As part of a false flag operation,[1] a group of Egyptian Jews were recruited by Israeli military intelligence to plant bombs inside Egyptian-, American-, and British-owned civilian targets: cinemas, libraries, and American educational centers.

The attacks were to be blamed on the Muslim Brotherhood, Egyptian communists, "unspecified malcontents", or "local nationalists" with the aim of creating a climate of sufficient violence and instability to induce the British government to retain its occupying troops in Egypt's Suez Canal zone.

Before Lavon's resignation, the incident had been euphemistically referred to in Israel as the "Unfortunate Affair" or "The Bad Business" (Hebrew: העסק הביש, HaEsek HaBish).

Israel publicly denied any involvement in the incident until 2005, when the surviving agents were awarded certificates of appreciation by Israeli President Moshe Katsav.

[4] In the summer of 1954, Colonel Binyamin Gibli, the chief of Israel's military intelligence directorate Aman, initiated 'Operation Susannah' in order to reverse that decision.

[citation needed] According to historian Shabtai Teveth, who wrote one of the more detailed accounts, the assignment was "To undermine Western confidence in the existing Egyptian regime by generating public insecurity and actions to bring about arrests, demonstrations, and acts of revenge, while totally concealing the Israeli factor.

Unit 131 operatives had been recruited several years earlier, when the Israeli intelligence officer Avraham Dar arrived in Cairo under the cover of a British citizen from Gibraltar named John Darling.

[8] In 1954, on behalf of both Winston Churchill and the World Jewish Congress, Maurice Orbach went to Cairo to intercede for the lives of those sentenced to death.

When intelligence chief Gibli contradicted Lavon, Sharett commissioned a board of inquiry consisting of Israeli Supreme Court Justice Isaac Olshan and the first chief of staff of the Israel Defense Forces, Yaakov Dori that was unable to find conclusive evidence that Lavon had authorized the operation.

Lavon tried to fix the blame on Shimon Peres, who was the secretary general of the defense ministry, and on Gibli for insubordination and criminal negligence.

On 3 November 1955, Sharett (who had not known about the operation in advance, and had therefore strongly denied Israel's involvement) resigned as Prime Minister and was replaced by Ben-Gurion.

[citation needed] In April 1960, a review of minutes from the inquiry found inconsistencies and possibly a fraudulent document in Gibli's original testimony that seemed to support Lavon's account of events.

During this time it came to light that Elad (the Israeli agent running Operation Susannah in Egypt) had committed perjury during the original inquiry.

This led to the expulsion of Lavon from the Histadrut labor union and an early call for new elections, the results of which changed the political structure in Israel.