Did an Israeli company engage in illegal trade with Iran, violating sanctions that the Jewish state has championed? Or was the firm secretly helping Israel to spy on its arch-enemy?

The case of the Ofer Brothers Group, a shipping company blacklisted by the US State Department last week for trade with Tehran, has set off a firestorm of speculation in Israel.

Israeli newspapers quickly uncovered records showing Ofer Brothers vessels had docked at Iranian ports at least 13 times over the past decade.

And the plot thickened on Tuesday, when a meeting of parliament's economic affairs committee convened to discuss the case screeched to a halt after its chairman received a mystery note.

The case came into the public eye last week after the US State Department accused Ofer Brothers and its alleged subsidiary Tanker Pacific of involvement in the September 2010 sale of a tanker to an Iranian firm under sanctions.

Israel has called for tough measures against Iran over its nuclear programme, which the Jewish state and much of the international community believes masks a weapons drive, despite Tehran's denials.

But the company denied any role in the sale in a letter to the parliamentary committee, which was leaked to the media on Tuesday.

It said it had no ties to Tanker Pacific and said that the US State Department had made an "unfortunate mistake."

Just hours later, the already-complex story took a new twist when the head of the committee abruptly halted discussions on the issue after receiving what he said was a last-minute warning from Israel's security services.

"Officials from the security services explained that comments made by lawmakers based on speculation could be damaging," Carmel Shama-Cohen told public radio on Wednesday.

"On top of that, no representatives from either Ofer Brothers or the defence ministry were going to come, so why hold the meeting?"

Shama-Cohen also pointed to remarks made by Israel's former spy chief Meir Dagan, who described the allegations against Ofer Brothers as "greatly exaggerated," without explaining why he thought the claims were overblown.

Dagan's comments and the sudden halt to Tuesday's meeting have fuelled speculation that the Ofer Brothers Group was in fact helping Israel spy on Iran.

The top-selling Yediot Aharonot cited high-ranking security officials as saying the company's owners had "performed a significant service for the state of Israel... at times while endangering their business."

Friends of the Ofer family also told the newspaper the company docked its vessels in Iranian ports with explicit permission from the Israeli government.

"Had they been asked to stop the dockings in Iran, they would have done so immediately," the paper quoted them as saying.

"We are relieved that finally part of the truth is coming to light, and the public is beginning to see the picture."

But other commentators suggested the alleged ties between Ofer Brothers and Israel's spy service were just a convenient excuse for the company.

"By evoking the issue of espionage, those close to Ofer Brothers want to muddy the waters with a James Bond story to hide the fact that they broke the law banning commercial relations with Iran," Haaretz journalist Yossi Melman told public radio.

Israeli MP Einat Wilf also expressed scepticism.

"They are trying to create a smokescreen to defend enormous economic interests by using the pretext of security so the whole world will just say 'Amen' and ask no questions," she told the radio.

The Israeli press has also begun digging into ties between Ofer Brothers, who own networks of major companies in the Jewish state, and the political establishment.

Several newspapers reported on Wednesday that a number of public figures, including National Security Council head Yaakov Amidror, and a former head of the Shin Bet internal security service, have been employed by firms tied to the Ofer family.

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