Wärtsilä Issues Statement on Investigation
Tuesday, September 30, 2003
The state prosecutor of Finland has announced that a pretrial investigation will be started into the so-called broker agreement signed by Wärtsilä in connection with marine engine sales in 1999 and 2000, and into the allegation of bribery related to this agreement.
Wärtsilä will itself thoroughly investigate the matter and help the authorities in their work. The individual employed by Wärtsilä and responsible for signing the agreement has been relieved of his duties for the duration of the investigation.
Marine projects are broad in scope, involving the interests and aims of the shipowner, the shipyard and the equipment suppliers. For this reason it is common practice in the business to employ the services of brokers, agents and consultants. In the future Wärtsilä will give particular attention to the agreements it signs with these parties and draw up new rules of procedure when selecting new brokers to work with.
During the course of a court action on this matter in Sweden a large amount of material has been made public knowledge which, when treated in the media, has given an insufficient and, in certain respects, erroneous account of Wärtsilä's activities. Wärtsilä therefore wishes to clarify certain details and to describe general business practice related to marine sales.
The broker harmonizes the demands of the various parties
Broker agreements are relatively common in the shipbuilding industry. The main parties in a shipbuilding project are the shipowner, which orders the vessel, the shipyard which builds it, and various suppliers of equipment and systems, such as Wärtsilä. At the design stage of the vessel the shipowner might wish to stipulate a certain type of engine to ensure easy ship maintenance, whereas the shipyard would rather use another type for easier installation, for example. It is the job of the brokers employed by the equipment suppliers to harmonize the opinions, requirements and wishes of these parties.
Wärtsilä had no reason to doubt a respected name in the industry
Wärtsilä made a broker agreement with a Singaporean Euro Marine Ltd. When a person who was well-known and respected in the industry, and authorized by the shipowner to be its representative, announced that the other party to the broker agreement was Euro Marine Ltd, Wärtsilä assumed that Euro Marine was part of the Rederi AB Gotland group. There is nothing suspect as such in a broker company belonging to a customer's group as this is how the shipowner is able to secure its interests in a large project. Wärtsilä had no reason to suspect that the payments set out in the agreement would in fact go to a private individual.
Wärtsilä paid against a written payment order
It has been claimed in public that Wärtsilä paid the fees without an invoice. This is not true. Wärtsilä received a payment order from Euro Marine dated 3 October 2000 which referred to the broker agreement and advised Wärtsilä to pay the sum stipulated in the agreement to a Swiss bank whose account number was also in the payment order. This payment order has also been submitted as evidence in the court case underway in Sweden. Wärtsilä ascertained that the payment order was in accordance with the agreement and approved its payment. It transpired later that the account belonged to the technical director of Rederi AB Gotland.
With hindsight Wärtsilä could have investigated Euro Marine's background more thoroughly before signing the agreement.
Full co-operation with the authorities from the outset
It has also been claimed that Wärtsilä was unwilling to assist the Swedish authorities. In fact Wärtsilä has assisted the authorities during both the pretrial investigation and the court action. The first contact with the Swedish authorities were made by telephone on 16 and 17 June 2003. Before handing over confidential information, Wärtsilä required the authorities to submit a written request. When this written request was received on 18 June 2003 Wärtsilä replied the same day. The Swedish authorities also confirmed in writing their receipt of the documents requested.