Israel's Prime Minister Benjamin Netanyahu could face more corruption charges after new details of his role in the so-called submarine affair emerged.
The submarine affair – often known as Case 3000 – refers to a series of allegations against close associates of Netanyahu, who it is claimed lobbied Israeli defence officials to sign a deal with German firm ThyssenKrupp. The associates are also believed to have "skimmed" the deal, keeping huge sums of the multi-billion-shekel deals for themselves.
Although previously Netanyahu was not a suspect and was only being interviewed as a witness in the case, new details which emerged this week have prompted Israel's state prosecution to consider opening a corruption investigation against him.
If this goes ahead, this will be the fourth corruption investigation against the incumbent Israeli prime minister, after Israel's Attorney General Avichai Mandelblit announced in February that Netanyahu would face trial for his role in three other cases, dubbed Case 1000, 2000 and 4000 respectively.
The submarine affair refers to several deals dating back to 2009 which would have seen multi-billion-shekel state purchases of naval vessels and submarines from ThyssenKrupp, a German shipbuilding company.
According to the Times of Israel there are four deals under investigation, which together make up Case 3000:
- An original deal to purchase a submarine for the Israeli Navy which was pushed by Netanyahu after he became prime minister in 2009. The deal was officially signed with ThyssenKrupp in 2012.
- A second deal which was pushed by Netanyahu's government in 2016 to purchase three more submarines from ThyssenKrupp, despite the fact that then-Defence Minister Moshe Ya'alon argued Israel did not require that many submarines. This deal has not yet been implemented.
- A third deal which would have seen the purchase of four warships to protect Israel's offshore gas assets. ThyssenKrupp did not participate in the initial tender process because it did not build ships to the specification requested. However, around 2016, the tender was abruptly cancelled, despite the fact that several companies had submitted bids. The Israeli government then handed the project exclusively to ThyssenKrupp and changed the specification of ships it required to one which matched the German firm's offering.
- In 2014, Egypt ordered two submarines similar to those bought by Israel in its 2012 deal, as well as two anti-submarine warships. It was understood that though Germany doesn't require Israeli permission to sell these ships to other countries, it had refrained from doing so to give Israel dominance in the region. The sale reportedly went ahead without Ya'alon's approval. A report this week claimed that Amos Gilad, who was the Defence Ministry's director of policy at the time, told police that Netanyahu had approved the deal without consulting or notifying the ministry.
A number of people have been implicated in the affair. Miki Ganor, a former ThyssenKrupp sales representative in Israel, previously admitted to bribing a string of senior officials in order to help secure the above contracts. He signed a deal to turn state witness, and his testimony has led others to be investigated.
Among those under investigation is Netanyahu's cousin David Shimron, who represented Ganor in the deals and allegedly promised to use his influence over Netanyahu to secure the sales. In return, Shimron would receive a "hefty cut" of the money exchanged, though exact figures have not been disclosed. According to police documents, there is sufficient evidence to charge him with bribery and money laundering offenses.
Other close associates of Netanyahu have also been implicated in the affair: another cousin of Netanyahu, Nathan Milikowsky; his former bureau chief David Sharan; his former pick for National Security Adviser Avriel Bar-Yosef; former head of the Israeli Navy Eliezer Marom; and former government minister Eliezer Sandberg.
In shock move, key state witness withdraws testimony
Though the submarine affair had gone quiet in the past few months as Israeli and international media focused on Netanyahu's indictment in other corruption cases, the affair has resurfaced this week.
In a shock move on Tuesday, Miki Ganor presented himself to the police and asked to change his previous statement, on which the whole case rests. Despite standing by the statement during 50 meetings with the police over the course of the investigation, Ganor now claimed he had been pressured by the police into confessing and now wished to withdraw his testimony.
Ganor was arrested for "obstructing an investigation with false information" as a result and was re-questioned by the Israel Police on Wednesday. According to Haaretz, "Ganor claimed he had never bribed anyone involved in the case," after which "investigators confronted him with statements [from] previous interrogations, as well as recordings and other evidence he had previously given to police" in which he had confessed to bribery.
Ganor told confidantes: "I agreed to sign a state's witness agreement only because the police threatened to arrest my wife and daughters – I couldn't take the pressure. The police set the narrative in the case. Every time before confrontations with chief suspects, investigators took me to a room that was not recorded by cameras and instructed me [in] exactly what to say and how to act. This is the truth – I don't want to lie and say that this was bribery."
On Thursday, the State Prosecutor threatened to rescind Ganor's partial immunity as state witness in light of the change in his statement. Under the agreement, Ganor would testify for the prosecution in exchange for only having to serve one year in prison and pay a ten million shekel ($2.7 million) fine for his role in facilitating the above deals.
Despite a series of petitions filed through Israel's courts over whether Ganor should remain in police custody, the Supreme Court ruled today that he must be detained until at least Sunday. Ganor's lawyers have been given until mid-next week to explain why he changed his statement, the reasons for which are, as yet, unclear.
Was Netanyahu involved?
In addition to the drama surrounding Ganor's change in testimony, reports have also emerged that appear to show Netanyahu profited from the submarine deals, contrary to his previous claims.
According to a report by Israel's Channel 13, the Israeli State Comptroller's Office recently found that Netanyahu and his cousin, Nathan Milikowsky, were shareholders in Texas-based steel factory SeaDrift, which was later absorbed into GrafTech International, a long-time supplier of ThyssenKrupp.
According to the report, Netanyahu did not disclose his shareholdings in GrafTech, which he had acquired when he was not prime minister. Netanyahu claims he sold his shares to his cousin after he was elected prime minister in 2009, the Times of Israel reported.
However, Haaretz yesterday reported that the State Prosecutor's Office is considering launching a criminal investigation into Netanyahu, saying that he had a "clear conflict of interest" at the time the sale was made. Haaretz explained that Netanyahu's shares in SeaDrift "quadrupled in value over the course of four years, from 2007 to 2010, even though the [SeaDrift] factory did poorly in that period".
Netanyahu had received shares in SeaDrift – which were managed by his cousin Milikowsky – worth four million shekels ($1.1 million), but sold the shares "about 19 months after being elected prime minister, for at least 16 million shekels [$4.4 million]". Given the mismatch between the company's poor performance and Netanyahu's huge profit margins, sources have concluded "the only possible explanation is that he bought the shares for a significant discount off market price, probably totaling millions of dollars".
An additional detail has also raised questions about Netanyahu's involvement in Case 3000. Haaretz explains: "The person who drafted the agreement for the 2010 share sale between Netanyahu and Milikowsky was attorney Isaac Molho. Molho was a partner at the firm of David Shimron, one of the main suspects in the submarine affair, and the lawyer for Thyssenkrupp's Israeli representative, Michael Ganor."
What does this mean for the upcoming election?
Netanyahu's Likud party has criticised the timing of these new details as politically motivated, saying in a statement that: "Twenty days before the elections there is a leak about an attempt for another investigation against prime minister Netanyahu. Only the citizens of Israel will choose the prime minister."
Speaking on Tuesday in response to the allegations, Netanyahu said: "I didn't get a shekel from the submarine deal. This was checked extensively by the prosecution and the attorney general [and] they stated unequivocally that I am not suspected of anything."
The submarine affair has also been seen by commentators as a blessing for Netanyahu's main political rival, former Chief of Staff and co-leader of the Blue and White (Kahol Lavan) alliance Benny Gantz. In the wake of this week's Iran phone hacking scandal – which saw Netanyahu attack Gantz's competency and claim that he is regional foe Iran's "preferred candidate" for the premiership – Gantz's "Teflon image", which had thus far successfully eschewed accusations of this kind, was damaged.
Trying to regain composure after what many felt was a luke-warm handling of the hacking scandal, Gantz has used the submarine affair to hit back at Netanyahu. Speaking on Wednesday, Gantz said the affair had "security and strategic implications" for Israel and called for a full investigation into Netanyahu's involvement in the case. He explained: "This must be investigated by all the relevant agencies, the truth must come out. The events surrounding the purchase of the submarines must be investigated without further delay."
Even if a new investigation is opened against Netanyahu, with little over two weeks to go until the election on 9 April no indictment will be reached in time to rule him out of the election race. What the new revelations will do, however, is to add further fuel to the interpretation of the upcoming election as essentially "a referendum on the character of the prime minister". Just as Attorney General Mandelblit's February recommendation to indict Netanyahu in other corruption cases impacted the polls – causing a drop in support for Netanyahu and boosting Gantz – this week's events could produce a similar result. With the two main rivals virtually tied on seats, how the Israeli public reacts to the new revelations could prove crucial.