Part 1: Political scandel with Dutch yard at Black Sea

Romania is one of the few NATO countries that has raised its military budget up to 2 per cent of its GDP. The country is now upgrading its armed forces and one of the projects it embarks on is modernisation of the naval forces. The project however is not going as planned. Mid January the Romanian Ministry of Defence suspended the selection process for a €1.8 billion naval corvette program, because of “suspicions regarding the lawfulness of the procedure.” It is only the latest step in a process full of unclear irregularities and political turmoil.

In November 2016, the Romanian navy signed a deal with the Dutch-owned Damen ship yard company to build new corvettes, but the acquisition got canceled by the Government because the procedures were not followed according to the law. Shortly after this decision Damen announced that he had bought a 49% stake in the Mangalia yard, located on the Black Sea coast. The Romanian Government keeps the majority stake with Damen responsible for the operational management of yard. Probably Damen was hoping that this investment would give it a preference position in new naval orders. Aside from a public scandals about Damen employing former intelligence officers, the acquisition had no result. In February 2018 the Romanian government started in open international tender instead of giving the order straight away to the Dutch shipbuilder.

Three European firms decided to partner with Romanian counterparts to compete for the deal:

In November 2018, after some delays and talk about the close connection of Damen to the government, the offers came on the table. It turned out that the French made a cheaper offer than Damen, but Damen was still favoured party. Then the scandal broke out: In November Mihai Fifor, the Minister of Defence, stepped down. The close cooperation between Damen and the Romanian government was all over the Romanian press. Former Prime Minister Traian Basescu commented that Fifor “preferred to resign before announcing the auction result, to be not involved in the misery.” In a reaction Damen said not to rule out the possibility of bringing to court those who “spread false information” and came with a statement to publicly clear its records.

After Mihai Fifor had stepped down, the new Minister of Defence Gabriel Beniamin Les decided to downplay the rumours and said: “Regardless of how transparent you may be, when you’re talking about €1.6bn there will always be suspicions.” However the government disputed the renewed mandate of the chief-of-staff of the army. This dispute between the top military officer and the Government was related to large public procurement contracts. According to press reports the army chief-of-staff disagreed with the government favouring Damen. So the head hunt encircling the acquisition broadened into military circles. (See also: Romania's government insists on replacing army head, IntelliNews, January 9, 2019)

In December the French financial weekly La Tribune wrote: “For some obscure reasons, Romania is desperately trying to offer the deal to Damen at the expense of (French) Naval Group which won the tender. Paris is ready to step up to defend the Naval Group's offer”. According to La Tribune, French minister of Defence Florence Parly will call her new counterpart Gabriel Les to raise the issue at high level.

It is is not clear if this is the reason that the promised decision on the acquisition on January 12 was suspended. The French Naval Group threatened the Romanian Ministry of Defence to go to the court, because it did not agree to be ruled out in the tender. Constanta – Naval Group’s partner in the tender – launched a court appeal for the cancellation of the procurement process in January 2019.

Will be continued

MB