Dutch newspaper Nederlandse Omroep Stichting (NOS) reported that Damen Shipyards has received 270 million euros (about 314 million U.S. dollars) in state aid to prevent it from falling into further serious financial difficulties, as confirmed by multiple sources.
The report said that the construction progress of the six German frigates project undertaken by Damen Naval, a subsidiary of Damen Shipyards, has been hindered. The project was partially delayed due to software problems, ersulting in Damen Naval failing to meet the phased node targets set by the German Navy as required by the contract, so the German Navy is not paying the money for the time being. Since the frigate project is worth up to 7 billion euros, it will bring huge financial pressure to Damen Shipyards.
In addition to overseas orders, the Dutch Ministry of Defense has also ordered several vessels from Damen Shipyards. As a stakeholder, the Dutch government will ensure that Damen Shipyards does not face further difficulties. Therefore, the Dutch government has decided to provide financial support, but it is currently unclear whether this will take the form of a loan or a guarantee.
The Netherlands currently considers the defense industry to be a strategically critical sector, which means that the country’s parliament must approve the multi-million dollar budget adjustment. The Senate and the House of Representatives have received confidentiality notices, which are also due to related business and security interests. Therefore, the Dutch Ministry of Economic Affairs and the Ministry of Defense, as well as Damen Shipyards, have remained silent.
It is worth noting that the Dutch government’s aid comes at a time when Damen Shipyards is embroiled in legal disputes. Not long ago, it was reported that the Dutch prosecutor’s office would file a lawsuit against Damen Shipyard, allegedly for suspected bribery, forgery of documents and money laundering and suspected of violating sanctions against Russia.
Dutch prosecutors said the agency is filing a lawsuit against Damen Shipsyards and some of its executives for possible corruption, bribery, and money laundering.
The corruption case focuses on Damen Shipyards’ commercial activities between 2006 and January 2017. Dutch authorities believe that between 2006 and January 2017, some of Damen Shipyards’ new vessel orders may have involved dishonest transactions, i.e., transactions may have been secured through bribery, document forgery, or secret fund transfers to conceal the true source of the funds.
In response, Damen Shipyards strongly denied the allegations and said it was confident it could prove the prosecution’s charges in court.
In addition, Damen Shipyards faces another accusation. Dutch prosecutors believe that Damen Shipyards may have violated EU sanctions against Russia. The sanctions are intended to prevent certain goods and technologies from flowing into the Russian military, especially after tensions between Russia and the West escalated.
In the face of this accusation, Damen Shipyards strongly opposed it and stated: “The company always abides by the law and respects all sanctions. The company is “surprised” that this case, which is nearly two years old, is only now being brought to court.”
As a privately owned family business with approximately 12,000 employees, this sanction case is crucial for Damen Shipyards. The Dutch Navy plans to replace most of its naval vessels within 15 years, and Damen Shipyards expects to receive a large number of vessel orders as a result. Therefore, any legal issues faced by the company could impact its ability to secure orders.
According to its official website, Damen Shipyards was founded in 1927 and has a history of nearly 100 years, having delivered more than 6,000 vessels. Damen Shipyards has long been a key player in the Dutch shipbuilding industry, especially in Dutch naval shipbuilding projects and other international projects. It is currently building anti-submarine frigates and combat support vessels for the Dutch Navy.