Publication: Der Spiegel Issued: Date: 2011-08-11 Reporter: Reuters

U-Turn on U-Boats



Der Spiegel

Date 2011-08-11
Reporter Der Spiegel

Thyssen Plans Withdrawal from Submarine Joint Venture

German group ThyssenKrupp wants to pull out of a London-based joint venture with industrial services company Ferrostaal that sells submarines, SPIEGEL has learned. Insiders say the move was prompted by corruption allegations.

ThyssenKrupp AG wants to end its cooperation with the industrial services company Ferrostaal over the sale of submarines "as soon as possible" and will cancel the agreement unilaterally if necessary, according to a letter sent by the executive board of ThyssenKrupp Marine Systems to Ferrostaal board member Joachim Ludwig on Oct. 20, SPIEGEL has learned.

The two businesses have been involved in a joint venture called Marine Force International (MFI) based in London. That company was founded in 2004 in order to sell submarines built by ThyssenKrupp subsidiary HDW around the world.

ThyssenKrupp's planned withdrawal is believed to be linked to a corruption scandal involving Ferrostaal. The Munich public prosecutor's office has accused Ferrostaal of paying millions of euros in bribes to Greece related to the purchase of 214-class submarines. The joint venture has been widely cited as an example of how German and other European companies have massively profited from a Greek government that has, for years, spent beyond its means. Many German firms doing business in the country have also been complicit in corruption.

Insiders say that ThyssenKrupp also likely wants to get out of the consortium because MFI itself has also recently been suspected of corruption, regarding questionable payments involved in its sale of submarines to South Korea. After a SPIEGEL report last week, ThyssenKrupp had to concede that it transferred millions of euros to an intermediary suspected of corruption *1 in Seoul, despite the fact that MFI knew by 2007, at the latest, that the intermediary had already been convicted of bribing members of the Korean military in 1993.

The business dealings of MFI were scrutinized in a confidential report compiled by the US law firm Debevoise & Plimpton. In its investigation, the firm could not find concrete evidence of MFI paying bribes, but its report lists numerous inconsistencies related to submarine deals with Pakistan, Indonesia, Turkey, Italy and Egypt.

The attorneys investigated, for example, a deal in Turkey that involved a questionable loan of more than 2 million ($2.8 million) to a local business partner. In Indonesia, the local intermediary allegedly blatantly demanded that the company "line the pockets of my friends."


With acknowledgements to Reuters and Der Spiegel.

*1      A delicious instance of the pot calling the kettle black.

Thyssen has paid massive bribes wherever it has done business *2.

Just like many other German companies such as Siemens and Ferrostaal, its business model is based on corruption.

*2      In the South African frigate deal Thyssen paid bribes on the region of R300 million in order to win the deal.

First it paid DM2,5 million to get the Bazan done deal unconsummated.

Then it paid a further USD22 million to the higher level group.

Then it paid a further USD3 million to the lower level group of Chippy Shaik and those represented by him.

Then it paid further amounts to some naval admirals.

It even paid some money to a Janes Defence Weekly Africa correspondent to write kindly articles in the South African national press about its products.

Meantime the product that it sold to the SA Navy is critically corroding at it stands alongside the naval harbour in Simon's Town Naval dockyard.

This is due to simplistic and extremely poor engineering for this multi-billion Rand per each product.

The other technical problems are also numerous, vast, critical and bankrupting the SA Navy.

These, inter alia, are the real reapings of corruption.

Corruption is the grim reaper.

As one of his many trite little sayings, Project Director Rear Admiral (Junior Grade) Jonathan Edwin Gold Kamerman said :

"you have sown the wind and will now reap the whirlwind" *3*4

He also said :

You can't make an omelette without breaking any eggs."

I was one of his eggs.

But, indeed, indeed.

I am not a vindictive person, but I own 12 Lehman Brown hens which lay beautiful large brown eggs and I love to eat eggs and omelettes.

I also eat them boiled, poached, scrambled, fried and even pickled.

Unlike Nigella, I do not eat them raw.

Other than fishing for corrupt functionaries, I love scrambling and frying them too.

Watch this space.

*3      "For they have sown the wind, and they shall reap the whirlwind"
(Hosea 8:7).

*4       "They have sown the wind, and so they shall reap the whirlwind" (Air Vice-Marshall Sir Arthur Harris, 1940).