and down from the third quarter's 45.6 percent, which Ericsson said was due to the rising share of services, where it manages operators' networks, within its business.

"The traffic growth in the world's mobile networks is expected to continue as a result of both new services and new subscribers," the company said in a statement.

"For 2006 we continue to believe that the global mobile systems market, measured in U.S. dollars, will show moderate growth compared to 2005," it added.

Chief Executive Carl-Henric Svanberg said Ericsson continued to gain on its competitors and, speaking to Swedish radio, estimated overall market share at 35 percent.

For full-year 2005, pretax profit rose to 33.3 billion crowns from 26.2 billion.

Analysts expected a muted share reaction to the figures.

"I think the share price will open unchanged or dip somewhat due to the fact that both the gross and operating margin were lower than expected," said Redeye analyst Greger Johansson.

"I don't think it is enough that sales were higher than expected," he added.

On the Instinet electronic brokerage, Ericsson slipped 1.8 percent to 26.7 crowns after the earnings report.