Germany said to freeze signing of submarine deal amid corruption scandal

Germany has reportedly told Israel that it is delaying the signing of a deal for Israel to purchase three new submarines amid the rapidly expanding corruption scandal surrounding several multi-billion-dollar naval deals between the two countries.

Israel and Germany were set to sign a memorandum of understanding next week, but this has been postponed indefinitely, the Yedioth Ahronoth newspaper reported Tuesday.

Concerns that Germany might cancel the deal prompted Defense Ministry head Udi Adam to meet his counterpart recently in Germany, Yedioth reported.

The move follows Monday’s revelation that a key suspect in the case — Miki Ganor, a former agent for German shipbuilder ThyssenKrupp — is in talks to turn state’s witness.

Police were hoping to finalize the state’s witness deal on Tuesday.

Investigators suspect that Ganor, along with former National Security Council deputy head Avriel Bar-Yosef, paid out bribes in connection with a decision by Prime Minister Benjamin Netanyahu to buy three submarines from ThyssenKrupp, despite opposition from the Israeli Defense Ministry.

They also reportedly influenced decisions to buy naval corvettes to protect the gas fields and awarded ThyssenKrupp a contract to service other naval vessels.

Miki Ganor, arrested in the submarine affair also known as "Case 3000", is brought for a court hearing at the Magistrate's Court in Rishon Letzion, July 10, 2017. ( Moti Kimchi/POOL)

Ganor is suspected of fraud, money laundering and conspiracy to commit a crime. He was arrested a week ago and remains behind bars, along with Bar-Yosef. Both men’s detention was extended Monday for a further four days.

Germany, which is supposed to finance a third of the deal, has the right to change its mind thanks to a clause in the agreement permitting it to do so unilaterally if suspicions of corruption and fraud prove to be true.

It appears that the reports about Ganor turning state’s witness gave the country sufficient jitters to activate that clause. Germany’s decision to freeze the deal has not been confirmed by government sources.

The three new submarines are intended as replacements for older models which will be retired in around 10 years.

Netanyahu is not suspected in the case but his personal lawyer, David Shimron, who was under house arrest for several days until his release on Saturday, had been questioned several times by the police investigation unit Lahav 433.

Bar-Yosef, who played a central role in recommending that Israel buy the submarines, is suspected of bribery, conspiracy to commit a crime, fraud, breach of trust and money laundering.

Avriel Bar-Yosef is seen at a hearing at the Rishon Lezion Magistrate's Court following his arrest in the 'Case 3000' affair on July 10, 2017. (Moti Kimchi/Pool/Flash90)

According to the German newspaper Handelsblatt, Ganor stood to make 10 to 30 million euros from what the paper estimated was a 1.5-billion-euro deal.

Another suspect in the case, the former commander of the Israeli Navy Maj. Gen. (res) Eliezer Marom, was also released from house arrest on Saturday evening.

Attorney General Avichai Mandelblit ordered the police to formally look into the submarine affair — dubbed Case 3000 — in November 2016, after accusations surfaced that Netanyahu may have been swayed to purchase the vessels by business ties that Shimron had with ThyssenKrupp. Late last year, Channel 10 News revealed that Shimron had also served as an adviser to Ganor.


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