U-Turn on U-Boats: 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 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."
Stay informed with our free news services:
© SPIEGEL ONLINE 2011
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH
Click on the links below for more information about DER SPIEGEL's history, how to subscribe or purchase the latest issue of the German-language edition in print or digital form or how to obtain rights to reprint SPIEGEL articles.
- Frequently Asked Questions: Everything You Need to Know about DER SPIEGEL
- Six Decades of Quality Journalism: The History of DER SPIEGEL
- A New Home in HafenCity: SPIEGEL's New Hamburg HQ
- Reprints: How To License SPIEGEL Articles
MORE FROM SPIEGEL INTERNATIONAL
German PoliticsMerkel's Moves: Power Struggles in Berlin
World War IITruth and Reconciliation: Why the War Still Haunts Europe
EnergyGreen Power: The Future of Energy
European UnionUnited Europe: A Continental Project
Climate ChangeGlobal Warming: Curbing Carbon Before It's Too Late