Bubbles, boats, and beats: the Netanyahu scandals

Israel’s purchase of submarines from Germany plunges the Navy into scandal.

By
August 25, 2017 11:12
Dolphin-class submarine

The Dolphin-class submarine first entered service in 2000. (photo credit: IDF SPOKESMAN’S UNIT)

IN EARLY August, the Israel Police informed a District Court judge that Prime Minister Benjamin Netanyahu is a suspect in bribery, fraud and corruption investigations that have been code-named cases 1000, 2000 and 3000.

Case 1000 deals with pink champagne, expensive cigars, private jets and posh hotels valued at nearly $200,000 that Netanyahu, his wife Sara and their son Yair received from wealthy supporters such as Hollywood tycoon Arnon Milchen and Australian casino magnate James Packer. Netanyahu, for his part, allegedly called then-US secretary of state John Kerry and asked him for a favor: to grant Milchen a US entry visa for 10 years. Netanyahu also tried to intervene on behalf of Packer to get him Israeli citizenship even though he is not Jewish. Had Packer become an Israeli citizen, he could have used Israel as a tax shelter.

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Case 2000 deals with alleged efforts by Netanyahu to get favorable coverage from the daily Yediot Ahronoth in return for working to put Yediot’s nemesis, Israel Hayom, out of business. This free tabloid was launched a decade ago and financed by Sheldon Adelson, an American gambling tycoon, solely for the purpose of boosting Netanyahu and reducing the tremendous influence Yediot has had on the Israeli public.

Case 3000 seems to be less directly linked to Netanyahu and, thus, less damaging. However, it is the most troubling because it unveils how deep corruption penetrated the Israeli defense and military establishment, one of the nation’s most trusted institutions.

At the heart of the scandal is the decision by the Israel Navy, the Israel Defense Forces and the Defense Ministry to purchase three new submarines and four frigates. The controversial deal between the German shipyards in Kiel owned by the German multinational conglomerate ThyssenKrupp and Israel was brokered by Miki Ganor, a former navy lieutenant-colonel and real estate developer worth a half billion euros, who made his money in Cyprus, and eastern and central Europe.

Ganor, who already has admitted to giving bribes to officers and officials, agreed to be a state witness in return for a reduced sentence of one year in prison and fines of around $3 million.

His attorney, David Shimron, is also the private lawyer of Netanyahu and his family and happens to be Netanyahu’s cousin.

Leaks from the investigations suggest that Ganor is going to incriminate former Israel Navy commander Eliezer Marom and Avriel Bar-Yosef, a vice admiral in the navy and former deputy head of the National Security Council. Both were arrested, investigated and released on bail after being suspected of receiving kickbacks from Ganor.

Marom was appointed in 2007 as the commander of the Israel Navy and served in this capacity until 2011. He was considered a very talented officer with a colorful personality.

In 2009, Marom found himself in a scandal after he was caught partying at a strip club in Tel Aviv. A year later, his son, a lieutenant-colonel, was dishonorably discharged from his service for providing secret documents to an unauthorized person.

The main accusation in case 3000 is that, while in command of the navy, Marom plotted to replace the previous Israeli agent and representative of ThyssenKrupp, former air force intelligence brig.-gen. Shaika Barkat.

Indeed, in 2010, the German company appointed Ganor instead of Barkat. A few years later, after he retired from the navy, Marom began working as a “consultant” for Ganor and received from him $100,000 that were deposited in a foreign bank account. Marom and Bar-Yosef deny any wrongdoing.

If Marom is indicted and found guilty, he will be the highest IDF officer to be sent to jail. But the investigation is aiming higher. Police hope Ganor will provide information that links the submarines and missile boats deals to Shimron and, via him, to Netanyahu.

Ganor already has testified that Shimron wasn’t just his lawyer, but also a future partner who was to receive 20 percent of his $45 million commission if the deals would have gone through.

Shimron also denies Ganor’s charges. He told me he acted only as Ganor’s attorney, and was paid, accordingly, a lawyer’s fee of $200,000. He flatly denies that he ever spoke to Ganor about being his partner. He also says he had always compartmentalized Netanyahu on his private business and never discussed with him his private legal work.

Netanyahu denies all accusations leveled against him in all three cases with the slogan, “There won’t be anything” as a result of the police investigations “because there was nothing.”

The Israel Navy never could have imagined it would find itself in the midst of the country’s biggest corruption scandal ever.

For the first four decades of Israel’s independence, the navy was considered to be a laughing stock among the IDF; it was small, with a few patrol and missile boats and very few resources. No wonder it was derogatorily labeled the “Bathroom Corps” even though missile boats showed their potential in the 1973 Yom Kippur War, when they attacked Syrian and Egyptian ports and sank dozens of their ships.

The change in attitude toward the navy and its image began in the 1990s due to two developments, in Iraq and Iran.

In 1989, the IDF decided to upgrade the navy by purchasing two new submarines to replace two more than 20-year-old Britishmade ones. Israel had hoped to buy them from American shipyards to be financed by the US annual military assistance of $3 billion. It turned out, however, that the US shipyards were constructing only nuclear-powered submarines that would have been too big and expensive for the modest requirements of the Israel Navy. Also, despite the strategic cooperation between the two countries, Washington would not have agreed to sell nuclear-powered submarines to the Jewish state in any event.

In April 1990, nine years after the Israel Air Force destroyed his nuclear reactor and aspirations to have nuclear weapons, Iraqi dictator Saddam Hussein threatened to “scorch half of Israel.” This was interpreted as a hint that Iraq would take revenge on Israel by launching missiles with chemical warheads.

Four months later, Hussein invaded and occupied Kuwait and, in January 1991, a US-led coalition invaded Iraq. The next night, Hussein launched Soviet-made Scud missiles against Israeli cities with “only” conventional warheads. It seemed that he feared Jerusalem would retaliate with nuclear weapons, which, according to foreign reports, Israel possesses. Eventually, under US pressure, Israel for the first time in its history refrained from retaliating against an enemy aggressor.

During the First Gulf War, which lasted less than two months, Iraq launched 39 missiles, killing one Israeli by a direct hit (94 others died of suffocation and heart attacks) and causing heavy damage to property.

It was revealed during that time that German firms secretly and illegally supplied materials, equipment and technologies to Hussein’s chemical and other programs to produce weapons of mass destruction. These German companies violated international sanctions and the Missile Technology Control Regime.

The outcry in Israel that 50 years after the Holocaust Germans were helping an Arab dictator obtain weapons that could gas Jews shamed Germany.

In response, the German government offered to help Israel’s defense and agreed to build and fully finance the two new submarines Israel needed and subsidize 50 percent of the cost of a third. In today’s terms, the German “generosity” resulting from its shame and Holocaust guilt is worth $1.3 billion. Israel paid only $300 million from its own pocket.

Since then, Israel has purchased three more submarines from the German shipyards – with the sixth due to arrive in 2019. In this second deal for three submarines, Israel paid $1b. and the German government paid the remaining $500m.

What was even more important was the fact that, according to foreign reports, the German-made Israeli submarines are capable of carrying nuclear-tipped missiles. Germany, with its historical track record with the Jewish people, is probably the only country that would have agreed to such a nuclear deal.

By having submarines with nuclear weapons, Israel has joined the exclusive club of nations that have “second-strike capability,” meaning it is capable of a response even if it is attacked and destroyed first by a nuclear strike.

The decision to have second-strike capability is a direct result of Israeli fears, expressed obsessively by Netanyahu, that Iran was and still is aspiring to develop nuclear weapons (despite the international agreement to curb such weapons) .

In 2016, the government, spearheaded by Netanyahu, decided to purchase three more submarines from the German shipyards. These are to replace the aging first three submarines. It was explained that since it takes a decade to build and fit them for the special Israeli (nuclear) needs, the order must be made now.

However, then defense minister Moshe Ya’alon argued that there was no rush and the order could be placed in a few years. A year later, he was replaced by Avigdor Liberman.

Although the change at the defense helm was because Netanyahu wanted to enlarge his narrow coalition base, there are now commentators who claim that Ya’alon was practically sacked because of his opposition to the submarine deals.

Earlier, in 2012, after Israel discovered huge gas fields in the Mediterranean, the navy claimed it needed to upgrade its fleet of patrol boats to protect the country’s “territorial and economic waters.” The cabinet approved the request and, without a tender, agreed to purchase four missile boats from ThyssenKrupp.

This was a very controversial decision. Does the navy really need missile boats to defend the gas rigs, or can it accomplish this mission with smaller patrol boats? Was the German offer the best? Why didn’t the Defense Ministry issue an international tender for the boats?

Israel’s national budget is more than $100b. The defense budget is 7 percent, but in terms of the 6 percent ratio of defense expenditure to GDP, Israel is only second in the world to Saudi Arabia.

These indicators shed light on the importance and influence of the defense establishment on Israeli life and society. One could say the defense establishment is practically a “state within a state.”

For years, security has been considered a “sacred cow” that cannot be touched. Israeli society has undergone a process of militarization. Retired military men got the best jobs in all Israeli walks of life – politics, government, business, health and education.

The belief among ordinary citizens has always been that Israel’s security is in good hands, that those who serve in the defense establishment are committed, loyal and decent, and that they sacrifice their lives for the common good of the state. The navy scandal, however, shows that something is rotten in the defense kingdom.


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