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German submarines scandal goes to court

A top Portuguese judge has ruled that three German executives and seven Portuguese businessmen are to face trial for robbing the Portuguese state of €34 million.

Carlos Alexandre, from the Portuguese Criminal Court (Tribunal Central de Instrução Criminal), took only minutes to decide that the former executives from the German industrial giant Man Ferrostaal and Portuguese businessmen from the ACECIA group of automotive companies would sit in the dock to answer charges of qualified fraud and falsifying documents to do with a billion Euro submarine deal.

The German defendants in the case, Horst Weretecki, formerly Ferrostaal vice-president, Winfried Hotten (a former director) and executive Antje Malinowski, who claim they were never served with the indictments properly translated in their own language, are arguing that they were never questioned and heard during the initial inquiry phase of the investigation.

The ACECIA Portuguese car industry executives facing the dock are Pedro Ramalho (President of Simoldes), António Lavrador (CEO of Ipatex), Filipe Moutinho (President of Sunviauto), Jorge Gonçalves (Amorim Industrial Solutions), Rui Santos (Inapal Plastics), António Roquette (President of Inapal Plastics) and José

Medeiros (Comportest).   

The accusations specifically have to do with offsets which the German company promised to provide for Portuguese industry but never or rarely materialised.

Offsets are a widespread and highly criticised practice in Europe and the United States linked to billion Euro defence contracts whereby companies winning these lucrative contracts promise to provide spinoffs for the purchasing country’s national industry up to or equalling the amount of the contract.

However, in many cases, the sweeteners were never provided and instead, it is alleged, Portuguese company directors were bribed to issue false invoices based on pre-existing business orders that had nothing to do with the German company that makes, among other things, conventional submarines.

It was decided to purchase the submarines and renew Portugal’s aging fleet during the PS António Guterres government in the late 1990s but the purchase and offsets contracts were signed by Paulo Portas as Defence Minister during the José Manuel Durrão Barroso government in 2004.

The entire submarines case has been clouded by accusations of CDS-PP party bankrolling by the supplier company, the unfair awarding of the contract to the Germans at the expense of the French rival company DCN and numerous backhanders paid to high-ranking Portuguese dignitaries at political, defence and diplomatic levels.

Not only that, classified and legally incriminating documents to do with the submarines contracts and purchase, supposed to be kept securely in Ministry of Defence archives in a Lisbon fortress, mysteriously vanished when police and magistrate inspectors called.

In his court order, the judge referred to a “veiled threat” from the Ferrostaal defence lawyer, Godinho de Matos who warned that if the case went forward, it would be like “drinking from a poisoned chalice”.

The German defence lawyers are likely to argue the case that evidence used by the prosecution is not impartial since the consultancy entity Inteli – responsible for carrying out the specialist reports being used by the prosecution – was working for the Government (the Ministry of Defence) and the Public Ministry’s Public Prosecutor’s Office at the same time that it was working for Man Ferrostaal.

Not only that, Inteli President, Rui Felizardo, who commissioned the expert consultancy reports for both sides, was also allegedly having an affair with one of the public prosecuting magistrates investigating the case.

Ferrostaal, whose main shareholder company is based in Abu Dhabi, is being investigated in various countries including Argentina, South Africa and Greece for alleged fraud and bribery over the sale of military hardware.

So far none of its present or former directors and executives has been charged in these countries.

A public prosecutor’s inquiry is also underway in Munich, Germany, into the company’s activities but it has been reported in the German press that Ferrostaal is likely to escape court there by paying a hefty fine.

The first German submarine for the Portuguese navy, the Tridente, was delivered in August 2010 following extensive sea trials. It has since had to undergo repairs, paid for by the manufacturer, because it was unable to adequately withstand conditions in the Atlantic Ocean. The second submarine, the Arpão, which has been completed in German HDW shipyards in Kiel by ThyssenKrupp, is expected to be delivered at some time this year, following trials. Chris Graeme