Israel: Netanyahu approved Germany-Egypt submarine deal for $142m discount

Israeli Prime Minister Benjamin Netanyahu is facing new questions over his role in the so-called “Submarine Affair”, after reports emerged that he approved a deal between Egypt and Germany in order to secure a multi-million-dollar discount for Israel’s own naval purchases, not for “security reasons” as he previously claimed.

The affair – sometimes known by its case number 3000 – involves allegations that several of Netanyahu’s close associates lobbied senior Israeli defence officials to sign deals with German shipbuilding firm ThyssenKrupp. These associates are suspected of “skimming” millions of shekels off the top of the deals for their personal profit and are now being investigated for corruption.

These investigations revealed that one deal saw Egypt order two submarines and two anti-submarine warships from ThyssenKrupp. Though Germany does not require Israeli permission to sell its ships to other countries, it has traditionally refrained from doing so to give Israel dominance in the region.

However, on this occasion the Germany-Egypt sale reportedly went ahead without the approval of then Defence Minister, Moshe Ya’alon; instead, former Defence Ministry officials and aides to German Chancellor Angela Merkel claimed that Netanyahu had personally approved the deal.

Amidst the outcry that ensued, Netanyahu agreed to a rare TV interview to discuss the deal. “My reasons are security reasons and security reasons alone,” he told Israel’s Channel 12, “the State of Israel has secrets that only the prime minister knows and a handful of people”.

READ: Germany launches investigation into Israel submarine affair

Now it has emerged that Miki Ganor – a former ThyssenKrupp sales agent in Israel and previously a state witness in Case 3000 – told corruption investigators that Netanyahu approved the sale to Egypt in exchange for a discount of half a billion shekels ($142 million) on the purchase of Israel’s sixth submarine from the German firm.

It was this discount which ensured that the Germany-Egypt deal went ahead, in the process securing a huge cut for Ganor and his associates, the Times of Israel explained, citing a report by Israel’s Channel 13 yesterday.

German Chancellor Angela Merkel greets Israeli Prime Minister Benjamin Netanyahu in Germany in February 2016

Ganor agreed to turn state witness in 2017, admitting to bribing a string of Israeli officials. He agreed to provide evidence for the prosecution in exchange for serving only one year in prison and paying a ten million shekel ($2.7 million) fine.

However, in a shock move, in March Ganor presented himself to Israel Police and asked to change his previous statement, despite standing by it during 50 meetings over the course of the investigation. Ganor instead claimed he had been pressured by the police into confessing.

The move was, however, reportedly prompted by Ganor’s discovery that signing a state witness agreement had put his name on an international banking blacklist, thereby blocking his access to tens of millions of shekels under his name in banks in Cyprus and Austria.

He was subsequently arrested for “obstructing an investigation with false information”. Later that month, Israel Police withdrew its state witness arrangement with Ganor, since recommending that he be charged with five counts of bribery and one count of receiving an illicit gift, in addition to six counts of money laundering.

However, as the Times of Israel explained, Ganor’s “testimony is still usable in court, and the part about Netanyahu’s reason for approving the submarine deal hasn’t been affected by [his] retraction of some of his testimony.”

READ: Israel minister resigns after being handed graft indictment

Critics of Netanyahu have been quick to respond to the fresh allegations, particularly given the proximity of Israel’s upcoming general election, which is slated for 17 September.

De facto opposition leader and head of the Blue and White (Kahol Lavan) party, Benny Gantz, said in a statement that “it is unacceptable for the prime minister to carry out arms deals that affect the strategic balance in the region while being suspected of involving personal considerations”.

Blue and White number two Yair Lapid echoed this sentiment, accusing Netanyahu of “deflecting and lying as to why he approved the sale of advanced submarines to Egypt”. The former finance minister also called the affair the “worst corruption scandal in Israel’s history,” calling for a state inquiry into the allegations.

Netanyahu’s Likud party hit back at Blue and White – its biggest election rivals – for criticising the prime minister, labelling their statements “desperate attempts […] to revive this corpse [in order to] divert the public’s attention from the internal mess in their party”.

The prime minister does not seem to have issued his own statement on the revelations, only retweeting the Likud party’s statement.

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