Bug's duty-free store at Ben Gurion International Airport was shut yesterday at 9 A.M., following a raid by Customs Authority inspectors.

Bug is suspected of selling to people who had no boarding passes to prove they were traveling abroad. Employees allegedly sold tax-free goods to friends and other airport workers, among others.

Two suspects were arrested and released on bail.

The Customs Authority confirmed the report but declined to provide additional details.

Customers who made purchases at the store and left them at the airport, to pick up when they return from abroad, can still do so.

Bug opened a huge duty-free store at the airport in September 2008, investing NIS 10 million in the 600-square-meter outlet, which sells computers, multimedia devices, cosmetics, cell phones and more.

Bug, which was founded in 1982, has another 50 branches throughout Israel.

A spokesman for Bug declared its operations at Ben-Gurion were all completely legal.

"We are not aware of any improper activities at the store. The company is now making inquiries with the Customs Authority," the spokesman said.

The Airports Authority said that it believes that the issue does not involve it, and that it's all between Bug and the taxman. It couldn't say how long the store would remain closed.