Police release 'submarine' conclusions

Israel Police completes investigation into 'Submarine Case' over charges including bribery, fraud, breach of trust, money laundering.

Mordechai Sones,

Submarine
Submarine
iStock

Israel Police has completed the investigation into the "3000 Submarine case", dealing with allegations of bribery, fraud, breach of trust, money laundering, and other offenses.

The alleged offenses were committed within the framework of a network of relationships involving public officials and business and senior executives either directly or through business and private companies that acted as middle parties. The purpose of the arrangement was to promote business interests relating to acquisition of submarines and vessels for the State of Israel by the German corporation Thyssenkrupp AG, while promoting additional business interests.

In November 2016, on the recommendation of the State Attorney, the Attorney General ordered an investigation of suspicions of bribery and breach of the trust in connection with transactions made between the corporation Thyssenkrupp AG and the State of Israel.

According to the decision of the Lahav 433 investigative unit head, the investigation would be carried out by the National Unit for Combating Economic Crime at Lahav 433. The investigation was also coordinated with the Tax Authority's investigations unit, and was closely monitored by a team of attorneys from the Taxation and Economics Office. During the initial police checks dozens of messages were intercepted from various people involved.

Initial police findings raised suspicion of criminal activity and involvement. The State Attorney ordered on February 27, 2017 the police to open an official investigation.

As part of the investigation there were 3 waves of arrests made by police.

In July 2017 in the first wave, Maj. Gen. "Cheney" Marom, "Malal" former deputy head Avriel Bar Yosef, and businessman Miki Ganor were questioned.

In September 2017, a second wave was carried out when former Minister and KKL Chairman Mody Zandberg, former Chief of Staff of the Prime Minister David Sharan, and Brig. Gen. (res.) Shay Shaykeh Brosh were questioned.

In November 2017 a third wave was carried out when attorney David Shimron and attorney Yitzhak Molcho were questioned.

During July 2017, in the midst of the first wave of arrests, an agreement was signed with suspect Michael Ganor who served in the relevant period as representative of German Thyssenkrupp corporation in Israel. According to the agreement Ganor will be tried on the suspicions of tax offenses, will serve 12 months in prison, and be fined 10 million shekels while at the same time cooperating with the State to provide further information about the case.

As part of this extensive investigation, a number of suspects were questioned under warning and hundreds of messages from dozens of witnesses were examined. The Prime Minister also gave testimony in the case. In addition, further materials were collected and analyzed including real-time recordings of documents seized from various government ministries and government agencies and requests for legal assistance to foreign countries.

Additionally, as part of the ongoing investigation, assets and funds were seized amounting to millions of shekels.

According to the evidence and investigation findings, over the years the German corporation Tysenkrupp provided the State of Israel with five submarines. The submarines are in active service as part of the navy's submarine systems. Until the year 2009 Brigadier General (Res.) Shaike Bareket was the representative of the corporation for the State of Israel.

In 2009 Barkat was replaced by businessman Michael Ganor who took over the position and began to serve as the representative of the corporation and the broker for purchases for the State of Israel. The findings of the investigation revealed that Navy Commander Maj. Gen. (res.) Eliezer (Chayni) Marom Avriel Bar Yosef, were behind the decision to choose Ganor to take over responsibility for all further decisions. The representative was paid by the corporation significant sums of money calculated according to percentages of the value of the transactions.

During the period when Ganor served as corporation representative between 2009 and the opening of the investigation in the middle of 2017, a ship purchase was completed at a value of hundreds of millions of Euros. During the investigation, suspicions arose that during that relevant period a series of former and current public officials and senior executives, together with business and private individuals took part and received benefits from the businessman in cash and checks and illegal contracts.

Whether in connection with the submarine deals that were carried out between Thyssenkrupp and the State of Israel or in connection with other current and future business deals that took place in Israel and abroad in partnership with Ganor, it is clear that there are glaring and severe conflicts of interest between their positions and the public interest and the promotion of their business and their own promotion.

Main suspicions against Brig. Gen. (Res.) Avriel Bar Yosef: During the relevant period he served as the director of the Knesset Foreign Affairs and Defense Committee and later served as Deputy Head of the National Security Council. It is suspected that Yosef suggested to Ganor help him become the representative of the German corporation in place of Barkat and helped and pushed for his appointment.

It is also supected that he acted within the framework of his duties during the relevant period to promote the submarine transaction and also receive fees from the company, whether directly or through Brigadier General (Res.) Shay (Shayke) Brosh, a close associate and close friend of Bar Yosef. Brosh served as a private businessman during the relevant period. It was suspected that he had been intentionally introduced by Bar Yosef as a mediator between Bar Yosef and Ganor during the transaction for the purchase of the submarine in order to not blow the connection between the two. It is suspected that Ganor and Brosh signed an agreement in the amount of € 120,000 intended to cover the transfer of the bribe money.

Maj. Gen. Eliezer Merom: Suspected that when serving as Commander of the Navy, together with Bar Yosef, he acted so that Ganor would become the representative of the German corporation in Barkat's place. Marom received sums of money from Ganor under the guise of consulting services allegedly provided to Ganor, in the sum of 600000 shekels.

Adv. David Shimron: Partner of Adv. Yitzhak Molcho and Prime Minister Netanyahu and his wife's private attorney, it is suspected that Shimron acted on Ganor's behalf as a representative of the German corporation to promote the deal between Israel and the corporation while using his status and close connection to the Prime Minister and public officials with whom he worked with. Adv. Shimron and according to suspicions received payments defined as a "reward for success". In a number of stages amounts of 270,000 shekels were payments rendered for "opening the doors" and influencing public employees to promote Ganor's business in the purchase of the submarines.

In addition, it is suspected that Adv. Shimron acted on Ganor's part to promote the $100 million investment of the Germany-Israel Fund in a Swiss bank to disguise Ganor's involvement in the deal that was a conflict of interests between him and the chairman of the fund, Atalia Rosenbaum, while attorney Shimron presented false representation to banks in Israel and abroad about his real involvement in the investment transaction.

In return, according to suspicions, attorney Shimron received a 20% commission from the investment money that he transferred to Ganor. Attorney Yitzhak Molcho, a partner in the law firm of Shimron-Molcho who was an advisor to Prime Minister Binyamin Netanyahu on political matters and negotiations with the PA, is suspected in a meeting that took place when Molcho and Ganor discussed Germany's request to remove political barriers as a condition for promoting the purchase of submarines and future vessel deals. According to suspicions Molcho did not report the meeting to the legal advisor of the Prime Minister's Office, in contrast to his duties under the conflict of interest arrangement that applies to the attorney's office in the context of his public role.

Former Minister Eliezer Zandberg when serving as KKL Chairman is suspected of promoting Ganor's business as a representative of the German corporation in Israel, taking advantage of his past and present role and position to "open doors" for Ganor and receiving information from employees and public and elected officials in connection with the submarine transactions. In exchange he received money from Ganor a number of times totaling sum of 100,000.

David Sharan: During the period he served as Chief of Staff of then Finance Minister Yuval Steinitz, and later as head of staff of Prime Minister Binyamin Netanyahu, according to the suspicions acted in favor of Ganor's interests in the submarine transactions, and received from him between 2013 and 2016 sums of 130,000 shekels through businessmen close to Saran, who were placed by Sharan to disguise and to blur the connection between him and Ganor.

In addition Sharan was suspected of raising funds for the election campaign of Minister Steinitz in 2012.

Upon the conclusion of the investigation. police recommend the following:

  • Brig.-Gen Avriel Bar-Yosef: There is evidence that he committed bribery, fraud, breach of trust, and conspiring to commit a crime;
  • Brigadier General (Res.) Shay Brosh: There is evidence that he committed bribery, fraud, breach of trust, conspiracy to commit a crime, illegal invoicing, and money laundering offenses;
  • Maj. Gen. (res.) Eliezer Marom: There is evidence that he committed bribery, fraud, breach of trust, conspiring to commit a crime, money laundering, and VAT offenses;
  • Adv. David Shimron: There is evidence that he committed bribery offenses and money laundering in connection with his involvement in Credit Suisse;
  • Former minister and KKL Chairman Eliezer Zandberg: There is evidence he committed bribery, fraud, breach of trust, and illegal invoicing;
  • David Sharan: Suspected of committing bribery, fraud, and breach of trust, conspiracy to commit a crime, money laundering, and offenses under the Elections Law;
  • Attorney Yitzhak Molcho: There was insufficient evidence that he committed offenses.

As part of the investigation, other persons involved in the case, including private businessmen who do not hold public office were also questioned. During the investigation and gathering of evidence in this case police discovered discrepancies between administrative agencies and private companies in matters regarding security and strategic issues. The discrepancies require lessons to be learnt by the relevant authorities to improve security procedures in Israel and protect it from improper interests. The police intends to turn to the relevant authorities and bring before them their conclusions.


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