Despite Police Inquiry, Israeli Lawmakers Approved Funding for German Ship Maker

Defense and finance subcommittee votes to buy submarines, missile boats from ThyssenKrupp, despite controversy surrounding Netanyahu associates and the German firm.

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Benjamin Netanyahu tours the new Rahav submarine in Haifa's port, January 12, 2016.
Benjamin Netanyahu tours the new Rahav submarine in Haifa's port, January 12, 2016.Credit: Baz Ratner/Reuters
Chaim Levinson
Chaim Levinson

A Knesset subcommittee voted last week to approve funding for the purchase of new vessels from the German company ThyssenKrupp, even though the police are currently investigating two different aspects of these deals for possible improprieties.

The subcommittee on the defense budget – a joint subcommittee of the Knesset’s Finance Committee and Foreign Affairs and Defense Committee – met last Thursday to discuss the proposed defense budget for 2017.

The ThyssenKrupp headquarters in Essen, Germany. Credit: Martin Meissner/AP

Both Defense Minister Avigdor Lieberman and Israel Defense Forces Chief of Staff Lt. Gen. Gadi Eisenkot attended the first part of the meeting. After they left, the panel began voting on the budget’s various items.

When the subcommittee got to the navy’s budget, MK Erel Margalit (Zionist Union) and his colleagues in the opposition demanded that the budget for buying new vessels from ThyssenKrupp be frozen. The vessels in question include both submarines and missile boats. The latter, which are meant to protect Israel’s offshore natural gas fields, will cost some 430 million euros ($454 million), of which 115 million euros is coming from the German government.

Police are currently looking into two potentially criminal aspects of these deals. One is the involvement of lawyer David Shimron, given his prima facie conflict of interests: In addition to being Prime Minister Benjamin Netanyahu’s personal attorney, he also does legal work for ThyssenKrupp’s Israeli representative.

The second regards suspicions that Avriel Bar-Yosef – who spearheaded the purchase of the missile boats and negotiations with Germany over them in his capacity as then-deputy head of the National Security Council – received bribes from a German businessman, Michael Herzog.

During the subcommittee meeting, which was closed to the public, opposition MKs argued that financing for the ThyssenKrupp deals should be frozen until the police finish examining the issues. Instead, they said, the money should be put into the Defense Ministry’s budgetary reserve, to ensure that it will still be available if and when the cloud of suspicion is lifted.

“It’s inconceivable that foreign parties should turn a profit on defense deals while members of the budget committee don’t even know about them before those billions are approved, and especially when police are investigating the deal,” a source on the committee quoted Margalit as saying.

But governing coalition members objected, saying this would be tantamount to reopening the defense budget, which they weren’t willing to countenance. In the end, the motion fell by one vote.

The votes in favor of the motion came from Margalit and two of his party colleagues, Shelly Yacimovich and Manuel Trajtenberg. The votes against came from Avi Dichter and Anat Berko (Likud), Moshe Gafni (United Torah Judaism) and Moti Yogev (Habayit Hayehudi).

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