Submarines Case erupts in Germany

By Chris Graeme [email protected]


The German authorities have arrested one of the suspects involved in alleged bribery crimes over the construction of two submarines for the Portuguese Navy.

The German industrial consortium Ferrostaal, from which Portugal ordered two submarines in April 2004, may have succeeded in getting the sale contract worth 880 million euros on the back of bribes and fake consultancy deals.

A news item, published on Tuesday by German magazine Der Spiegel, has cited German police investigation sources.

One member of the company’s board of directors, Klaus Lesker, has already been detained by police but there are around half a dozen other suspects.

The Munich Public Prosecutors Office is also investigating two former board members and other senior executives for suspected tax evasion and bribing foreign officials.

According to the police investigation report, an honorary Portuguese consul contacted a member of Ferrostaal’s Board of Directors telling him that he could swing the contract for the two Portuguese submarines in the company’s favour.

The same diplomat may have succeeded in setting up a meeting, in the spring of 2002, with the recently elected President of the European Commission, José Manuel Durão Barroso. For this reason, he ended up being hired as a consultant, in January 2003, receiving 1.6 million euros, for a position that was obviously incompatible with his diplomatic activities.

Apart from this, Ferrostaal paid a further million euros for the development of the business deal to a Portuguese rear admiral (not named by the German magazine). There is also a firm of Portuguese lawyers who may have lobbied on Ferrostaal’s behalf so that they would be awarded the contract.

The Submarines Case has been investigated by the Portuguese authorities, but mainly over suspicions of alleged irregularities nationally. The Der Spiegel revelations shed new light on this complex case.

Portuguese opposition parties in parliament have called for the contracts for the two submarines to be cancelled on the grounds of the alleged fraudulent irregularities or, failing that, for the submarines to be sold on receipt because the state needs to reduce its spending to meet its Stability & Growth Pact Programme plans by 2013.  

In an interview on RTP’s Grande Entrevista with Judite de Sousa last week, the leader of the CDS-PP Party, Paulo Portas, who was Minister for Defence when the contracts were signed for the submarines with Man Ferrostaal, stood by his decision to order them.

“In 2003, the public debt stood at 55 per cent of GDP, it wasn’t at the 100 per cent of GDP it is today. If you were to ask me if I were to make the same decision today, of course I would postpone them,” he said.

The former Minister for Defence blamed the PSD Socialist party of António Gutteres for launching the public tendering competition for the contract and claimed it had wanted to order three submarines with an option for a fourth. “We cut it down to two,” he said.