Berlin Suspends Submarine Deal With Israel Amid Corruption Probe

Co-written by Anna Ahronheim.

Amos Gilead, a decorated retired IDF general and defense official, testified on Tuesday before the police’s Lahav 443 investigative unit amid the ongoing probe into a controversial submarine deal with Germany that has ensnared some of Israel’s most powerful officials.

According to Lahav 443, Gilead, a former director of policy and political military affairs at the Defense Ministry, is presently not suspected of illegal activity, and provided testimony voluntarily.

The content of Gilead’s testimony remains unclear.

Nonetheless, the police agency hinted that Gilead’s investigative status could change, noting in a statement that: “We have not found any evidence of corruption, but our investigation is only preliminary.”

Meanwhile, the signing of a memorandum on the sale of three submarines between Germany and Israel has been postponed.

A senior diplomatic official confirmed to The Jerusalem Post that the Memorandum of Understanding on the sale of the three submarines, which was supposed to be signed by Ambassador to Germany Yakov Hadas-Handelsman, has been postponed.

While the announcement is not an outright cancellation of the deal, it is a dramatic development in an affair that has rattled Israel.

In June, Der Spiegel reported that the German National Security Council approved the €1.5 billion purchase by Israel – 27% subsidized by Berlin – of the three submarines.

However, the contract reportedly includes a clause giving Berlin the right to cancel it if any improprieties or criminal offenses are proven as a result of the current police investigation, codenamed Case 3000.

Senior officials in both countries reportedly agreed that the clause was a condition for Germany’s agreement to sign the contract on the transaction. In addition to the significant sum of money that the deal is worth, senior German officials stated that it was important for German Chancellor Angela Merkel to show her policy of strengthening Israeli security.

Volker Beck, Green Party lawmaker and the head of the German-Israeli parliamentary group in the Bundestag, told the Post that despite the investigation and criticism surrounding the sale, Berlin is not turning away from it.

“Germany has a special responsibility for Israel’s security. That means concretely that we support Israel’s self-defense possibilities with the delivery of armaments,” he said. The postponement of the signing comes shortly after several senior officials and key suspects in the case were detained and placed under house arrest, including Prime Minister Benjamin Netanyahu’s personal lawyer David Shimron, businessman Miki Ganor, former deputy head of the National Security Council Avriel Bar-Yosef, and former Israel Navy commander Eliezer Marom.

A spokesman for the German Defense Ministry told the Post “Israel is thinking about acquiring additional submarines that will beginning in 2027 replace the three submarines previously obtained. Conversations on many levels took place to explore possible German support, including the modalities of a financial contribution.”

The spokesman continued, “The agreement between the Federal Republic of Germany and Israel over financial support for the acquisition of three additional submarines for Israel’s navy to replace the first delivery has not been signed.

“Regarding other matters concerning the Federal Security Council and individual cases of armament exports, especially on preliminary questions or press reports from the foreign media, the Defense Ministry will not comment.”

Despite the probe, Shimron was allowed to fly to the United States on Saturday after his period of house arrest ended. Shimron is reportedly suspected of illegally pushing the purchase of submarines from German shipyard ThyssenKrupp over the objections of the defense establishment, including then-defense minister Moshe Ya’alon.

Ya’alon has testified against Netanyahu, who is not a suspect in this affair, offering the police details about contacts the premier held with German officials regarding the acquisition of three submarines and several other warships, all of which happened without the knowledge of the security establishment.

Ya’alon continues to voice his opposition to the deal, stepping up his attacks by accusing Netanyahu of being corrupt, saying that there was no way that he could not have been involved in the scandal.

On Monday it emerged that Ganor, who brokered the agreement between Israel and ThyssenKrupp, is in the process of striking a deal to become a state’s witness in the case.

ThyssenKrupp spokesman Tim Proll- Gerwe, in an email statement to the Post, said that the company found no concrete indications of corruption and had “suspended” business relations with Ganor when the allegations against him became known.

“The complete clarification of the allegations in Israel are very important to us. Our company stands for honest business. Compliance is for us a central building block of good company leadership and means more than merely the compliance with provisions and laws. Compliance is a question which affects daily the attitude of every worker of Thyssenkrupp.”

Proll-Gerwe added that the company is closely observing the controversy in Israel and that while the internal investigation has temporarily finished, it has offered its cooperation to both the Israeli and the German authorities, adding that the company was limited by not being allowed to conduct its own investigation in Israel, as that “could be interpreted as criminal obstruction of justice.”

Questions over the 2014 submarine deal surfaced in November, when Channel 10 reported that Shimron worked for the Israeli representative of ThyssenKrupp.

Israel currently has three Dolphin- class submarines and two Dolphin 2-class submarines (another one is expected to be delivered in 2018).

The three additional Dolphin 2-class submarines under order, which would not reach Israel for another decade, are set to replace the older Dolphins.

Herb Keinon and Daniel Eisenbud contributed to this report.

Benjamin Weinthal is a senior fellow at the Foundation for Defense of Democracies. Follow him on Twitter @BenWeinthal. Anna Ahronheim is a military correspondent at the Jerusalem Post.

Follow the Foundation for Defense of Democracies on Twitter @FDD.