Submarine corruption case investigation centres on CDS party

By CHRIS GRAEME [email protected]

The Portuguese Criminal Investigation Department investigating the Submarine Scandal strongly suspects that political movers and shakers may have received millions of euros in sweeteners from crooked German industrial giant bosses.

Paulo Portas’ CDS party and other unnamed politicians join the ranks of a senior naval figure, top businessmen and a Portuguese honorary consul who may have received money in bribes from Man Ferrostaal executives in Germany, in order to guarantee that it got the submarine contract instead of French competitor DCN-I.

It also emerged this week that justice department archive searches at the official residence of the Ministers of Defence near Lisbon last summer found key files to do with the Submarines contracts missing.

The fort of São Julião da Barra, the Portuguese Navy’s largest and once most important military fortifications, served as CDS party leader Paulo Portas’ residence when he was Minister of Defence in the PSD-CDS/PP coalition government in 2004.

The official minutes, which document the searches held on July 14, 2009, state that “various documents were seized but that it was also noted that various shelves in the archive were empty”.

A Portuguese Public Ministry document, dated September 2009, which forms part of the judicial case currently at Lisbon’s Criminal Court, makes it clear that “suspicions have existed and continue to exist that Portuguese State representatives conducting the contract negotiations favoured the German Submarine Consortium’s interests to the detriment of the Portuguese State, with the result that the referred to consortium may well have given them, directly or via third parties, considerable financial advantages, which they accepted.”

The acquisition of two ThyssenKrupp-built German submarines from the German Submarine Consortium (GSC) for nearly one billion euros, including their attendant ‘offsets’ or Portuguese industry compensation contracts, has been under investigation by the Portuguese public prosecution and criminal investigation authorities since 2006.

state defrauded

It has been suggested not only that the State paid 63 million euros over the original asking price for the submarines but also that parcels of up to 1.6 million euros a piece were paid in bribes to leading officials through consulting firms like the Banco Espirito Santo Group company ESCOM.

It has also been suggested that a senior retired Rear Admiral took 1.6 million euros as a dubious ‘commission’ in return for producing a report, which rubbished the French competition for the submarines contract and over extolled the German submarine’s capacities.

Not only that, two Man Ferrostaal executives – from one of the German industrial company’s that make up the GSC – are accused by the Portuguese authorities of having defrauded the Portuguese State out of nearly 35 million euros and faking documents while the promised spin-off benefits to Portuguese industry from the contract in many cases never materialised.