Iran Made Millions From German Submarine Maker That Netanyahu Insisted on Buying From

This morning Yedioth Ahronoth revealed Tehran holds nearly 5% of ThyssenKrupp. Haaretz looked into its financial reports and found Iran raked tens of millions of euros off company stocks. Senior official: Netanyahu didn't know.

Prime Minister Benjamin Netanyahu on the Rahav submarine, the fifth sub in the Israeli fleet, January 2016.
Baz Ratner/Reuters

Iran has received the equivalent of tens of millions of euros in dividends from ThyssenKrupp, a German corporation that supplies the Israeli navy with ships and submarines, a Haaretz investigation of the company's financial reports revealed on Friday. The prime minister's office refused to respond to the report, but a senior official said Netanyahu was not aware of Iran's stake in the German firm.

Earlier on Friday morning, Yedioth Ahronoth reporter Yossi Yehoshua revealed that the Iran Foreign Investment Company holds nearly 5 percent of ThyssenKrupp's shares. The German company is involved in several fields connected to technology and industry, making the construction of naval equipment just a part of its operations.

Prime Minister Benjamin Netanyahu has pushed to do business with the corporation without a tender, against the wishes of the Defense Ministry. Netanyahu's attorney and confidant, David Shimron, represents ThyssenKrupp's representative in Israel, Miki Ganur. Resulting concerns of a conflict of interest led Attorney General Avichai Mendelblit to open a police investigation into the affair.

In 2006, the Iranian investment firm reported receiving 18.5 million euros in dividends from ThyssenKrupp. The Haaretz investigation has revealed that since 2006, the company has paid shareholders dividends amounting to 2 billion euros. In the middle of the last decade, the company tried to maintain dividend payments of 600 million euros annually, a figure that fell overtime to reach 85 million euros in the last two years.

The chairman of the Iranian company confirmed in an interview in the past that the firm held shares in ThyssenKrupp, but said that the Germany company was unauthorized to invest in Iran on its own.

The Iranians, who at the end of the 1970s held a quarter of shares in ThyssenKrupp, reduced their stakes in the company to some 5 percent in 2003 in order to prevent sanctions from being placed on the company by Western governments.

Reports from ThyssenKrupp said that the company tried to receive an exemption from these limits, but was unsuccessful and bought back IFIC's shares and bring their total involvement in the company to less than 5 percent.

A report from the Iranian company in 2011 also said that it held 4.5 percent of shares in the German company.

The fact that Iran holds stakes in ThyssenKrupp isn't expected to have any security significance for Israel, but could have economic effects, according to sources in the defense establishment. Israel maintains a secrecy agreement with its German naval contractors that clearly define the information security protocols regarding Israeli activities.

Many security firms, including Israeli ones, allow the public to purchase shares on the stock market, and doing so does not mean that shareholders have access to any information held by the company. According to the one of the sources, there is no evidence that Iran's stakes in ThyssenKrupp led to a leak of information.

The prime minister's office refused to respond to the reports of Iran's stake in ThyssenKrupp.

However, a senior source in Jerusalem, who requested to remain anonymous due to the sensativity of the issue, said that Netanyahu and the National Security Council, which led negotiations with Germany for the purchase of the naval craft, was unaware of Iran's holdings in the German company.

The senior source added that every company involved in security deals with Israel undgoes extensive checks beforehand, and that the defense establishment does not believe there to have been any risk of an information leak to Iran as a result of Israel's contracts with ThyssenKrupp.

Israeli MK Erel Margalit, however, said that, "Those benfiting the most from the ships and submarines deal are the friends of Netanyahu and Iran. The fact that the Iranians own 5 percent of the German company gives them information rights, meaning the rights to know everything as a central stakeholder. That's why the deal that the prime minister is pushing forward gives the Iranian regime information on the details of the submarines and the details of the buyer - the state of Israel."