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The Worst National Security Corruption Case in Israel's History

Gilead Sher
Uzi Arad
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A demonstration calling for investigation of Prime Minister Benjamin Netanyahu in Case 3000, involving the purchase of German-made submarines and patrol boats, November 2020
A demonstration calling for investigation of Prime Minister Netanyahu in Case 3000. The delay in forming a government commission of inquiry is extremely unreasonable.Credit: Ohad Zwigenberg
Gilead Sher
Uzi Arad

“Case 3000” – the submarines and war ships affair – is not just another “ordinary” corruption scandal, which relates primarily to unethical practices. Rather, It is Grand Corruption combined with Defense Corruption, both having severe legal implications. 

Grand Corruption is defined as a scheme perpetrated at the highest levels of government, involving leaders and senior officials. It usually entails substantial benefits for the individuals involved and significant losses for the state. It also leads to illicit exchanges in the realm of policy formation. Such corruption causes egregious harm to citizens but regrettably often ends with impunity.

The common denominator to all transactions in Case 3000 is that they all belong to the defense sector involving the acquisition of major weapon systems. The suspects in the affair are senior officials in the Prime Minister’s Office, relatives of Prime Minister Benjamin Netanyahu, as well as senior naval officers. All the acquisitions lead to the German Thyssenkrupp conglomerate. 

In several of these transactions, Netanyahu took decisions which contradicted the official stance of the military and defense establishment. The decision-making process undermined the binding procedure for strategic and defense procurement.

One such decision related to the acquisition of a sixth submarine shortly after the defense establishment had determined that five submarines should suffice Israel's military needs. The second decision dealt with the accelerated ordering of future submarines, 7, 8 and 9, despite opposition from the IDF chief of the general staff and the defense establishment who claimed such ordering is premature.

Then there was another Netanyahu decision to wave Israeli opposition to the supply of advanced German submarines to Egypt, while concealing that decision from the defense establishment. Such supply apparently gave rise to the consideration of Israel purchasing anti-submarine vessels, something the Israel Navy never demanded – ostensibly to defend the sea lanes from the growing Egyptian submarine fleet.

Prime Minister Benjamin Netanyahu climbs out after a visit inside the Rahav submarine after it arrived in the port of Haifa, January 12, 2016.
Prime Minister Benjamin Netanyahu climbs out after a visit inside the Rahav submarine after it arrived in the port of Haifa, January 12, 2016.Credit: Baz Ratner / Reuters

On top of it, was the distorted decision process to acquire four patrol boats to protect Israel's economic waters? How come such large, heavy and expensive craft were ordered from Thyssenkrupp, when boats that meet operational requirements as defined could have been acquired from another supplier and at lower cost? Why was the international bidding process canceled, with Thyssenkrupp becoming sole supplier of these boats? 

How was the location of the main natural gas rig approved near the coast, without a comprehensive mandatory security risks assessment, which would have revealed that the site chosen was wrong in terms of security and safety? And finally, what lied behind the idea of privatizing Israel's navy's shipyards, in contradiction to the fundamental principle of Israeli self-reliance – for the sake of giving exclusivity to Thyssenkrupp? 

This is how the Israel Police summed up its investigation: “Deficiencies were found in matters relating to administrative procedures in various agencies, relating to strategic defense procurement for the State of Israel. Such deficiencies require that authorized bodies learn their lessons and draw the appropriate conclusions, to improve the defense procurement procedures, render them more efficient, and protect them from extraneous interests and inappropriate influences.”

So why did the police confine itself only to pointing out the defects, which were exceptional in their scope and severity, without looking into the suspicions of security offences having been noticed by the investigation? Why did the Attorney General claim that the only criminal offences that should be investigated are those related solely to unethical behavior, and has not to-date allowed an investigation into the far more serious criminal offences in the realm of state security, foreign relations and official secrets? After all, the damages caused by such security offenses are often large-scale and the punishment accordingly heavier. 

Yet the Attorney General excluded, at the very outset, Netanyahu from the circle of suspects under investigation, and asserted – without there being any basis for such an assertion at that preliminary stage, as there isn’t one to this day – that Netanyahu is still not even a suspect in the whole affair. This disputed decision, taken by Israel's chief prosecutor, has never been explained to the public.

The AG himself said recently that disturbing materials had been brought to his attention, and that “the evidentiary material conveyed to me regarding the patrol boat transactions includes weighty claims, from senior and highly experienced officials in the public establishment … On the face of it, the claims show conduct that does not meet the proper standards of a public authority dealing with a matter of such importance to the national interests of the State of Israel.”

And despite these very harsh statements, we still know of no process of clarification, examination, inquiry or investigation of the security offences committed under Case 3000, either by the Israel Police or even by the defense establishment. In the past, Israelis have been prosecuted on suspicion of undermining the state’s secrets, defined as serious espionage, harming military supplies or the country's foreign relations, and some were prosecuted and sentenced – for committing far, far less severe crimes than what has been published to date as defense related violations in this case.

Israel’s policy toward the German supply of submarines to Egypt was a particularly well-kept secret, and the prime minister himself explained that the reason for the unprecedented exclusion of defense establishment regarding these submarines was by itself a “secret.” Yet, the police investigation has revealed that non-official civilians among those suspected in the affair knew about Netanyahu’s secret approval for selling the submarines to Egypt – even before senior officials in the IDF and the defense establishment learned about it.

Clearly the flow of top secret security and diplomatic information among suspects involved is no less serious than the flow of suspected money transfer. Prima Facie, the legal definition of such acts, in Israel's Criminal Law, is “severe espionage.” No less. And the police investigation has explicitly stated some of the suspects were tasked with collecting and passing on of information, evidently classified, connected to the various weapons deals. 

It goes without saying that providing additional German attack submarines to Egypt poses a greater threat than there is now to shipping lanes, leading to and from Israel, places a heavier burden on its forces and adversely affecting its preparedness. That is certainly the reason for the defense establishment’s opposition to giving consent to this transaction. Top officials, former heads of the IDF General Staff and the Shin Bet security service, have described the actions undertaken in connection with the sale of German submarines to Egypt as seriously tainted – to the point of “treason.”

Any Israeli acquisition of submarines, or patrol or anti-submarine craft, beyond what the army needs based on its multiyear plan, will come at the expense of  weapon systems it considers of higher priority .Hence, a net detraction from the country's military capability. But the greatest damage to Israeli future security stems from the corruption risk that has emerged out of the scandal and puts in jeopardy of the future supply of submarines 7, 8 and 9, which are meant to serve as a pillar of Israel’s future deterrent. 

The 2017 Israeli-German Memorandum of Understanding includes a clause that permits the German government to reconsider the deal for future submarines in the event that any elements of corruption are revealed. This new corruption risk caused by Israelis involved in the transactions, some of them subordinates and confidants of the Prime Minister, allegedly places on them a heavy responsibility, possibly criminal...

Israel’s involvement in Egypt’s acquisition of submarines from Thyssenkrupp caused tension in relations between Israel and Egypt, and demanded that Jerusalem find ways to calm the anger in Cairo. The cancellation of the international tender for the patrol boats damaged relations with South Korea, and required compensation from  Israel. And of course, the prosecution of Israelis accused of corruption in connection with ThyssenKrupp have cast a shadow over Israel-German relations, including relations between the German Chancellor and the Israeli Prime Minister.

Article 5 of the OECD Convention on Combating Bribery of Foreign Public Officials reads as follows: "Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party … and shall not be influenced by considerations of … the potential effect upon relations with another state."

As a member of the OECD, Israel is committed to complying with this convention. In the event that it does not carry out the investigation of this Grand Corruption security affair to the point of prosecution, for reasons of foreign relations, it will find itself in noncompliance of the above-mentioned article.  This in itself will damage Israel's renowned rule of law and standing as a law-abiding country that fights corruption.

In light of the widespread public call for a government commission of inquiry into Case 3000, the delay in forming it can be described as highly unreasonable. The findings prove that this is the most severe, -security corruption Israel has had. Allegedly, excluding the prime minister from the investigation at the outset, and neglecting criminal security offenses, are also unreasonable in terms of law and national security.
This affair must be thoroughly investigated, with all its ramifications and consequences, with no further delay – if only to prevent a future recurrence.

Prof. Uzi Arad served as National Security Adviser to the Prime Minister and Head of the National Security Council, and as the Foreign Policy Adviser to the Prime Minister and Mossad's Director of Intelligence.

Col. (res.) Gilead Sher, an attorney, served as Chief of Staff and Policy Coordinator to former Prime Minister and Defense Minister Ehud Barak, and as a senior Israeli negotiator. He served recently as visiting professor at Georgetown University.

Akiva Eldar, a political analyst, previously Haaretz columnist and editorial writer. 

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