The head of a company specialising in the manufacture of spy planes is suspected of having made transactions with an east Asian country without authorisation from the defence ministry, police said.

Officers neither identified the company nor the country in question.

Executives being questioned are also suspected of falsifying export documents as a means of bypassing the required authorisation.

Army radio said the equipment in question had been sold to China by Israeli aviation company EMIT.

Last year, defence relations with Washington hit crisis point over US fury that Israel had sold sensitive military technology and equipment to China.

The spat centred on an Israeli deal to upgrade Harpy Killer drones it had sold to China, amid concerns that advanced US defence technology contained in Israeli equipment could be used against Taiwan.

Washington said such an upgrade, for which China had already paid 50 to 60 million dollars, would threaten US strategic interests.

The United States briefly froze Israeli participation in the development of a new F-35 generation fighter jet in protest while Israeli exports of military hardware to China were also stopped for a time under US pressure.

Israel, which receives 2.2 billion dollars in US military aid to buy US defence equipment, has little room to manoeuvre when it comes to arms deals, despite some domestic calls to show independence from Washington.

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