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German prosecutors to probe Israeli sub deal

Ben Knight Berlin
March 26, 2019

Prosecutors have launched an investigation into a submarine deal between German firm ThyssenKrupp and the Israeli military. Persistent bribery accusations linked to the sale have dogged Israeli PM Benjamin Netanyahu.

Deutschland Israel U-Boot Lieferung
Image: picture alliance/Photoshot/A. Cohen

One of the scandals spiraling around Israeli Prime Minister Benjamin Netanyahu has caught the attention of German authorities investigating potential use of taxpayers' money to bribe Israeli officials.

State prosecutors in Bochum confirmed to DW that they have started an investigation into possible bribery and corruption as part of a deal to sell three "Dolphin" class submarines and four corvette ships from German manufacturer ThyssenKrupp Marine Systems to the Israeli military. The deal was approved by the German government in July 2017.

Prosecutors said in an email that after "assessing (international) press reports," an investigation into unknown persons had begun. German authorities had previously only been "observing" the case.

Israeli police, who have been investigating so-called "Case 3000" for more than two years, filed bribery-related charges against six people last November, including David Shimron, Netanyahu's family lawyer who also represented ThyssenKrupp's former agent in Israel, Michael Ganor. Netanyahu himself is not a suspect.

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Graft allegations

Ganor, himself in custody on bribery charges, had been a state's witness in exchange for a limited jail term, but dramatically recanted his testimony to police last week.

According to Israeli newspaper Haaretz, Ganor has now denied any payoffs. "I didn't bribe anyone. All the payments that I made to those involved in the case were for professional services that they provided me," he said.

Netanyahu: Allegations are 'unprecedented witch hunt'

A spokesman for ThyssenKrupp told DW that Tuesday's news had not changed their position, since no ThyssenKrupp employees had been mentioned in the German prosecutors' statement. The company has said it cut ties with Ganor as soon as the original allegations came to light two years ago, and carried out an internal investigation that found no evidence of corruption.

Israeli media last week speculated that, as well as the bribery charges, Netanyahu may have personally benefited from the sale, a charge eagerly taken up by Benny Gantz, his chief opponent in the upcoming Israeli election.

Shares and interests

That accusation is based on the recent revelation, from Israel's Channel 13, that in 2007 Netanyahu bought shares in the US company Seadrift Coke, run by his cousin Nathan Milikowsky, that was later acquired by steel manufacturer GrafTech International, a longtime supplier of ThyssenKrupp. Netanyahu recently said he sold those shares to his cousin in 2010, about a year after becoming prime minister. 

According to Israel's Channel 10 news, when bids for the naval upgrade were invited in 2014, Shimron, acting at Netanyahu's behest, called an adviser for the Israeli Defense Ministry and asked him to support ThyssenKrupp. Later that year, Netanyahu and the National Security Council lobbied to suspend bidding in favor of ThyssenKrupp. Shimron and Netanyahu have denied these allegations.

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German government silence

The deal could yet lead to political fallout in Berlin, because, as part of Germany's ongoing commitment to contribute to Israel's defense, the German government agreed to fund a third of Israel's purchase of the three Dolphin submarines, amounting to €540 million ($610 million) to be spent over 10 years.

Sigmar Gabriel and Benjamin Netanjahu
Netanyahu (right) met then-German Foreign Minister Sigmar Gabriel in early 2018Image: Imago/photothek/T. Koehler

According to a 2017 report in Haaretz, the German government briefly suspended the deal because of the corruption allegations, though then-Foreign Minister Sigmar Gabriel pushed for the deal to mend his fraught relations with Netanyahu.

In answer to an official information request from a group of Left party Bundestag members, the German government refused to confirm or deny this temporary suspension, though it admitted it was in constant contact with representatives of the Israeli government on defense issues.

One of those MPs, Andrej Hunko, accused the government of evading questions on the issue. "Even though the Israeli police has been investigating corruption for a long time, the German government has given no information on the negotiations and guarantees for ThyssenKrupp," he told DW in an email. "They have only confirmed that the issue of 'corruption' was 'addressed' with ThyssenKrupp. We were not told any results."

He added that the German state prosecutor's decision to open an investigation "offered the possibility that the German government be forced to help investigate the corruption scandal." He also said the government should be able to say whether any of the people charged in the Israeli investigation were involved in the negotiations with ThyssenKrupp.

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Ben Knight Ben Knight is a journalist in Berlin who mainly writes about German politics.@BenWernerKnight