German conglomerate ThyssenKrupp admits that its internal investigation into suspected bribery in the course of the deal for the sale of submarines and ships to Israel was "limited in capacity," and that the investigators did not speak at all with Michael Ganor, ThyssenKrupp's representative in Israel, who has a key role in the affair.
ThyssenKrupp spokesman Tim Proll-Gerwe told "Globes," "The bottom line of our internal investigation is that no evidence of corruption was found, but we were very limited in our ability to check things out in depth."
According to Proll-Gerwe, despite reports in the German and Israeli media that the company found no evidence of bribery in the affair, the managers of the internal investigation were unable to speak with Ganor, the principal suspect.
"According to the legal advice we got in Israel, we realized that if we had tried to speak with Ganor, it could have been considered obstruction of justice, and our internal investigative report on the submarines deal was therefore very limited," Proll-Gerwe said.
He added that the results of the internal investigation had been delivered to the German government, and were expected to remain confidential. The German government undertook to pay for a third of the cost of the deal for the purchase of three submarines. Because of the involvement of German public money in the process, it demanded to see the investigation findings.
According to German media reports in recent days, the German government has suspended progress in the deal pending clarification of the suspicions, and postponed the signing of a memorandum of understanding in the matter, which was scheduled to take place this week in Berlin.
"We have received no official notice of the deal's being suspended," Proll-Gerwe said, "and until the contract between us and Israel is signed, what are involved are agreements between countries."
"For our part, we want the entire process to be legal and spotless, and want to go ahead with the submarines deal with Israel. We're a business company that wants to make money," he added.
"When the term 'useful contributions' appears, it means bribery"
The German company's investigation began last November with the report of the fact that Ganor had used the services of Advocate David Shimron, Prime Minister Benjamin Netanyahu's cousin and personal lawyer, to promote his business, including representing ThyssenKrupp in Israel. Ganor reportedly received €11 million from the company as a commission for two already signed deals: the construction of four Sa'ar 6-class corvettes and a sixth submarine. He was also due to receive €10-40 million for the purchase of three submarines to be supplied in the future. The company said that it had suspended its cooperation with Ganor immediately after the reports, in view of the fact that he had not cleared Shimron's involvement with it in advance, as required by the contract between them.
According to German media reports, the company is likely to completely cancel the contract with Ganor soon. "It does not appear that we will want to work with him in the future after this affair," Proll-Gerwe said.
Handelsblatt reported this week that it had new evidence of suspicious money transfers from ThyssenKrupp and Ferrostaal, its partner in the submarines and warships deals, to Israeli parties in the deals for the sale of submarines number 4 and number 5 ("Tanin" and "Rahav"), which are already in use by the Israeli navy.
These deals were made in the mid-2000s, before Ganor became ThyssenKrupp's intermediary in Israel in 2009. According to the report, a never-before published internal investigative document of Ferrostaal, ThyssenKrupp's partner in the sale of submarines and warships through a joint company named Marine Force International, found clear evidence of the transfer of "useful contributions" to Israeli companies in the course of these deals. Martin Murphy, the journalist who published the report, explained to "Globes," "If 'useful contributions' appears somewhere in the internal documents of one of the companies, the only explanation is that it refers to a bribe. This is the code used for a bribe by the two companies, which we saw in other cases in South Korea, South Africa, and other countries."
Murphy continued, "The confidential internal investigation raised many eyebrows at Ferrostaal and ThyssenKrupp." He said that he was waiting for clarifications about the identity of the Israeli companies that had received the money, and their possible connection to interested parties involved in the deals.
Murphy's report is based on an internal database of documents of ThyssenKrupp and its partners that he obtained a few years ago, and was the basis for a series of reports exposing corruption in the German company's arms deals. Following the accusations of corruption and bribery in many cases of purchases of submarines and warships, the partnership between the companies was dissolved five years ago, and in certain cases, Ferrostaal had to pay a ransom in order to avoid being indicted.
"To this day, I do not understand what Ferrostaal's involvement was in the deal in Israel, and why it was necessary," Murphy says, "but I know it exists."
Low-key coverage in Germany
Up until now, the affair has not received unusual coverage in the German media. Reports about it do not appear on the front pages, and the affair is almost never mentioned on the websites of the major newspapers, let alone creating a storm.
The headline of a story on the affair in the Frankfurter Allgemeine Zeitung was "Business between Friends," while the Spiegel magazine website laconically reported, "Germany is suspending the submarines deal with Israel."
Murphy says that he also has the impression that the affair is not getting much attention in Germany. "It does not involve Chancellor Merkel. Senior German politicians were not bribed. It involves corruption in a submarines deal - a fairly routine matter, unfortunately," he says.
In his talk with "Globes," Proll-Gerwe referred to the investigation taking place in Israel, and to the fact that Ganor was likely to become a state's witness in the affair. He said that the Israeli authorities who investigated the affair had not visited or contacted ThyssenKrupp even once.
"We offered them full cooperation through Israeli lawyers - documents and conversations - but no one came to meet with us or ask for documents," Proll-Gerwe said. Murphy, who published incisive evidence in the affair about the pressure allegedly exerted by former Israel navy commander Vice-Admiral (res.) Eliezer Marom on ThyssenKrupp to appoint Ganor as its representative in Israel, also said that no official Israeli party had contacted him or spoken with him about the matter.
The sixth submarine ordered by Israel through Ganor's mediation is currently being constructed at the Howaldtswereke-Deutsche Wert (HDW) docks in Kiel, where the previous submarines were built, and where the three additional submarines Netanyahu ordered from the German government are to be built. The shipyards belong to ThyssenKrupp Marine Systems. This division lost a huge Australian navy contract last year, and the deal with Israel is regarded as a lifeline for its faltering business.
According to reports, ThyssenKrupp wants to sell the division, among other things in order to avoid negative media coverage of arms deals.
The German government's subsidy for the deal was also designed to help maintain Israel's security. According to foreign reports, the submarines have the capability to launch second-strike nuclear missiles in a nuclear war. They will also preserve thousands of jobs in the veteran shipyards. The value of the deal, which is "stuck on the ice," as Spiegel put it, is €1.5-2 billion.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 20, 2017
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