The President and
the Arms Dealer

A story of international arms deals – and expensive gifts in Berlin. A CORRECTIV investigation with public broadcaster ZDF’s Frontal21 and Stern magazine.

24. September 2019

The President and the Arms Dealer

A story of international arms deals – and expensive gifts – in Berlin. A CORRECTIV investigation with public broadcaster ZDF’s Frontal21 and Stern magazine.

24. September 2019

For years, Abu-Dhabi-based Lebanese businessman Ahmad El Husseini acted as the German arms exporters’ facilitator in the Middle East. Then suddenly, he fell from grace, and more than €60 million is subject to disputes.

German industrial giant ThyssenKrupp asked Mr. El Husseini to broker weapons purchases for frigates sold to the Algerian navy. But why did the firm not buy the weapons itself? Was corruption involved in a deal that helped propel Germany to fourth place among international arms exporters?

Mr. El Husseini maintained excellent contacts not only with ruling families and arms buyers in the Middle East – he was also very well-connected in Berlin. Mr. El Husseini sent luxury Christmas hampers packed with vintage wine to several Social Democratic Party (SPD) politicians, including current German president and head of state Frank-Walter Steinmeier. The vintage wines could now spell trouble for the recipients.

Who is Ahmad El Husseini? What was he trying to achieve with his high-end Christmas presents? A search for evidence in Kiel, Abu Dhabi, Singapore – and Berlin.

Part 1

The Algeria Deal

From Kiel to Düsseldorf and Beyond

It was one of the largest German arms deals of the past decade. In 2011, ThyssenKrupp sold two MEKO A-200AN frigates to the Algerian navy in a total package worth about €2 billion. Its marine unit ThyssenKrupp Marine Systems (TKMS) built the warships in Kiel. The German government underwrote the deal with export credit guarantees.
Germany is arming Algeria even though the country is controlled by an unelected, unaccountable clique of military and intelligence officers. Corruption is endemic.
ThyssenKrupp was to deliver the warships with armament included. But TKMS did not buy the ammunition, including shells, torpedoes, guided missiles, directly from manufacturers in Germany, France and Italy. Instead, TKMS followed a curiously roundabout route – that today looks immediately suspicious – and contacted Ahmad El Husseini.
For years, the Lebanese businessman had run a sprawling construction conglomerate in Abu Dhabi and was active in the energy sector. His local partner was one of the most powerful members of the ruling family of the oil-rich emirate.
Initially, TKMS planned to purchase a weapons package worth around €300 million from Abu Dhabi-based firm Federal Development (“Federal”), run by Mr. El Husseini. The strange thing: a manager in Kiel offered to introduce the broker to arms makers in France and Italy: “Our team is prepared to assist Federal in regard to the first direct contact with any of the manufacturers,” he wrote to Mr. El Husseini in June 2012.
The manager appeared to possess the relevant industry contacts himself. Yet he turned to a broker, Mr. El Husseini. TKMS signed the weapons package contract with Federal in late 2012. But Federal, in turn, simply bought the entire package from another German defence company, Düsseldorf-based Rheinmetall. A deal structure with more parties than were necessary from a strictly commercial perspective.

Bribery, though illegal, is still widespread in the global arms industry. The presence of a middleman is always a red flag in the eyes of anti-corruption investigators.

Oliver Scholz, a professor at Berlin’s HTW University and an expert on corruption comments: “This is classic. It looks like a transaction for the purpose of evading the law. There are many places here where invoices are issued. And where invoices are issued, the difference between purchase price and sale price offers wriggle-room to generate funds for other purposes.”
ThyssenKrupp has been selling its warships through business units located outside Germany since the early 2000s. It set up a company in London to sell submarines. A separate unit in Singapore sells surface ships.
The London-based subsidiary signed consultancy agreements with Mr. El Husseini back in the 2000s. Mr. El Husseini was to earn five percent commission on planned submarine sales to the Middle East, including to Algeria.
The submarine deals ultimately fell through but auditors would later question why some of the money was to be channelled through offshore companies, and why Mr. El Husseini was involved even though he had no presence in Algeria.
Despite those earlier concerns, the two sides apparently stayed in touch. In 2012, it was TKMS’s Singapore unit which contracted with Federal and its managing director Ahmad El Husseini to buy the weapons package for Algeria. The roundabout route.
ThyssenKrupp says that compliance violations can never be ruled out when third parties are involved. It also says that an audit of the Algerian frigate deal by external lawyers has not turned up any concrete evidence of wrong-doing.
A questionable middleman, a detour via Singapore – but still the German government supported the frigate sale to Algeria with multi-billion euro export credit guarantees. German MP Tobias Lindner of the opposition Green party is highly critical.
Another deal highlights why German arms exporters needed Mr. El Husseini for their Middle East business. Rheinmetall fitted out ships of the United Arab Emirates’ navy with guns. But disagreement ensued when the buyer, unhappy with the accuracy of those guns, refused to pay the agreed €80 million.
Rheinmetall turned to Mr. El Husseini. Success fees worth €15 million were meant to make the problem go away. This is how Rheinmetall justified the deal.
It’s not exactly clear what happened next. Rheinmetall claims that Mr. El Husseini transferred the agreed success fees from a joint bank account before he was entitled to, forcing it to file a criminal complaint against him. German prosecutors accepted the company’s arguments and indicted Mr. El Husseini for fraud this summer. His lawyer rejects the allegations. A German court in Lüneburg, Lower Saxony is now considering the indictment.
Millions are also missing in the Algerian frigate deal. At the end of the roundabout route via Singapore and Abu Dhabi, about €50 million failed to arrive in Rheinmetall’s account, but partially ended up in Lebanon and Hong Kong instead. Rheinmetall is claiming €37 million from Federal and is understood to have initiated arbitration proceedings in Switzerland.
In short, the whereabouts of more than €60 million from deals between Rheinmetall and Mr. El Husseini are disputed. A lawyer for Mr. El Husseini declined to comment, citing current legal proceedings. A spokesman for Rheinmetall also declined to comment on the details of the case but rejected any notion of impropriety in its business.

Part 2

The Hampers

Searching for evidence in Berlin

Berlin is home to the famous department store KaDeWe, Europe’s second largest after Harrods of London. Its customers include wealthy locals and well-heeled tourists from around the world. And once a year, it now emerges, a familiar name did some of his Christmas shopping there.
German arms exporters made use of Mr. El Husseini’s contacts in the Middle East. But, unusually in the discrete world of arms dealing, the Lebanese middleman also boasted excellent contacts in their home market. And, it is possible to state, he sent some expensive gifts to a number of very high-level political operators in Berlin.
CORRECTIV and its media partners have obtained documents from inside the KaDeWe department store that show Mr. El Husseini paid for expensive wines to be sent to several of his associates. The documents date back to the early to mid 2010s.
Six recipients are named, including the current German president and head of state, Frank-Walter Steinmeier. From 2013 to 2017, Steinmeier was Germany’s foreign minister. During that time he was responsible for approving German arms export licences.
In 2015, for example, Steinmeier is the intended recipient of a hamper worth €1,299. Three bottles of the Italian ‘Super Tuscan’ red wine Ornellaia (1997 vintage), and three bottles of James Bond-favourite Dom Perignon champagne. And a Christmas stollen. To be delivered to Steinmeier at the SPD parliamentary group in the Bundestag, the German parliament.
Regulations in Germany require ministers to hand over gifts worth more than €150 to the government. Steinmeier failed to do this, according to a list of gifts provided by the German chancellery.
During his time as foreign minister, Steinmeier was also an SPD member of the Bundestag. The rules are less strict for MPs. They must disclose donations and gifts worth more than €5,000.
Mr. Steinmeier says that he met Mr. El Husseini “two or three times” but “more than ten years ago”. He says it is no longer possible to confirm whether Mr. El Husseini sent the hampers to his office. Presents received in the Christmas season were distributed to employees or public institutions. Mr. Steinmeier says that at no point did Mr. El Husseini influence either his political positions or decisions during his time as MP or foreign minister.

The Social Democrats say they consider wine hampers to be gifts, and not party donations. The German Bundestag, which oversees party financing rules, takes a different view and sees them as donations. The difference is crucial, since according to SPD rules, donations need to be passed on to the party. The SPD says it has not received the hampers and has neither registered any donations from either Mr. El Husseini or his Berlin company.

There is no evidence of a close connection between Mr. El Husseini and Mr. Steinmeier. There is also nothing to suggest German government decisions were influenced by the gifts. Still, Mr. El Husseini had reason to put Berlin in a festive mood. He had benefitted from the German government’s approval and backing of the frigate sale to Algeria in his role as a broker in the weapons package.
But Mr. El Husseini did maintain close contacts with two other (former) SPD politicians, ex-chancellor Gerhard Schröder and Otto Schily, interior minister from 1998 to 2005. Bottles of red wine, champagne and Christmas stollen were also ordered for them after their time in office.
The Abu Dhabi-based arms dealer and Germany’s former interior minister got along so well, in fact, that they met up in northern Italy on the occasion of the Palio, the famous horse race held twice a year in the medieval heart of Siena, and coincidentally not so very far from the Ornellaia winery. Mr. Schily did not answer questions put to him concerning his relationship with Mr. El Husseini.
When in Germany, Mr. El Husseini also often met Gerhard Schröder who also failed to answer questions put to him concerning his relationship with Mr. El Husseini.

Mr. El Husseini acted as a middleman for the German defence industry in sales to the Middle East while maintaining excellent contacts with top Social Democrats. The party, battered in recent elections, is currently in the process of electing a new leadership. It now needs to explain its covert ties with the defence industry.

Part 3

Silence in Berlin

Mr. El Husseini’s expensive wine hampers: perhaps just relatively low value items in the big scheme of things, the seasonal generosity of an affluent businessman. It is hard to imagine that such gifts could influence political decisions.

But the gifts served to maintain a network. And they link a shadowy figure from the world of international arms dealing with top German government officials. A connection about which important people in Berlin today prefer to remain silent.

First example: in late 2014, Angola and Germany sign a military cooperation agreement. An Angolan delegation visits the German government and German defence companies.
Mr. El Husseini turns to a former German naval officer, L. The officer met an official at the German defence ministry, at the time headed by Ursula von der Leyen, now President-elect of the European Commission. It appears that L. was meant to influence talks between the German government and the Angolan side on behalf of Mr. El Husseini. This is what he wrote to the lobbyist.
Today, L. appears to be uncomfortable with the episode. The former naval officer declines to talk to journalists. The German defence ministry says it has no knowledge of the meeting.
Second example: in 2014, Mr. El Husseini fixed a meeting with Gerhard Schröder and German foreign ministry official Dieter Haller at ‘Bocca di Bacco’, an Italian restaurant in Berlin popular with Hollywood movie stars. The diplomat was twice Germany’s ambassador to Saudi Arabia, one of the German arms industry’s top customers.
Mr. Haller was at the time head of the economic department of the foreign ministry with responsibility for arms exports. It is not known what the diplomat, the former chancellor and the arms dealer discussed. The German foreign ministry declined to comment. Mr. Haller did not respond to questions. Mr. Steinmeier says he has no knowledge of the meeting.
The documents obtained from inside the department store KaDeWe include three more names, former top officials in the Schröder government. One of them has confirmed that KaDeWe sent out the gift baskets on behalf of Mr. El Husseini.
For years, Mr. El Husseini maintained an office right next to the Brandenburg Gate in the heart of Berlin’s diplomatic quarter. There are now calls for more transparency regarding Mr. El Husseini’s use of his contacts in the German capital.
Timo Lange of the German non-profit group LobbyControl says the case shows that German politics needs to be more transparent.
Today, Mr. El Husseini is believed to be back in Lebanon. Persons close to him say that he fell victim to the Middle East’s sectarian politics. They claim that in early 2017, the Sunni Muslim rulers of Abu Dhabi expelled the Shi’ite businessman.
A person who has met Mr. El Husseini describes him as a charming but secretive individual who gives nothing away. Politicians in Berlin, and in particular some senior Social Democrats, are doubtless hoping that things will stay that way.

Do you have any question or additional information? This is how you can reach our reporter Frederik Richter. Messaging App Signal: +4917675628865. Threema: J5A6SWPY. Stay up to date with CORRECTIV’s English-language newsletter.

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Reporting by: Frederik Richter (CORRECTIV), Christian Rohde, Ulrich Stoll (Frontal21), Hans-Martin Tillack (Stern) Design: Benjamin Schubert Development: Benjamin Schubert, Michel Penke Contributions: Anne-Lise Bouyer, Simon Wörpel, Jonathan Sachse Pictures: Ivo Mayr

Photo credits:

Odd Andersen / AFP, Jean-Paul Barbier / AFP, Mike Benna-Lobe / , Lars Berg / imago images, Rodger Bosch / AFP, Carlo Bressan / AFP, Daniel Brosch /, Gerhard Cerles / AFP , Johannes Eisele / AFP, Eventpress Mueller-Stauffenberg / dpa , Gregor Fischer / dpa , Hüdaverdi Güngör Correctiv, Ryad Kramdi / AFP, Yannic Kress /, John MacDougall / AFP, Ludovic Marin / AFP, Ivo Mayr / Correctiv, Marijan Murat / picture alliance, Fayez Nureldine / AFP, Roslan Rahman / AFP , Frederik Richter / Correctiv, Stefan Sauer / dpa , Tobias Schwarz / AFP, Christof Stache / AFP, Patrik Stollarz / AFP, Julian Stratenschulte / dpa, Anja Trappe, Brandy Turner /, Scott Warman / , Jörg Waterstraat / picture alliance / SULUPRESS.DE, Craig Whitehead /, Valentin Zick / CORRECTIV, Hüdaverdi Güngör / CORRECTIV, Pressedienst Botschaft Angola