Shipbuilder Damen to be prosecuted for violating sanctions against Russia

The Public Prosecution Service (OM) will prosecute the Dutch shipbuilder Damen Shipyard as well as the current and two former chairmen of the board for bribery, money laundering, and violating sanctions against Russia, among other things, sources told the Volkskrant.

The directors charged are the current chairman of the board, Arnout Damen, his father, Kommer Damen, who founded the family business in 1967, and René B., who chaired the board between 2006 and 2019.

The decision to prosecute follows seven years of investigation and a failed attempt to settle the case outside of court with a fine. The settlement negotiations fell apart last year when the Volkskrant revealed new suspicions of bribery against the Dutch shipbuilder and Nieuwsuur discovered that Damen was evading sanctions imposed against Russia.

The OM suspects Damen of continuing to supply goods and technology to Russia over the past three years, despite the EU sanctions imposed on the country after it invaded Ukraine. The OM believes Damen helped strengthen the Russian military with its products.

The OM also suspects Damen and the three board members of paying too much money to agents abroad responsible for obtaining orders. For a long time, Damen awarded these agents 15 percent of the total price of the order, which is a massive amount considering the price of a ship. With such high success fees, there is a great risk that the agents will use some of the money to bribe officials. When Damen was limited to 5 percent success fees, the company and directors allegedly concealed additional money in the administration.

The consequences of the prosecution could be far-reaching. Once convicted, companies are not allowed to compete for government orders for four years, according to European tendering regulations. Damen is the most important shipbuilder for the Dutch Navy. Defense has ordered dozens of ships from Damen in recent years to replace the current fleet, describing the choice of a Dutch shipbuilder as “in line with the government policy to strengthen the Dutch maritime manufacturing industry” and “Europe’s strategic autonomy.”

In response to parliamentary questions, Defense State Secretary Gijs Tuinman (BBB) said last month that “an ongoing criminal investigation and suspicions of fraud and bribery are not compelling grounds for excluding a company from a tender.” He did not mention the accusations of sanction violations.