TEL AVIV, Israel — A widening scandal in Israel over a slew of suspected criminal offenses is likely to torpedo a €1.2 billion (U.S. $1.4 billion) submarine deal between Israel and Germany, as a former Israeli Navy commander and the personal attorney of Prime Minister Benjamin Netanyahu are the latest to be caught up in an ongoing probe.

Vice Adm. Eliezer Marom, who commanded the Navy from 2007-2011, and David Shimron, Netanyahu's personal attorney, remain under house arrest after three days of questioning in what is known here as the Case 3000 Affair.

There are now four ongoing police probes into Netanyahu or his close associates spanning a spectrum of allegations including accepting inappropriate gifts to abuse of influence over the telecommunications sector, ranging from Case 1000 to Case 4000. Hence, the naval procurement scandal's colloquial label of Case 3000.

Three other suspects in the Case 3000 Affair — including Micky Ganor, the local agent for ThyssenKrupp Marine Systems; a retired Navy officer; and retired Rear Adm. Avriel Bar-Yosef, a former deputy National Security Council chief — are in police custody on suspicion of bribery, conspiracy, break of trust and money-laundering.

Marom is the highest-ranking Israeli military officer ever to be arrested here. Investigators suspect him of conspiracy and of taking bribes from Ganor, the local agent of TKMS, the Kiel, Germany-based shipyard that builds Dolphin-class submarines and surface ships for the Israeli Navy. 

During interrogation earlier this week, Marom confirmed that, as Navy commander, he insisted TKMS replace its longtime agent in Israel, a former Israeli Air Force officer, with Ganor. Through his attorney, Marom has denied receiving payment from Ganor, yet experts say it is unprecedented for an active-duty officer to intervene on contracts between foreign companies and their in-country agents.

In an interview earlier this year, Yeshayahu Bareket, the retired Air Force officer who was ousted from his role with TKMS, told Defense News that he was "strong-armed" out of the position he held for 20 years.

"My work there was to the mutual benefit of my country and the shipyard. Thank God I'm out with my integrity and clean hands," Bareket said.

The package for three new Dolphin 2-class, air-independent propulsion submarines was approved by the Israeli Cabinet last October after an extraordinarily fast-tracked process that circumvented normal oversight and approval procedures within the Navy, the Israel Defense Forces' General Staff and the Defense Ministry. It was negotiated directly between Netanyahu and German Chancellor Angela Merkel and their direct representatives, although a contract has yet to be signed.

Now, as the probe threatens to widen further while casting aspersions on Netanyahu himself, a contract is unlikely to be signed, according to a senior Israeli Defense Ministry official. 

In the meantime, the official said, the Defense Ministry has launched an internal review of its own processes aimed at preventing "outside interested parties from hijacking the professional system in place for administration and oversight."

Twitter: @opallrome

About Barbara Opall-Rome

Opall-Rome is Israel bureau chief for Defense News. She has been covering U.S.-Israel strategic cooperation, Mideast security and missile defense since May 1988. She lives north of Tel Aviv. Visit her website at www.opall-rome.com.

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