© Reuters
Yuli (left) and Sami Ofer.
Israel's Ofer brothers face a backlash at home and abroad over their business dealings

Ofer Brothers Group, one of Israel's most powerful corporations, is no stranger to scandal, but until now has largely emerged unscathed. But since allegations emerged that it traded with Iran it has been facing an unprecedented domestic backlash that could profoundly shake the Israeli establishment.

Israel's hawkish government, led by Benjamin Netanyahu, is the most vocal of Iran's critics, labelling its nuclear ambitions an existential threat to the Jewish state and calling repeatedly for tougher economic sanctions by the international community. But what it demands of others, it apparently fails to do itself, Israeli commentators say.

"Netanyahu, who endlessly preaches the need for firm action against Iran to prevent it from acquiring nuclear arms, is not lifting a finger to stop Israeli companies and individuals indirectly trading with Iran," wrote Yossi Melman in the left-leaning newspaper Haaretz.

Ofer Bros was one of seven companies singled out by the United States for punishment last week after it sold a tanker to an Iranian front company in contravention of US sanctions. Days later, Israeli media revealed that it enjoyed even more extensive trading links with the Islamic Republic than previously understood.

The revelations embroil the Israeli government in an embarrassing and murky affair that has transfixed the domestic media and spawned vivid speculation about the nature of relations between Ofer Bros and Israel's shadowy security services.

Ofer, owned by octogenarian brothers Sammy and Yuli Ofer, is now facing an unprecedented storm of domestic criticism, fuelled by a long-standing animosity to a company that has often courted controversy in its business dealings. Among the most pressing of questions is just how much successive Israeli governments knew and to what extent its security services were complicit in the company's involvement with Iran. Several Israeli newspapers have quoted sources close to Ofer Bros as saying that the corporation was furthering Israel's security interests in Iran. Mr Netanyahu has said only that his government approved no deals with the Iranians.

The affair erupted last week when the US claimed the company had sold a tanker to the Islamic Republic of Iran Shipping Lines for $8.6m via its Singapore-based subsidiary Tanker Pacific. Ofer responded by saying it did not know the buyer was a front for the Iranian company. US officials said Ofer Bros did not do the due diligence that would have revealed the client's real identity.

The US move deals a heavy blow to Ofer Bros. It will not be able to draw loans of more than $10 billion from US banks, secure financing from the Export-Import Bank of the US or receive US export licences.

At home, the Ofer family came under even further scrutiny after a newspaper alleged that ships belonging to companies owned by the group had docked in Iranian ports to load and offload goods at least 13 times in the past decade. The allegations prompted discussion over whether the company broke Israeli law that prohibits trade with enemy states.

The affair took a bizarre and titillating turn this week, when an MP abruptly cancelled a televised parliamentary meeting to discuss the affair after being handed a hand-written note. Carmel Shama-Hacohen has refused to discuss what was in the note, saying that it did not come from a political or business figure, prompting speculation that it originated with the security services.

Further clouding the picture, Mr Shama-Hacohen added: "It turns out that reality is much more complex, much more complicated and touchy than the average imagination can handle."

His words only heightened speculation that Ofer Bros had helped Israel's security services, an assumption apparently encouraged by sources close to the Ofer family. The best-selling Yedioth Ahronoth quoted a high-ranking official as saying that the company had "performed a significant service for the state of Israel ... at times while endangering their business."

Ronen Bergman, the author of a forthcoming book on Mossad, the Israeli secret service, said that while Israel had a history of using Israeli or Jewish businessmen to further its security interests, Ofer Bros could be playing up its co-operation with the security services to limit the damage to its reputation domestically. "According to the bizarre psychology of Israelis, you can be blamed with all sorts of wrongdoing" and get away with it, he said, referring to allegations levelled at Ofer Bros in the past. "But if you damage national security or are blamed for doing business with the 'empire of evil'... they [Ofer Bros] know this will not go away easily."

Others, such as the Labour party MP Einat Wilf, were sceptical that there was any truth to the suggestions. "They are trying to create a smokescreen to defend enormous economic interests by using the pretext of security so the whole world will just say 'Amen' and ask no questions," Ms Wilf told public radio.

The Ofer siblings, estimated by Forbes magazine to have a combined wealth of $10.3 billion, control a vast array of holdings in Israel and overseas, spanning energy, shipping and media. But their businesses have frequently attracted unwelcome scrutiny, and critics have charged that the brothers grew rich at the expense of the state, buying up privatised assets cheaply with the collusion of government officials.

Among their most profitable enterprises is the controversial Dead Sea Works, a chemical plant that is blamed for extensive pollution and causing the sea to shrink at an alarming rate. The brothers were accused of influencing the Israeli media when domestic television channels refused to broadcast a documentary investigating links between Ofer Bros and the political establishment. It was shown by Channel 1 after it agreed to air a filmed response from the company.