Lawmaker urges probe into Iran’s ties to builder of Israeli subs

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Comments come after revelations that Teran owns a stake in German shipbuilder behind Israel’s top-secret weapon

The reported involvement of Iran in a company that makes Israel’s top-secret navy submarines demands a thorough investigation into the issue that has roiled Israeli politics in recent weeks, Knesset member Ofer Shelah from the opposition Yesh Atid party said Saturday.

The Yedioth Ahronoth newspaper revealed on Friday that a company belonging to the Iranian government owns 4.5 percent of the German shipbuilding firm ThyssenKrupp, which builds the submarines and provides other services to the Israel Navy.

“The revelations of Iranian involvement in the firm that Israel buys its submarines from only strengthens the need to thoroughly investigate this affair,” said Shelah, who sits on the Knesset’s powerful Foreign Affairs and Defense Committee.

The news about Iranian ownership is just the latest episode in a scandal that saw Attorney General Avichai Mandelblit last week order the police to look into the Prime Minister Benjamin Netanyahu’s personal lawyer, David Shimron.

Shimron is alleged to have used his close relationship with the premier to push Israel to purchase several submarines from ThyssenKrupp, award the company a contract for naval vessels to defend Israel’s gas fields, and allow it to build a shipyard in Israel.

Shimron was a representative of the company in Israel.

MK Ofer Shelah (Yesh Atid) seen during the Foreign Affairs and Defense Committee meeting at the Knesset, during the committee's vote on a new chairman, on Monday, May 12, 2014. (Flash90)

MK Ofer Shelah (Yesh Atid) seen during the Foreign Affairs and Defense Committee meeting at the Knesset, during the committee’s vote on a new chairman, on Monday, May 12, 2014. (Flash90)

Shelah said that while the decision to purchase new submarines was sound, the decision-making surrounding it was “chaotic” in nature.

“All this leads to a public perception that something here is not right.

The conflict of interest by attorney David Shimron needs a criminal investigation,” he said, speaking at an event in the central city off Modi’in.

Meanwhile, a senior Defense Ministry official downplayed the importance of the Iranian involvement.

“This is a lone headline that slightly changes the picture,” said Amos Gilad, director of the ministry’s Political-Military Affairs Bureau.

Amos Gilad (photo credit: Yossi Zamir/Flash90)

Amos Gilad (Yossi Zamir/Flash90)

“I was not aware of the Iranian involvement. Iran is not selling submarines to Israel. Their involvement is marginal, but we need to check it,” he said Saturday, according to Channel 10 News.

Israel has “very strict secrecy agreements” with ThyssenKrupp that allow them to build “while safeguarding Israel’s security,” he said, adding that in the Defense Ministry there was no debate over the need for submarines, only over the number.

The Yedioth article revealed that the Iranian investments in ThyssenKrupp began in the 1970s, during the era of the Shah.

Tehran invested some $400 million in the German company, giving it a 24.9% share that was inherited by the Islamic regime when it took over Iran in the 1979 revolution.

The newspaper pointed out, however, that at this time, ThyssenKrupp was not building Israeli submarines, but was instead focused on the steel, automotive and elevator industries.

ThyssenKrupp Marine Systems, the current incarnation of the conglomerate, was created in 2005, when ThyssenKrupp acquired shipbuilding company Howaldtswerke-Deutsche Werft.

The INS Rahav, Israel's newest submarine, sets off from the German port of Kiel toward Haifa, December 17, 2015. (IDF Spokesperson's Unit)

The INS Rahav, Israel’s newest submarine, sets off from the German port of Kiel toward Haifa, December 17, 2015. (IDF Spokesperson’s Unit)

By the beginning of the new millennium, the Iranian investment in ThyssenKrupp, via the Iran Foreign Investments Company, was so significant that its deputy economy minister, Mohamad-Mehdi Navab-Motlagh, sat on the company’s board.

But according to a Financial Times report in 2004, the German company “bowed to US pressure” and removed him from the board.

The US, under then-president George W. Bush, had two years earlier declared Iran to be part of the “Axis of Evil,” along with Iraq and North Korea.

According to the FT report, which cited sources close to the company, the US government “told the German conglomerate that it would be blacklisted if it renewed [Navab-Motlagh’s] position.”

At around the same time, the FT said, “ThyssenKrupp was forced to pay a vastly over-inflated sum to the Iran Foreign Investment Company to reduce its holding to below 5 per cent.”

In its report, Yedioth quoted a 2016 interview by Dr. Farhad Zargari, the current managing director of the Iran Foreign Investments Company, in which he confirms the investment in ThyssenKrupp.

“We own shares in important companies such as British Petroleum, ThyssenKrupp, Siemens, Adidas, and many other big brands,” Zargari told the Business Year website, which describes itself as a “leading research firm and publisher of annual economic resources on national economies.”

Haaretz reported on Friday that Tehran may have brought in around $100 million in profits over the past decade from the shares it holds in the company.

Haaretz inspected ThyssenKrupp’s financial records, and found that over the last decade the company handed out dividends to its shareholders amounting to around €2 billion ($2.1 billion at current exchange rate). With 4.5% of the company’s stock, the Iranians would have received approximately $96 million from ThyssenKrupp over the past 10 years.

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