An intriguing case with faint echoes of the 1986 Iran-contra scandal is dominating Israeli news headlines, even as Washington lawmakers have largely ignored the story. U.S. officials have accused the Ofer brothers--who are from one of Israel's most prominent business families--of trading with Iran. Such transactions are in violation of U.S. economic sanctions enacted--with strong lobbying from Washington pro-Israel groups--in order to pressure Iran to curb its nuclear program.
Washington Iran analysts say the scandal casts a shadow over a key Israeli foreign policy objective of ratcheting up global economic and diplomatic pressure to isolate Iran.
The State Department accused Israel's Ofer Brothers Group last week of using a Singapore-based subsidiary, Tanker Pacific, to sell an $8.6 million tanker to Iran's main shipping line last year, the Islamic Republic of Iran Shipping Lines. One of the company's executives, Sami Ofer, was ranked as Israel's wealthiest businessman by Forbes magazine in 2008.
Subsequent reports by Israeli media and maritime newspapers suggest ships run by Ofer-controlled firms and subsidiaries have been secretly docking at Iranian ports for years--well beyond the September 2010 tanker sale cited in the new State Department sanctions designation.
"At least 13 Tanker Pacific ships, owned by the Israeli Ofer Brothers Group, have docked in Iran over the past decade, according to information released by Equasis, a major shipping information database," SeaNews Turkey reported this week. "The ships docked in the Iranian port city Bandar Abbas"--on Iran's southern coast--"and Kharg Island," a major Iran oil export port.
Israeli newspaper Ha'aretz reports today that the Ofer Brothers Group ordered its ships last year to halt docking at Iranian ports. A close reading of the order, the paper's intelligence columnist Yossi Melman points out, indicates that the company was apparently already aware that its ships were docking in Iran.
"This is the first indication of such instructions from the Ofer family, serving as an indirect implication that ships in their possession have in fact docked in Iranian ports before," Melman writes.
"This thing stinks," is how Patrick Clawson, director of research at the Washington Institute for Near East Policy, summed up the brewing scandal for The Envoy.
Clawson noted the company involved is deeply politically connected in Israel; Israel's current national security adviser, Yaakov Amidror, was, for instance, until two months ago on the board of several Ofer-owned companies. Maritime expert sources have suggested to him that Ofer-owned subsidiary ships have used deliberate (and risky) measures to evade detection while sneaking into Iranian ports -- deactivating global positioning systems, turning out beacon lights, etc.
Such techniques would appear to be in line with the way Iran shipping firms have sought to bypass western sanctions and inspections. The Wall Street Journal reported last year on western intelligence agencies playing a "cat and mouse game" with the Iran shipping line, IRISL, to which the Ofer Brothers Group was accused of selling the tanker. "U.S. officials said IRISL regularly changes the names of its corporate units and ships to stay a step ahead of pursuers," the paper reported. "The company has even resorted to repainting its ships' smoke stacks and hulls to try and camouflage their identity, U.S. officials say."
Haaretz has written that the Ofer Brothers Group has provided some assistance to Israeli intelligence services in the past. Israeli officials have yet to offer any cause to think, however, that the company's tanker sale to the Iran shipping line was condoned as part of that arrangement.
The State Department designation of the Ofer Brothers Group had apparently been ready for more than two months before it was made public last week, a Washington expert on Iran sanctions told The Envoy on condition of anonymity. During subsequent inter-agency review, U.S. officials would have consulted with Israeli officials in order to establish any national security explanation for the Ofer Brothers Group's sale of the tanker to the Iranian shipping lines. Since the State Department designation proceeded, the chain of events suggests that no such explanation was provided.
Other analysts believe Ofer's relationship with the Israeli security services may be more complex. "If I had to bet on it, I absolutely would bet the Ofer brothers had been asked by the Mossad to lend their ships, contacts, networks in order to get as much intelligence as they can on what is going on in Iran," the Washington expert on Iran sanctions said on condition of anonymity.
An Israeli Knesset hearing on the subject came to an abrupt halt earlier this week after the Israeli lawmaker chairing the proceedings was handed a note. Israeli media suggested the note may have been security related.
Clawson said there may be a silver lining in the somewhat embarrassing affair: It could well give the U.S. more credibility in enforcing global trade sanctions now that State officials have called out a leading company of its top Middle Eastern ally for violating Iran sanctions.
"This was a signal, that we will go after anybody, including the powerful and politically well-connected," Clawson said. "If you're a small company in Germany [thinking of doing business in Iran] and see the Americans go after an Israeli company, you might think, 'uh oh.'"
The Ofer Brothers scandal is coming to light at an interesting moment in Israel's own policy debates over Iran. Meir Dagan, the recently departed chief of Israel's intelligence service, the Mossad, has argued since leaving office that any prospective Israeli military strike against Iran would be exceedingly ill advised. That position contradicts the posture of Prime Minister Benjamin Netanyahu, who has preferred to keep the option open -- at least to diplomatically pressure other countries to get behind stiffer sanctions.
"An attack on Iran would mean regional war, and in that case you would have given [Iran] the best possible reason to continue the nuclear program," Dagan told a Tel Aviv leadership conference Wednesday, CNN reported.
Dagan also stipulated that he was hoping the Ofer Brothers scandal would not be overblown. Dagan said Ofer-owned companies employ hundreds of Israelis and it would be a shame if their businesses were harmed by fallout from the case.
(Israeli Prime Minister Benjamin Netanyahu hugs outgoing Mossad chief on January 2, 2011: Ronen Zvulun, Pool, File/AP)