Israeli Navy procurement scandal prompts review of defense-industrial relationships

TEL AVIV, Israel — Israeli Defense Minister Avigdor Liberman on Thursday ordered a comprehensive review of the defense establishment’s procurement ties to retired officers and former officials with business interests amid a widening scandal here that has already ensnared a former Israeli Navy commander and deputy national security adviser, also a retired Navy officer.

The review will be conducted by a special advisory committee headed by Hila Gerstel, a retired district court judge. Other members of the panel are Moshe Kaplinsky, a former Israel Defense Forces deputy chief of staff; Pinhas Buchris, a former Defense Ministry director general; and Shmuel Hollander, a former civil service commissioner.

The panel will probe the commercial and business connections of retired military officers and Ministry of Defense officials as well as their ongoing ties to Israel’s defense establishment, and vice versa.

“The committee will assess the conduct of MoD and the IDF with regard to retired IDF officers and former members of the defense establishment on all commercial and business matters,” according to a July 20 statement from Liberman’s office.  

Liberman’s decision to probe the conduct of those involved in the procurement process follows a decision by Germany earlier this week to suspend the planned signing of a memorandum of intent to sell Israel three new Dolphin 2-class submarines pending the conclusion of an ongoing Israeli police investigation. 

The estimated €1.2 billion (U.S. $1.4 billion) sale was to be met with significant German government subsidies to ThyssenKrupp Marine Systems, or TKMS, the Kiel, Germany-based shipyard. However, the Israeli agent of TKMS, a former Navy officer, is now in police custody as a key suspect in the ongoing probe. 

Local media reported this week that Micky Ganor, the TKMS agent and former officer, is negotiating with authorities to turn state’s evidence — a development that could implicate additional suspects and further incriminate retired Vice Adm. Eliezer Marom, a former commander of the Israeli Navy.

Marom was released this week from house arrest but remains a key suspect in the so-called Case 3000 Affair, which involves allegations of bribery, breach of trust, money laundering and conspiracy. He served as Israel’s top naval officer from 2007-2011 and has admitted to forcing TKMS to replace its longtime agent with Ganor, yet denies accepting any payment for his highly irregular intervention in industry-agent relations.

In its July 20 announcement, Liberman said the numerous “question marks that have arisen” in the ongoing scandal prompted his decision to launch the sweeping procurement conduct review. 

“Retired IDF officers and those of the defense establishment are dedicated, ethical people of integrity that have devoted their adult lives to the defense of this country. Therefore, in light of recent events and the public question marks that have arisen, it’s important to check work processes and conduct. And if need be, to determine clear rules,” Liberman said.

He added that the members selected to serve on the review committee are experts in the defense, legal and civil service aspects of military procurement. 

The panel has been directed to present its findings within four months.

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