However, towards the end of February 1965, Lotz and his wife were arrested after returning from a trip to the area around the Suez Canal. The spy couple had just completed the identification of an anti-aircraft battery, but what had led the Egyptians to arrest them? Several theories are possible:
The first, and most likely, is that his radio transmissions had eventually betrayed the undercover agent. On a similar subject, it should be noted that at the same time in Syria, another famous Israeli spy called Eli Cohen,49 was soon to be unmasked and hanged, probably as a result of his radio transmissions. In Syria, as in Egypt, the secret service had received help from Soviet radiogoniometer specialists. The Egyptians had been looking for the Israeli spy living in their country for a long while, and had no doubt asked these experts to help them locate where he had been sending messages from.
A second possibility is that the arrest of Lotz and his wife coincided with the visit to Egypt of the East German Communist leader, Walter Ulbricht. On this occasion, the Egyptian authorities had decided to force the more prominent members of the German community to stay at home, so as not to anger Ulbricht and to avoid him meeting any former Nazis. An officer from the security services would have presented himself at Lotz's home and in the absence of the owner, would have taken the initiative to conduct a review of the premises. He would then have discovered the spy's transmitter and possibly even the explosives.
The third possibility is that Lotz was betrayed. Mossad and the BND maintained increasingly tight communications, yet the German secret services were still infiltrated by their eastern counterparts. One of these double agents may have been aware of Lotz's existence or even the reports that his wife, Waltraud, would regularly have been sending home. Markus Wolf, the head of the East German intelligence service, would thus have been able to alert the Egyptian authorities.
The only fact that remains is that Lotz's identity was finally revealed, which was a huge blow for Mossad.
The spy was quickly confounded by the over-whelming physical evidence; the transmitter, the explosives etc. However, he was to play a very clever game: he claimed that while there was no denying that he had been spying for the Israelis, he was only doing it for money. He explained that he was in debt as a result of his equestrian centre and had agreed to work for the Israelis after they had approached him and offered him large sums of money. Most importantly, he stood by his cover: his name was Lotz and he was a genuinely a racehorse breeder.
In the eyes of the Egyptians, his story was solid, and as he was not circumcised, they believed that he was not Jewish. Lotz's foreskin had saved his life! However, he was not out of the woods yet. Back in Germany, where this story had naturally caused quite a stir (not forgetting the mysterious bombings that had hit the scientists), journalists began to investigate. A reporter from the Stern magazine managed to discover some of the truths from Lotz's past, including his Jewish mother, his emigration to Israel in the 1930s and his naturalisation as an Israeli citizen.
The journalist had a real scoop in his hands and if the story were to be published, it could prove very expensive for the spy. Fortunately for Lotz, an Israeli journalist called Uri Dan, who was very close to Mossad, was made aware of the situation. He immediately went to Hamburg and met with the journalist's boss, who also happened to be a personal friend. He argued that if the story was published before the trial took place, Lotz would likely be condemned to death and executed. It worked: the journalist decided to delay the publication. However, a German lawyer who was representing the family of one of the scientists killed by the Mossad attacks, also discovered the true identity of Wolfgang Lotz.
What happened next is staggering: the trial of Lotz and his wife was already under way, when a letter from the German lawyer was handed to the judge, in which he revealed what he knew about the Israeli spy. As the judge began to read the document, he suddenly stopped, demanded that the journalists leave the room and that the doors be locked behind them. In discovering that Lotz was actually an Israeli spy, who for years had managed to fool the high-ranking members of Egyptian politics, he was no doubt concerned that such information would damage his country and its leaders. In short, it was a question of honour. A German spy working for Israel was bad enough, but an Israeli spy that had successfully infiltrated the highest echelons of Egyptian politics was too embarrassing to acknowledge publicly.
However, there is another possible explanation for what happened: the judge was already aware of the secret negotiations that had taken place between Israel and Egypt regarding Lotz. Mossad, who had already lost Eli Cohen in Damascus, were obviously keen to sane their spy in Cairo. On the occasion of the first visit France by an Egyptian leader since the Suez Crisis, both Israeli and Egyptian envoys met secretly in Paris. During the meeting, Mossad offered millions of dollars to prevent Lotz from being condemned to death after the trial. The Egyptians accepted the deal, on the basis that the fiction of Lotz as a German spy working for Israel was maintained - Arab public opinion would never have accepted the fact that an Israeli spy caught in the act would not be executed!
Waltraud was sentenced to three years imprisonment, while Lotz received a life sentence. However, there was a prisoner exchange
