Last week, as part of an undercover operation named 'Horse Race', Tel Aviv police arrested a number of executives from some of the leading companies in Israel. Eight senior executives and eleven private investigators are being held; it's alleged that they planted a Trojan in competitors' computers with the aim of gaining access to confidential information.

It is believed that the private investigators sent a promotional CD containing the Trojan to the victims. They also sent emails with attachments which contained the virus.

The executives come from companies in a range of sectors, including telecoms, mineral water and the automobile industry. Victim companies lost tenders and customers due to competitors being able to access confidential information. Supt. Roni Hindi, one of the police officers, classified the case as ":one of the gravest scandals in:industrial and market espionage in Israel.”

Although currently only middle managers have been arrested, the Israeli police stated that they believe the investigation will lead them to CEOs of the companies concerned. The suspects' lawyers claim that their clients acknowledge asking the private investigators to gather information on their competitors, but did not know that this was being done illegally. However, the head of Tel Aviv's fraud squad stated that 'We can assume these people worked according to instructions from above:it is hard to believe that the CEOs did not know what their subordinates were doing'.

Operation Horse Race was launched in November 2004, following a complaint from a novelist that part of a novel he had been working on had been published on the Internet. The Trojan found in his computer was traced to his former son-in-law, a computer programmer living in London. With the help of Interpol, this man was arrested and will probably stand trial in Israel for selling the Trojan to private investigation companies.

Although the investigation is currently focusing on Israel, senior officers involved in the investigation believe that "leading well-known international companies” may also have fallen victim to the Trojan.