Lapid says submarine scandal worst graft case in Israeli history
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Yesh Atid leader also raises treason allegation over related German-Egyptian submarine sale

Lapid says submarine scandal worst graft case in Israeli history

Former finance minister casts doubt on Netanyahu's claim not to have known of his lawyer's controversial role in huge defense deal

Former finance minister Yair Lapid (left) and Prime Minister Benjamin Netanyahu, when the last government was in power, in Jerusalem on July 3, 2013. (Flash90)
Former finance minister Yair Lapid (left) and Prime Minister Benjamin Netanyahu, when the last government was in power, in Jerusalem on July 3, 2013. (Flash90)

Israel’s former finance minister on Wednesday described a scandal over alleged illegalities in the purchase by Israel of German submarines as the gravest corruption case in the nation’s history.

Yair Lapid, the leader of the opposition Yesh Atid party who served as finance minister when the 2015 deal was being negotiated, also cast doubt on Prime Minister Benjamin Netanyahu’s claim not to have known that his own lawyer was representing the Israeli agent of the German defense firm selling the submarines.

Lapid also said that if any Israelis earned money from a related sale, of submarines to Egypt, this would constitute treason. He stressed that he was not referring to Netanyahu in this context.

In response, Netanyahu’s Likud party accused Lapid of issuing “baseless allegations,” when it is known that the case has “nothing to do with the prime minister.”

Six Israelis have been brought in for questioning as suspects in the affair in recent days, including Netanyahu’s lawyer David Shimron and the former commander of the Israeli Navy Maj. Gen. (res) Eliezer Marom.

In what is known as “Case 3000,” authorities are investigating alleged corruption and bribery involved in multi-billion-shekel naval deals with the German shipbuilding company ThyssenKrupp. Two other suspects are the former deputy head of the National Security Council Avriel Bar-Yosef and ThyssenKrupp’s Israeli agent Miki Ganor.

David Shimron seen at a Likud press conference in Tel Aviv on February 01, 2015. (Flash90)
David Shimron seen at a Likud press conference in Tel Aviv on February 01, 2015. (Flash90)

Netanyahu is not a suspect in the case. However, police are planning to summon him to testify on what he knows about the issue.

Lapid, who testified as a witness in the affair earlier in the week, called it “undoubtedly the biggest corruption case in the history of the state.”

What is not denied, Lapid said, was that funds from the Israeli defense establishment “went out of the country into a bank account in Germany, from there into a secret bank account in Germany, and then back to Israel and into the private pocket of the Israeli prime minister’s lawyer, best friend and political representative” — a reference to Shimron — “all without the defense minister and security establishment knowing.”

Noting that it is claimed Netanyahu did not know that Shimron was acting on behalf of the German sellers, Lapid said “I don’t know how he couldn’t have known,” but that the investigation would establish whether this was the case.

Miki Ganor is brought for a court hearing at the Magistrate's Court in Rishon Letzion, July 10, 2017. (Moti Kimchi/POOL)
Miki Ganor is brought for a court hearing at the Magistrate’s Court in Rishon Letzion, July 10, 2017. (Moti Kimchi/POOL)

He said it was manifestly unacceptable that when he was negotiating in good faith with Germans, holding out for the best terms, “the Germans facing me across the table knew that the Israeli prime minister’s lawyer was representing them.” Neither he, as finance minister, nor the Defense Ministry, knew of Shimron’s role, he stressed in tones of outrage. “In what country does everybody (involved in this) get to keep their jobs?” he asked.

Moving on to a related matter, a sale by ThyssenKrupp of submarines to Egypt, Lapid charged that Shimon, Marom and Ganor gave the German firm a green light for this deal without the defense minister’s or the Defense Ministry’s knowledge, and in a departure from Israel’s longstanding understanding with Germany that it not sell advanced weaponry to Israel’s neighbors. “We all go to the Germans” to protest the deal, recalled Lapid, and “they say, sorry, the prime minister approved it.”

Eliezer Marom in 2009, when he was commander of the Israel Navy (Roni Schutzer/Flash90)
Eliezer Marom in 2009, when he was commander of the Israel Navy (Roni Schutzer/Flash90)

Stressing that he was not referring to Netanyahu, Lapid went on: “If someone got money for this (Egyptian deal), that’s not corruption, that’s betrayal of the homeland. That endangers the security of Israel.”

The Israeli-German contacts came under intense scrutiny late last year, after it was revealed that Shimron had served as ThyssenKrupp agent Ganor’s lawyer in the deal, under which the German company was awarded the contracts for building Israel’s submarines and naval attack boats.

An Israeli nuclear Dolphin submarine in Kiel, northern Germany (photo credit: AP/Philipp Guelland)
An Israeli Dolphin submarine at the shipyards in Kiel, northern Germany (AP/Philipp Guelland)

Shimron, who was questioned for a third time on Wednesday, has denied any improprieties. So, too, has Marom, who is currently under house arrest.

Shimron has said he “did not discuss these matters with the prime minister,” and denied any effort to influence a decision over the deal.

Attorney General Avichai Mandelblit ordered the Israel Police to formally look into the submarine affair in November 2016, after accusations surfaced that Netanyahu may have been swayed to purchase vessels by Shimron.

Shimron is suspected of pushing for a NIS 6 billion ($1.5 billion) defense contract to purchase submarines for the Israeli Navy and other vessels for protecting the country’s maritime natural gas fields, an effort that could have netted him a hefty fee. Netanyahu’s own role in the purchase decision, including his insistence that Thyssenkrupp be exempted from the usual Defense Ministry tender process, raised concerns of a conflict of interest for Shimron. Part of the agreement being pushed by Shimron would also have seen ThyssenKrupp construct a lucrative shipyard in Israel, where the company would maintain the new vessels.

An Israeli navy Dolphin-class submarine (photo credit: Moshe Shai/FLASH90)
An Israeli Navy Dolphin-class submarine. (Moshe Shai/Flash90)

Netanyahu has denied any wrongdoing in the multi-billion-shekel deal for the submarines, saying that bolstering Israel’s long-term security needs was the “only consideration” behind the purchases. Netanyahu had pushed for Israel to buy the vessels, against the wishes of the Israel Defense Forces as well as then-defense minister Moshe Ya’alon.

While police have repeatedly said Netanyahu is not a suspect, top officials say he should be.

Ya’alon has repeatedly accused Netanyahu of improprieties in the submarine deal

“This was the straw that broke the camel’s back with Netanyahu,” Ya’alon said at an event in the southern city of Beersheba last month. “I had never suspected that he was corrupt. But then he went behind the back of the chief of staff and the head of the navy to sign the deal with (German Chancellor Angela) Merkel, when the whole professional consensus — from the navy to the Defense Ministry — was that we needed five submarines, not six.”

Ya’alon, who was ousted as defense minister last year, was known to have disagreed with Netanyahu over the submarine affair.

Ya’alon, who is trying to set up his own party to challenge Netanyahu, said that if it were not for the “submarine affair” he would still be defense minister.

Then-Defense Minister Moshe Yaalon speaks to students at the Hebrew University in Jerusalem, on March 4, 2015. (Photo credit: Hadas Parush/Flash90
Then-Defense Minister Moshe Yaalon speaks to students at the Hebrew University in Jerusalem, on March 4, 2015. (Hadas Parush/Flash90

The new submarines were intended as replacements for the military’s older models.

In December, officers from the Lahav 433 unit entered the office of legal adviser Ahaz Ben-Ari at the Defense Ministry building in Tel Aviv and removed information from computers there. The data concerned the cancellation of an international tender to build four new warships to protect Israel’s offshore natural gas rigs in the Mediterranean Sea.

The contract was awarded instead to ThyssenKrupp. Under the 2015 deal, worth €430 million ($480 million), ThyssenKrupp is to supply Israel with four “Sa’ar 6 corvette” ships over a period of five years.

Raoul Wootliff contributed to this report.

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