Israel's Ship-purchase Affair: Netanyahu 'Personally Ordered' Canceling Tenders

Testimony gathered by police is supported by documentation. The authorities are investigating whether crimes were committed in the navy’s purchase of ships and submarines from Germany.

Amos Harel
Amos Harel
Benjamin Netanyahu on an Israeli navy ship in 2009.
Benjamin Netanyahu on an Israeli navy ship in 2009.Credit: Reuters
Amos Harel
Amos Harel

Police investigators have evidence that Prime Minister Benjamin Netanyahu told the Defense Ministry’s director general, Dan Harel, to cancel an international tender in which Israel would buy ships to protect its offshore natural gas rigs.

The evidence part of a broader inquiry including a bribery investigation into Israel’s purchase of submarines from Germany is said to be supported by documentation.

On Monday, the Justice Ministry announced that State Prosecutor Shai Nitzan had ordered the police to progress from an inquiry to a criminal investigation into the subs deal. According Nitzan’s office, there was “evidence raising reasonable suspicion that some involved committed bribery,” although Netanyahu was not a suspect.

In recent months, the authorities have been examining Israel’s arms deals with Germany in general, including the decision to purchase four ships to protect Israel’s natural gas rigs in the Mediterranean.

A growing share of Israel's electricity is produced from natural gas from the Tamar gas field off the Mediterranean coast. Credit: Albatross Aerial Perspective

The findings so far point to large gaps in Defense Ministry oversight of huge military acquisitions, and people involved in the criminal investigation told Haaretz that more key revelations were likely.

The police have interviewed dozens of witnesses, including past and present defense officials. They have raided various offices in the Defense Ministry and collected a raft of documents.

Some of the people involved in the affair are expected to be questioned under caution, meaning they could be indicted.

These people are expected to include attorney David Shimron Netanyahu’s personal lawyer who also served as the attorney for the intermediary in the submarine deal, Michael Ganor. Shimron and Netanyahu deny that Netanyahu knew about this link.

One of Israel's Dolphin-class submarines purchased from Germany, photographed in 2016.Credit: Tomer Appelbaum

Also expected to be questioned are Ganor himself and former navy chief Eliezer Marom.

Another suspect was even detained for a short period amid suspicions of bribery: Brig. Gen. (res.) Avriel Bar-Yosef. Bar-Yosef, who is friendly with Ganor from when they served together in the navy, vigorously promoted the purchase of naval vessels from Germany when he was deputy head of the National Security Council.

Before the investigation into Bar-Yosef, Netanyahu sought to promote Bar-Yosef to the top of the NSC.

The police have already questioned both Harel and his predecessor as director general of the Defense Ministry, Udi Shani. They have also questioned Marom’s successor Ram Rothberg, former Defense Minister Moshe Ya’alon and Brig. Gen. (res.) Shmuel Zucker, who last month finished his term as head of the Defense Ministry’s acquisitions arm.

Harel testified over two days to the police; the investigators apparently wanted to use his experience to sketch out details in the transactions.

Also expected to testify is Mossad chief Yossi Cohen, who during part of the period when the transactions were discussed headed the National Security Council. Later on it may be necessary to take testimony from Netanyahu.

The Defense Ministry launched efforts to buy four missile ships in 2012. First came an intention to buy them from Germany’s ThyssenKrupp Marine Systems, which also makes Israel’s submarines. But later, then-Defense Minister Ehud Barak considered buying the missile ships from other countries, including South Korea.

At the end of 2014 the tender was halted, even though the Defense Ministry had already received bids from several countries. At this point Israel once again turned to ThyssenKrupp, and a year later an agreement was signed to buy the four ships.

Channel 10 reported that at least twice Shimron pressured attorney Ahaz Ben Ari, the defense establishment’s legal adviser, to get the tender canceled.

Another question is the link between the NSC and navy in drawing up the transactions. Some of the testimony seems to indicate that naval officers had a direct connection with NSC members in detailing the navy’s needs.

Unusually, these ties bypassed the Defense Ministry. According to one testimony obtained by Haaretz, the Defense Ministry may have been alerted after a copy of an NSC document was mistakenly sent to a ministry official, who drew it to the attention of Harel, the ministry’s director general.

In addition to the profits involved in the arms deals, other issues are the maintenance of the ships and submarines, and a long list of changes and special features that the military demanded before the ships were produced. All this can reach the hundreds of millions of dollars over time.

In reports in the Israeli media, it was claimed that Shimron and Ganor sought to transfer the maintenance of the submarines to a private shipyard in which the two men had a financial interest.

Regarding the special features, here too there is ostensibly room for intermediaries to make large profits in an area where Defense Ministry oversight is less dominant.

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