By the end of June 1954 the British evacuation of the Suez Canal
zone appeared imminent. The Israeli defense minister Pinhas Lavon
asked Binyamin Gibli, the director of MI, to use all of Unit 131’s
means in Egypt to prevent the evacuation. Lavon, as minister of de-
fense, did not get down to details. Gibli came up with an idea to pre-
vent or delay the British withdrawal by a series of sabotage acts di-
rected primarily against Western embassies and other institutions.
The British government would, according to Gibli’s thinking, inter-
pret such acts as being perpetrated by the Egyptians and might re-
consider or even cancel the evacuation plan.
On 30 June 1954 Gibli instructed Elad to carry out covert sabotage
in Egypt. Accordingly, on 2 July 1954 small firebombs were placed
in several mailboxes in Alexandria. On 14 July small harmless bombs
exploded at the U.S. cultural centers in Cairo and the library of the
U.S. Information Center in Alexandria. These events were reported
by the local and the international press.
On 23 July 1954 members of the espionage network were to plant
bombs in cinemas in Cairo and Alexandria and in the luggage storage
depot at Alexandria railway station. This was a symbolic date, the sec-
ond anniversary of the Egyptian Officers’ Revolution. When Philip
Nathanson entered the Rio Cinema in Alexandria, his bomb went off
prematurely in his pocket. Nathanson was arrested, and in a matter of
just a few days, the Egyptian security police arrested the rest of the
network’s members, who were interrogated. They also arrested Max
Binnet, who was not directly connected to the group.
Members of MI’s inner circle were forced to accept responsibility
for recruiting Egyptian Jews for the espionage network. Gibli admit-
ted that MI had recruited and trained them for their duties and had
even commissioned several of them as IDF officers. Prime Minister
Moshe Sharettknew nothing of the operation. Still, Gibli main-
tained that the order to activate them for the sabotage mission in
Egypt was given to him by Minister of Defense Lavon. Gibli’s sec-
retary even “retyped” Lavon’s alleged memorandum giving Gibli the
order. (Some half a century later, in May 2004, for the first time since
the affair, Gibli was interviewed by Israeli TV. He stated there that he
had received a verbal order by Lavon to carry out the sabotage activ-
ities in Egypt. It was impossible to confront his version with Lavon,
who was no longer alive.)BAD BUSINESS•2706-102 (02) A-G.qxd 3/24/06 7:23 AM Page 27