Tangled web

Israeli police refer bribery charges in ThyssenKrupp submarine deal to prosecutors

140923 HAIFA Sept 23 2014 An Israeli naval officer holds the mooring rope of an INS Tanin
Shipshape and Bristol fashion? Source: Imago

Dive, dive, dive! This might be the reaction of ThyssenKrupp as Israeli authorities narrow in on bribery charges in connection with a big submarine deal.

The Essen-based firm, however, did not comment on reports that Israeli police have identified several people suspected of money laundering and bribery in connection with the multi-billion deal.

The long-running investigation reaches directly into Prime Minister Benjamin Netanyahu’s entourage, though he himself is not a target. David Schimron, Netanyahu’s cousin and personal lawyer, is implicated, along with several former military officials.

Schimron and the other suspects deny the charges. Calls for Netanyahu’s resignation in light of the latest disclosures were rejected by the government.

Much of the evidence is derived from ThyssenKrupp’s middleman, Miki Ganor, who turned state’s witness in exchange for a lesser sentence. Ganor is a confidant of Schimron and in fact, was imposed on ThyssenKrupp as middleman from the beginning.

The bribery affair is the last thing ThyssenKrupp’s beleaguered shipbuilding division needs. Israel has been a prime customer for the division, with billions in orders over the years.

Post-WWII agreement

A pending order for three submarines worth €2 billion is also in play. According to reports, Israel’s military leadership was against the purchase, saying the country does not need new submarines, but Mr. Netanyahu apparently pushed the deal through.

The German government will pay a third of the sum for the subs in accordance with post-World War II arrangements, but only if bribery charges are cleared. As taxpayer funds are involved, all sides have to look into allegations of corruption very carefully. The agreement is also important for Germany’s naval shipbuilding workers in Kiel: 9,000 people are employed by ThyssenKrupp Marine Systems, which also has a contract to build four naval corvettes for Israel.

The shipbuilding division has already implicated in bribery in South Africa and Turkey, according to internal documents.

Israeli police have referred the case to prosecutors, recommending action against six suspects. The review by authorities could take another six months, Israeli experts estimate.

Martin Murphy covers the steel, car and defense industries for Handelsblatt. Pierre Heumann is based in Israel since 1993 and covers the Middle East for Handelsblatt. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the authors: heumann@handelsblatt.commurphy@handelsblatt.com

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