Report: Iran owns 4.5% share in German company building Israeli subs
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Report: Iran owns 4.5% share in German company building Israeli subs

Defense Ministry denies knowledge of revelation, which comes as police probe possible conflict of interest by PM’s personal lawyer who represented ThyssenKrupp in Israel

Prime Minister Benjamin Netanyahu aboard the new submarine 'Rahav' at the Israeli navy base in Haifa, on January 12, 2016. (Kobi Gideon/GPO)
Prime Minister Benjamin Netanyahu aboard the new submarine 'Rahav' at the Israeli navy base in Haifa, on January 12, 2016. (Kobi Gideon/GPO)

An Iranian government company owns 4.5 percent of the German shipbuilding company at the center of a scandal over its provision of submarines and other services to the Israel Navy, the Hebrew-language newspaper Yedioth Ahronoth reported Friday.

Attorney General Avichai Mandelblit last week ordered the police to look into allegations that Prime Minister Benjamin Netanyahu’s personal lawyer, David Shimron, used his close relationship with the premier to push Israel to purchase several submarines from ThyssenKrupp, award the company a contract for naval vessels to defend Israel’s gas fields, and allow it to build a shipyard in Israel. Shimron was a representative of the company in Israel.

Channel 2 television said that the police inquiry — which is not yet a full-blown investigation — would focus not on the multi-billion-shekel purchase of three Dolphin submarines from the Germany company, which has dominated the headlines, but rather on a separate 2014 Defense Ministry tender for naval ships, also involving ThyssenKrupp, to protect Israel’s Mediterranean natural gas field.

According to Yedioth, the Iranian investments in ThyssenKrupp began in the 1970s, during the era of the Shah. Tehran invested some $400 million in the German company, giving it a 24.9% share that was inherited by the Islamic regime when it took over Iran in the 1979 revolution. The newspaper pointed out, however, that at this time, ThyssenKrupp was not building Israeli submarines, but was instead focused on the steel, automotive and elevator industries.

ThyssenKrupp Marine Systems, the current incarnation of the conglomerate, was created in 2005, when ThyssenKrupp acquired shipbuilding company Howaldtswerke-Deutsche Werft.

David Shimron, Prime Minister Benjamin Netanyahu's personal lawyer, at a Likud press conference in Tel Aviv, February 1, 2015. (Flash90)
David Shimron, Prime Minister Benjamin Netanyahu’s personal lawyer, at a Likud press conference in Tel Aviv, February 1, 2015. (Flash90)

By the beginning of the new millennium, the Iranian investment in ThyssenKrupp, via the Iran Foreign Investments Company, was so significant that its deputy economy minister, Mohamad-Mehdi Navab-Motlagh, sat on the company’s board. But according to a Financial Times report in 2004, the German company “bowed to US pressure” and removed him from the board.

The US, under then-president George W. Bush, had two years earlier declared Iran to be part of the “Axis of Evil,” along with Iraq and North Korea. According to the FT report, which cited sources close to the company, the US government “told the German conglomerate that it would be blacklisted if it renewed [Navab-Motlagh’s] position.”

At around the same time, the FT said, “ThyssenKrupp was forced to pay a vastly over-inflated sum to the Iran Foreign Investment Company to reduce its holding to below 5 per cent.”

In its report, Yedioth quoted a 2016 interview by Dr. Farhad Zargari, the current managing director of the Iran Foreign Investments Company, in which he confirms the investment in ThyssenKrupp.

“We own shares in important companies such as British Petroleum, ThyssenKrupp, Siemens, Adidas, and many other big brands,” Zargari told the Business Year website, which describes itself as a “leading research firm and publisher of annual economic resources on national economies.”

An aerial view of an Israeli offshore gas rig (Albatross Aerial photography/Noble Energy/Flash90/File)
An aerial view of an Israeli offshore gas rig (Albatross Aerial photography/Noble Energy/Flash90/File)

“One of IFIC’s significant roles is to create a bridge between Iran and other countries with our investments, in order to pave the ground for knowledge and know-how transfer,” he said. “We feel more secure investing in European and other developed countries compared to less regulated countries.”

According to its website, IFIC has investments in 18 countries, 57% of which are in Europe. It also has holdings in South America, Africa and Asia.

The Defense Ministry said in response to the report that it was not aware of Iranian involvement in the company, Yedioth said.

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