Corruption at the Top, a Guide to the Perplexed: Behind the Scenes of the "Submarine Affair"

What is the connection between the former nominee to the position of Head of the National Security Council, the PM's personal attorney, a real-estate businessman and major defense industries? Amir Rapaport's weekly column attempts to sort out "File 3000", otherwise known as "The Submarine Affair"

The INS Rahav (Photo: AP)

On October 14, 2016, the Israel Defense website published an exclusive report to the effect that Israel intends to acquire three new submarines from Germany that would expand its underwater fleet to 9 submarines.

The outrage erupted only a few days later, pursuant to additional reports, this time to the effect that the Prime Minister's attorney and cousin, David Shimron, was involved in the mega-deal that had been promoted contrary to the position of the defense establishment.

Only this week, after nine months of maturation, the major characters of this affair have finally arrived at the interrogation rooms of the Lahav 433 Unit in Lod. Evidently, the primary suspicion currently being investigated by the Israel Police is whether defense procurement deals involving massive amounts of money were biased in favor of the Thyssenkrupp shipyards of Germany through bribery. The police investigators are examining two primary aspects. One: a suspicion that the State of Israel ordered three additional submarines, worth about 1.5 billion Euro, despite the fact that it was not at all certain whether these submarines were really necessary, and while their necessity is still controversial.

The other aspect involves the cancellation of an international tender in the context of the IDF Navy's Exclusive Economic Zone project that was intended to acquire missile frigates – both Sa'ar-6 frigates (the future surface vessels of the IDF Navy) and other missile frigates for protecting the offshore gas drilling rigs. Initially, the tender was issued to ship builders around the world, but subsequently it was withdrawn and replaced by a G2G agreement between Israel and Germany, and the same Thyssenkrupp shipyards, represented in Israel by Miki Ganor, were awarded the project without a tender and received a requisition for four vessels. The question that should be asked in this context is what was behind the cancellation of the tender and whether parties in Israel, including the gentlemen interrogated earlier this week at Lahav 433, received substantial amounts of money in that context.

It was embarrassing to view the parade of senior defense establishment officials alongside top attorneys, but are we really facing a "Submarine Affair" or is it the acquisition of the missile frigates that reeks of suspicions of bribery? Who are the real "heroes" and what are the lessons and the difficult questions that have already surfaced?

The Triumvirate: Ganor, Shimron & Bar-Yosef

Without a doubt, the three major characters in this affair are Miki Ganor, Avriel Bar-Yosef and David Shimron.

Apparently, each one hails from a different world, but Miki Ganor is the glue that bonds all three together. Ganor had risen through the ranks of the IDF Navy, from which he was discharged after a less-than-illustrious career. After his discharge, he tried his luck at business – from real-estate to the representation of defense industries. He remained in contact with Avriel Bar-Yosef, a former brigadier-general whom he had met during their service in the IDF Navy. Ganor met attorney David Shimron, one of the most respected lawyers in Jerusalem, and the personal attorney and cousin of Prime Minister Benjamin Netanyahu, in connection with real-estate business in Israel's capital. Avriel Bar-Yosef had served, after his discharge from military service, as a consultant to the Knesset Foreign Affairs & Defense Committee.

March 2009

The turning point for the aforementioned triumvirate occurred in early 2009, pursuant to the victory of the Likud party in the general elections and the appointment of Benjamin Netanyahu as Prime Minister. Shimron was 'promoted' to the position of the Prime Minister's personal attorney and found himself involved in international diplomatic processes, along with his partner, Netanyahu's envoy for secret and highly important assignment, attorney Yitzhak Molcho.

At around the same time, Ganor became the representative of the giant German shipbuilding conglomerate Thyssenkrupp, after the person who represented that corporation for many years, former IAF officer Shayke Bareket, had been pushed aside pursuant to a warm recommendation by the IDF Navy.

The third member of the triumvirate, Avriel Bar-Yosef, was appointed as Deputy Head of the National Security Council (NSC), after Minister Yuval Steinitz had warmly recommended him to the Head of the National Security Council, Uzi Arad.

When Bar-Yosef entered his new office, Israel had already decided to implement an option included in a past submarine deal, namely – to acquire a sixth Dolphin-class submarine for the IDF Navy, through generous subsidizing by the German Government. As part of the assignment of responsibilities at the National Security Council, Bar-Yosef was placed in charge of the element dealing with defense procurement, and showed particular interest in naval procurement deals and subsequently in the various issues pertaining to the natural gas found opposite the Israeli shore and the protection thereof. Very few people were aware, at that time, that he had a particular interest in these issues, beyond his official position. This aspect is currently at the very core of the police investigation.

As far as the professional aspect is concerned, Arad soon regretted the appointment of Bar-Yosef, but did not 'shift' him from his position as Deputy Head of NSC. Maj. Gen. (res.) Yaakov Amidror, who replaced Arad as Head of NSC, also complained that he was not happy with Bar-Yosef, while Yossi Cohen, who replaced Amidror (and who has since been appointed as Head of the Mossad), bid Bar-Yosef farewell in mid-2015.

March 2016

Another key point in the affair occurred when the Prime Minister decided to appoint Bar-Yosef as Head of NSC in place of Cohen, who had already occupied the office of the Head of the Mossad two months previously. The decision was viewed as questionable at best, or downright delusional in the eyes of many within the defense establishment, as until that decision the position of Head of NSC had always been filled by former IDF major-generals or former Mossad officials of equivalent seniority. Additionally, Brig. Gen. (res.) Bar-Yosef had never really made a name for himself.

Either way, Bar-Yosef's appointment was never implemented. A business dispute, rather than any investigation, motivated a party that had been 'burnt' in business by Ganor to send a letter to the Ometz movement, in which he raised serious suspicions regarding the conduct of Ganor and Bar-Yosef in the controversial natural gas and naval procurement issues. The letter was forwarded to the Attorney General who, after a prolonged consideration, ordered a police investigation ("Prime Minister Netanyahu is not a Suspect"). Bar-Yosef had waived his appointment to the position of Head of NSC even prior to the official investigation. The position of Head of the NSC has not been manned to this day. M., who serves as head of the Southern District at the ISA, will enter the position of temporary Acting Head of NSC fairly soon.

May 2016

Another dramatic development took place when Defense Minister Moshe Ya'alon, who had strongly opposed the acquisition of three additional submarines from Germany (to be delivered only toward the end of the next decade) and the acquisition of Anti-Submarine Warfare (ASW) surface vessels and other items from Thyssenkrupp's menu, left the government and the Likud party and was replaced by Avigdor Lieberman. As of this moment, the deal involving submarines 7 through 9 of the IDF Navy, valued at not less than US$ 1.5 billion, was concluded in no more than three months – and reported by Israel Defense.

The Secondary Heroes

Ganor, Shimron and Bar-Yosef did not operate in a vacuum. Here is some additional information about a few of the other characters in this affair.

Maj. Gen. (res.) Eliezer "Chiney" Marom, formerly the Commandant of the IDF Navy, whose bank accounts have been seized and who was detained for questioning. Over the last few years, Marom has operated as a businessman as well as serving as Chairman of the Israel Airports Authority. He recently told this writer that he was not bothered personally by the on-going investigation of the affair known as "File 3000". It is not yet known what Marom told the police investigators.

Maj. Gen. (res.) Ram Rothberg, formerly the Commander of the IDF Navy's 13th Flotilla (Naval Commandos) and Commandant of the IDF Navy until a year ago. Rothberg has not been interrogated under caution and has not drawn the attention of the media, but he may emerge as a key figure in this affair as he had served as the Head of the Defense Division of NSC, under Bar-Yosef, before he was appointed as Commandant of the IDF Navy. In both capacities, Rothberg was intensively involved in the Navy's massive procurement deals (including the acquisition of four missile frigates from the Thyssenkrupp shipyards, finalized in 2015).

Other figures who may be able to shed light on the affair include Maj. Gen. (res.) Dan Harel, who served as Director General of the Israel Ministry of Defense (IMOD) during three years of the relevant period and Brig. Gen. (res.) Shmuel Zucker, who headed the Acquisition Administration at IMOD until about six months ago.

Important testimonies may also be provided by former defense ministers Ehud Barak (whom former Prime Minister Ehud Olmert had suspected of having received bribes from the Germans) and Moshe Ya'alon, and to a lesser extent – current Defense Minister Avigdor Lieberman.

In the last few months, Member of Knesset Erel Margalit has been pouring money into the hands of private investigators in Germany, in an attempt to bring about the overthrow of Prime Minister Netanyahu, hoping to score some points in the primary elections of the Labor Party (in which he eventually failed). It is very likely that the police investigators had waited for the information Erel Margalit presented to them about two weeks ago, at their request, before moving on to the stage of the sensational arrests.

The Difficult Questions

Why did the IDF Navy intervene in the replacement of Bareket by Ganor?

This was probably one of the most difficult questions presented to Maj. Gen. (res.) Marom.

Why was Bar-Yosef appointed as Head of the NSC?

In other words – was Shimron involved in "concocting" this appointment, having received money from Ganor as Thyssenkrupp's consultant?

Did the decision to acquire the submarines actually contradict the position of the defense establishment?

Apparently, not really. Senior politicians have already told the police investigators that the IDF Navy had only put up a show of opposing the deal, so that the financing would be external instead of coming out of the Navy's own budget. This will be impossible to refute, but in any case, the political echelon had made quite a few procurement-related decisions in the past contrary to the position of the IDF (including the development of the Arrow and Iron Dome systems).

Why did attorney Shimron send a letter to the legal counsel of IMOD on the subject of the international tender IMOD had issued for the acquisition of the missile frigates, and why was the tender subsequently withdrawn and replaced by the acquisition of the frigates from Thyssenkrupp as a G2G deal instead?

Parties thoroughly familiar with the affair estimate that the suspicion of bribery in the context of the missile frigate deal is more serious than the suspicion regarding the submarine deal.

Where were the watchdogs – IMOD's Security Division (MALMAB), the State Comptroller who had investigated other affairs so vigorously and the veteran legal counsel of the Prime Minister's Office, Shulamit Barnea-Fargo, whose duty is to prevent such blatant conflicts of interests within the Prime Minister's Office and NSC?

Where were the control mechanisms – with regard to the mega-deal with Germany, namely – why were there no control mechanisms like the ones that have been in place with regard to procurement from the USA since the affair involving Brig. Gen. (demoted to private) Rami Dotan of the IAF?

Will Avriel Bar-Yosef turn out to be the new Rami Dotan of the IDF Navy?

Will the National Security Council, which is supposed to be the watchdog with regard to the deals made by the defense establishment, emerge as a professionally worthless and inherently corrupt organization?

 

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