Executives of the Edinburgh wing of arms firm Selex Galileo, which has benefitted from at least £12.5 million in research and development (R&D) funding from the Scottish Government & Scottish Enterprise, have been marketing the Gabbiano surveillance technology that has been installed in Israeli Hermes drones.
Anti-arms trade activists have condemned the funding of the company and acceptance of its sponsorship deals in Scotland.
The Hermes drones have been used to co-ordinate Israel's attacks on Gaza and are described as the backbone of targeting and reconnaissance missions by the Israeli air force.
Nearly 2,000 Palestinians have been killed, most of them civilians, since the beginning of Israel's military operation in Gaza on July 8. Israel, in comparison, has lost 67 people, all but three of them soldiers.
Israeli military commanders have recently credited the Hermes unmanned aerial vehicles (UAVs) in delivering added operational value in the recent Operation Protective Edge missions in Gaza.
It has been confirmed the Italian company's Edinburgh-based Radar and Advance Targeting business has been involved in marketing Gabbiano as part of its radar portfolio.
Selex, part of Rome-based defence giant Finmeccanica, which employs 2,000 of its 17,700 strong workforce in Scotland, had insisted it would not sell its products to countries that failed to comply with UK Government export rules, which forbid the issue of a licence if goods are used for internal repression.
However Gabbiano is classed as an Italian military product and therefore has to meet that country's export regulations.
A Selex spokesman said: "A few top execs based in Edinburgh are involved in promoting worldwide the whole of Selex ES's radar portfolio, including the Gabbiano, which is part of the Selex ES surveillance (ISR) radar domain."
A Campaign Against the Arms Trade spokesman said: "Selex is a company that is directly profiting from the Gaza conflict. It is completely wrong for a company like that to be getting public endorsement and public money.
"The Scottish Government should be disassociating itself with them. When Selex sponsor events they do it because it is good for business, and helps them to continue what they do and that is profiting from war and conflict."
Selex struck a deal with Israel-based Elbit Systems three years ago to supply the Gabbiano T20 on Hermes 450 while a more powerful version was chosen for Hermes 900.
According to Selex, the Edinburgh site boasts two manufacturing centres of excellence, a microelectronics centre of excellence and a laser centre of excellence, which "demonstrate the company's world-leading technology which is at the forefront of the global military laser and airborne radar markets".
The Edinburgh base, which Selex describes as Britain's largest defence electronics business, won a Queen's Award for Export in 2005 for increasing overseas revenues by 48 per cent in three years.
Two years later Scottish Government announced Selex would get a £2m research and development grant. It announced there was a signed strategic agreement outlining how Scottish Enterprise and Scottish Development International would work alongside Selex to maximise the benefit to the Scottish economy of future expansion opportunities.
Scottish Enterprise (SE) has given the company four separate R&D grants since 2005/6 totalling £12.3m. It is not known whether any public money has been used by the company for research on Gabbiano.
An SE spokesman said: "As with all our research and development grants, this support is for projects with clear economic benefits such as growing R&D activity, supporting employment and increasing export activity."
Selex provided a range of security measures at 20 Commonwealth Games venues in Glasgow, including the Athletes' Village.