Blue and White claims Netanyahu got NIS 16m. for illicit submarine deal

Amid separate scandal over ‘Iranian hacking’ of Gantz’s phone, centrist party says leader will address ‘the largest corruption scandal in Israel’s history’ in Sunday night speech

Raoul Wootliff is a former Times of Israel political correspondent and Daily Briefing podcast producer.

Prime Minister Benjamin Netanyahu, seen at a welcoming ceremony for a new submarine, Rahav, at the Israeli navy base in Haifa, on January 12, 2016. (Kobi Gideon/ GPO /File)
Prime Minister Benjamin Netanyahu, seen at a welcoming ceremony for a new submarine, Rahav, at the Israeli navy base in Haifa, on January 12, 2016. (Kobi Gideon/ GPO /File)

In a fresh and grave accusation of serious corruption, the Blue and White party claimed Sunday that Prime Minister Benjamin Netanyahu received millions of shekels in illicit funds as part of a massive graft scheme in the multi-billion shekel state purchase of naval vessels from Germany.

In a statement announcing a speech by party leader Benny Gantz set for Sunday evening, Blue and White said that the former IDF chief of staff will “for the first time address the largest corruption scandal in Israel’s history.”

Referring to the high-profile Case 3000 investigation, which has snared several close associates of Netanyahu but not the premier himself, the party said Gantz will specifically address “the NIS 16 million [$4.5 million]  that Netanyahu received in exchange for the approval of the submarine deal.”

The investigation, which centers on the $2 billion purchase of submarines and combat ships from German shipbuilder Thyssenkrupp, has already seen police recommend bribery charges against Netanyahu’s attorney and cousin David Shimron; his former bureau chief David Sharan; his former pick for National Security Adviser Avriel Bar-Yosef; the former head of the navy Eliezer Marom; and former minister Eliezer Sandberg.

Shimron represented Thyssenkrupp in the sale and is suspected of trading his influence over the prime minister in return for a hefty cut of the deal. Police believe he pushed for a NIS 6 billion ($1.5 billion) defense contract to purchase submarines for the Israeli Navy and other vessels to protect the country’s offshore natural gas fields.

Blue and White alliance leaders, left to right, Moshe Yaalon, Benny Gantz, Yair Lapid, and Gabi Ashkenazi speak to the press during a tour at the Israel-Gaza border near the kibbutz of Kfar Aza, on March 13, 2019. (MENAHEM KAHANA / AFP)

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 allegedly pushed by Shimron would also have seen Thyssenkrupp construct a lucrative shipyard in Israel, where the company would maintain the new vessels.

The NIS 16 million sum cited by Blue and White refers to the money that Netanyahu is alleged have made from selling shares in a publicly traded supplier to Thyssenkrupp.

According to a Channel 13 report aired last week, the attorney general’s office is probing the sale of the shares to another cousin of Netanyahu, US billionaire Nathan Milikowsky, after the State Comptroller’s Office recently discovered that the premier had not disclosed his holdings in GrafTech, a US-based manufacturer of graphite electrodes, used in the production of steel and other metals.

The accusation by Blue and White, which has mounted a formidable challenge to Netanyahu’s Likud party ahead of April’s election, comes amid a separate scandal currently plaguing Gantz over a purported Iranian hack of his phone.

The initial report about the hack was carried Thursday by Channel 12, which said Iranian intelligence had managed to gain access to Gantz’s cellphone and all its contents. A follow-up report on Saturday night said that no sensitive security information had been housed on Gantz’s phone at the time of the breach, but speculated that embarrassing information could have been obtained on the prime ministerial candidate.

Responding to the report, Blue and White number two Yair Lapid said that story was leaked in an attempt to divert attention away from the Case 3000 revelations.

“This is Netanyahu’s spin which just happens to leak a day after reports are published on the submarine affair,” Lapid told Channel 13 on Thursday. “It turns out that he had received NIS 16 million for deals he and his cousin had done with Thyssenkrupp… and suddenly a day later, a crazy story about Iranians and phone calls appears.”

This photo taken on December 11, 2012, shows the headquarters of German heavy industry giant Thyssenkrupp AG in Essen, Germany. (AFP/Patrik Stollarz)

Sunday’s statement was nonetheless a step up from previous claims made by Blue and White directly accusing the prime minister of having benefited financially “in exchange” for pushing the deal with Thyssenkrupp.

The sale of the shares was revealed last month when Netanyahu sought permission from the State Comptroller’s Permits Committee for Milikowsky to pay for his legal defense in the three other corruption cases in which he is embroiled. Ruling that it was inappropriate for wealthy benefactors to pay the legal fees in a criminal case relating to receiving funds from wealthy benefactors, the committee also ordered Netanyahu to return $300,000 he already accepted from Milikowsky to help pay his legal bills.

But according to Channel 13, while researching Milikowsky, the committee noticed that Netanyahu asked the committee in 2009 for permission to take a loan from his cousin so he could cover the tax liability owed on GrafTech’s profits due to his holdings. The loan was supposed to be repaid from Netanyahu’s share of the corporation’s profits.

“It’s all fake news,” a spokesperson for Netanyahu said last week in response. “In 2010, after being elected prime minister, he sold his shares in his cousin’s company with full approval of authorities, and for the last 10 years the prime minister has no connection to the company, and does not know its connection to Thyssenkrupp.”

The spokesman did not respond to a request for comment on Sunday’s allegation made by Blue and White.

Last month, Attorney General Avichai Mandelblit announced his intention to indict Netanyahu on charges of fraud, breach of trust and bribery in three separate cases, 1000, 2000 and 4000.

While a sitting Israeli prime minister has never been this close to indictment before, Netanyahu is not obligated to resign at this stage. The planned indictment is still subject to a hearing, during which Netanyahu can plead his case before formal charges are filed. This process will take place after April 9 elections, likely before July, according to the Justice Ministry.

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