The submarines that Israel purchased from German company ThyssenKrupp have starred in many headlines in the Israeli and international media thanks to the police investigation into the circumstances of the deal and the indictments that would subsequently be filed.

Now, a major international leak of documents reveals that the first submarines that the German company supplied to Israel were equipped with periscopes that did not meet the operational demands of the Israeli Navy and that it cost millions of dollars to adapt them.

That, however, is not the end of the story. In the aftermath of what became known as the ‘submarine scandal,’ the Navy made huge efforts to ensure that the optical equipment on the next submarines that Israel purchased was obtained from a different company. As part of these efforts, representatives of the Navy guided the company on how it could win over the Defense Ministry and recommended a “strategic partner” in Israel who would advance the issue. The whole affair raises significant questions about the principles guiding Israeli military procurement and the preference to use the military aid that the United States provides Israel – which obligates Israel to purchase from American companies, even when a different system might be a better operational option.

The documents at the heart of the leak, which came from German aerospace and arms component manufacturer Hensoldt, were obtained by Der Spiegel. The information was analyzed by European Investigative Collaborations, Greek investigative journalism website "Reporters United" and other media outlets. Shomrim’s Daniel Dolev and Uri Blau were the Israeli participants in the project.

Sub-Standard Periscopes

The documents relating to the submarines are taken, for the most part, from email correspondence between senior Hensoldt executives, at the time that the company was in contact with the Israeli Navy and, subsequently, with Israeli company Elta Systems.

At that time, Harald Hansen was head of Naval Solutions Sales for Hensoldt. The email that he sent in December 2020 to Sabine Hipp, the special advisor to the chief executive officer of Hensoldt, began with an apology for the extensive explanation he was about to provide regarding the issue. “As in most ‘subordinate’ navies,” Hansen wrote, the Israeli Navy is “obliged to accept system solutions that do not meet their operational expectations.”

This, he added, is what happened with the Dolphin-class submarines for which an American company called Kolllorgen (now known as L3Harris KEO) supplied the periscopes. According to Hansen, the choice of an American company was the result of political pressure, interference from the Defense Ministry, and the shipyards’ own interests. Hansen’s comments alluded to the military aid that Israel receives from the United States, which, as mentioned, can only be used for acquisitions from American manufacturers.

Hansen added that when Israel took delivery of the first Dolphin-class submarines, it became clear that the periscopes did not meet the operational demands of the Israeli Navy and that as far back as 2019, it was forced to launch an “equipment modernization project.”

Hensoldt submitted its bid for the tender, but at the last minute, L3Harris joined the race – bringing with it to the table $20 million of American military aid that could be used for the modernization project. The Israeli Navy, Hansen claimed in his emails, had no choice but to select L3Harris for the project. A year later, however, he added, the project ran into difficulties in terms of installation and integration. These problems, he pointed out, provided Hensoldt with an opportunity.

The Navy Recommends a Strategic Partner

The opportunity that Hansen was referring to was the purchase of the next three submarines planned for the Israeli Navy. Given the problems with American company L3Harris, the Navy requested that Hensoldt be added as an official supplier of parts in the early stages of the submarine manufacturing process. In the documents, Hensoldt executives argue that this request stemmed from their optic systems being the only ones that met “99 percent of the Navy’s demands.”

L3Harris, for its part, had no intention of giving up. According to Hansen’s emails, the American company used American military aid as leverage to exert pressure. To counter this, Hansen wrote, representatives of the Israeli Navy demanded that L3Harris’ proposal meet all the operational criteria that they put forward – even though they knew that there was a possibility that their demand would be rejected.

Navy offices, according to the mail, did not stop there. They also told Hensoldt what it should do in order to promote its proposal to the Defense Ministry. “The Israeli Navy … encouraged us to seek a strategic relationship with an Israeli company,” Hansen wrote. One Israeli official who knows the procurement process inside and out explained to Shomrim that the intention was, in all likelihood, to lay the groundwork for future reciprocal procurement from that Israeli company, which would make Hensoldt’s proposal even more attractive for the Defense Ministry.

The Israeli Navy, however, was not content merely to propose the idea of a “strategic partner” – it even went as far as to suggest a specific partner: “The Israeli Navy’s research and development division introduced us to the funded development work been done by Elta on submarine SIGINT and SATCOM antenna solutions,” Hansen wrote. He pointed out that Hensoldt has connections with another Israeli company, CONTROP, but added that “their strategic influence is limited.”

It is not known whether Hensoldt found a strategic partner or not, but its efforts were fruitful. According to the leaked documents, in late June 2023, the company signed a contract worth 27 million euros.

Inbuilt Tension

The whole issue of the periscopes ratchets up the inbuilt tension that sometimes exists in the Israeli defense establishment when it comes to military procurement. One senior official who is deeply involved in the issue explains that the ready availability of the American military aid, which comes to around $3.8 billion a year, makes buying American equipment much easier than anywhere else in the world. Sometimes, he adds, there is even horse-trading between different defense bodies, whereby they “exchange” American military aid for the option of procuring equipment from a manufacturer outside the United States.

The official adds that the emails make it abundantly clear that the Israeli Navy has gone to great pains not to work with L3Harris and that the correspondence reflects the intensity of the competition between American and German companies. At the same time, the official does not believe that Hansen was correct when he asserted that the Israeli Navy was forced to purchase equipment that did not meet its operational needs.

The IDF Spokesperson and the Defense ministry were both sent several questions relating to this article. The IDF responded by saying, “We have decided not to submit a response.” Similarly, the Defense Ministry chose not to respond to the article.