At Center of Corruption Scandal Plaguing Netanyahu, German Shipbuilder Opens Up Shop in Israel

Germany's ThyssenKrupp says future of deal with Israel 'unclear' in wake of submarine scandal, explaining local branch opened because company 'learned it's not always good to use local middlemen'

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The German-made INS Rahav, the fifth Israeli Navy submarine, arrives at the military port of Haifa on January 12, 2016.
The German-made INS Rahav, the fifth Israeli Navy submarine, arrives at the military port of Haifa on January 12, 2016. Credit: Jack Guez/AFP

German shipbuilder ThyssenKrupp, which provides the Israeli navy with its submarine, announced Thursday that it was not certain whether the deal to sell Israel Dolphin-class submarines will proceed as planned, but noted that it has opened a local company branch in the Jewish state in order to avoid using local middlemen for future business transactions.

As police continues to probe suspicions of corruption involving the submarine deal between the German and Israeli governments, seniors at ThyssenKrupp addressed the saga at a press conference in Germany.

>> The Israeli submarine scandal: What we know <<

While the conference was not directly related to the so-called "submarine affair," the German conglomerate's CEO, Heinrich Hiesinger, told reporters that the future of the deal is being reconsidered.

"It's not clear if it will happen," he said and noted that the memorandum of understanding between Israel and Germany includes a clause which allows Berlin to nix the deal should it emerge that it was linked in the past to corruption felonies.

"We will carry out what will be decided," Hiesinger said and stressed that the company itself is not privy to the negotiation with Israel, which is being held between the two countries' governments.

A senior official at ThyssenKrupp, board member Donatus Kaufmann, said that the conglomerate opened a branch in Israel in order to avoid the need to hire a local mediator. This decision was made following suspicions of corruption that have clouded the involvement of Israeli middleman in the deal, Michael Ganor.

Ganor has since become state's evidence in the affair. Ganor is suspected of money laundering, bribery, conspiracy and fraud. The police suspect Ganor gave money to government officials and paid a large sum in order to be named ThyssenKrupp’s representative in Israel. Prime Minister Benjamin Netanyahu, meanwhile, has shared a lawyer with Ganor, David Shimron, raising concerns Ganor used the connection to advance the deal.

"We have learned that it's not always good to use a local middlemen and that's why we opened a local branch of ThyssenKrupp in Israel two days ago," Kaufmann explained.

Kauffmann further placed emphasis on the fact that the company's contract with Ganor was discontinued as soon as the scandal blew up in Israel, and that following those events ThyssenKrupp started its own internal investigation.

According to him, that investigation did not indicate that any of the conglomerate's employees were suspect of inappropriate conduct in the submarine deal between Germany and Israel.

However, other seniors at ThyssenKrupp stressed during the press conference that the internal investigations they conducted didn't include a test of evidence uncovered in Israel.

They noted that by law, they are able to carry out such a test only on German soil and therefore the company is currently awaiting the results of the Israeli police and the General Prosecutor's investigation of the affair.

The officials added that should they be provided by Israeli investigators with evidence pointing at corruption they will test them in the utmost seriousness as part of a "zero tolerance" policy against corruption the company has declared it now endorses.

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