Industry sources said Salgad, a trading company, was established to conduct trade with Iranian companies in fields ranging from farming to communications.

Koor executives have denied conducting business with Iran.

But Ilan Traitel, director-general of the Beersheva-based Medent, said, "The Iranians are interested in everything that you can offer them.

"They are interested in agriculture, high technology and computers. They don't say no to anything," said Traitel, whose company supplies Iran with medical and laboratory equipment.

Traitel said Medent trades with Iran through a third country, which he would not name. He said that contacts with Iran were launched during last June's Akema trade show in Frankfurt.

"We are offering them incubators, hotplate stirrers, laboratory ovens," he said. "These are the main equipment. And they pay."

Business circles close to Israel's trade with Iran estimate it at hundreds of millions of dollars.

Meanwhile, Israeli officials are probing the possibility of resolving Iran's claim that Israel owes it $1 billion from oil dealings during the shah's rule, by having Russian companies purchase the debt. Israel would in turn buy Russian natural gas and invest in Russia.

Israel and Iran have quietly agreed to arbitration on the issue with the help of Germany. Israeli officials, particularly National Infrastructure Minister Ariel Sharon, hope that an agreement with Tehran could lead to the Islamic republic moderating its stance toward Israel.

Israel Radio recently reported that a group of 16 agriculture experts secretly visited Iran and met with its deputy agriculture minister. Their visit came following Iranian approaches to European subsidiaries of Israeli companies in search of irrigation equipment and spare parts for tractors and combines bought in the 1970s.

"We believe that trade contacts could help a lot for mutual peace," said Traitel, who added he is aware of the visit by the Israelis to Iran.