Government halts firm’s sale to Russia

Bookmark and Share

After weeks of controversy, the Norwegian government has changed its mind and will, after all, halt the sale of Bergen Engines to TMH International of Russia. The government now apparently agrees that national security interests are at stake, since Bergen Engines has supplied and still services some of the motors on several Norwegian defense vessels including the so-called “spy ship” Marjata.

Prime Minister Erna Solberg herself christened Norway’s new surveillance ship Marjata when it was launched in 2014. Since Bergen Engines delivered its famously silent motors, it still has maintenance responsibility, and that set off warnings when Bergen Engines’ pending sale to Russian owners was reported earlier this winter. PHOTO: Etterretningstjenesten/Forsvaret

Calls had been going out to halt the sale since it was first reported by newspaper Bergens Tidende (BT) in early February. Business news service E24 has since reported that Bergen Engines’ owner, Rolls-Royce, had alerted Norway’s foreign ministry to the then-“possible sale” to TMH as early as December.

That’s when Rolls-Royce, which had been in negotiations with other potential buyers, wrote in a “confidential” email to UD’s export control division that it had come farthest with TMH International, a Swiss-based unit of TransmashHolding, which is described as Russia’s largest manufacturer of locomotives and rail equipment. The Barents Observer has also reported that TransmashHoldings’ biggest customer is Russian Railways. One of the vice presidents of Russian Railways, meanwhile, has been Vyacheslav Pavlovsky, a former Russian diplomat who served as Russia’s ambassador to Norway from 2010 to 2016.

The problem is that Transmash is in turn owned and controlled by Russian oligarchs close to Russian President Vladimir Putin including, according to Rolls-Royce in its own mail to UD, Iskander Machmudov and Andrej Bokarev. Rolls-Royce itself wrote that it wanted to give the Norwegian government an opportunity to raise questions or concerns in advance of the sale. Rolls-Royce had concluded, meanwhile, that the sale did not require formal approval from Norwegian authorities and did not fall under Norway’s security law, not least because Bergen Engines hasn’t handled any classified information that involves Norwegian defense.

Chorus of critics
Opposition politicians in Parliament strongly disagreed, especially since motors from Bergen Engines are used both by Norwegian Coast Guard ships, on the Norwegian surveillance vessel Marjata and by the navies of several Norwegian allies including the US. The Norwegian defense department decided to evaluate whether the sale could effect existing contracts with Bergen Engines and future deliveries. Norway’s police intelligence unit PST, which has long ranked Russia and China as posing the biggest threats to Norwegian security, warned on a general basis that authorities in non-democratic countries can have great influence over their businesses (like Transmash/TMH).

The loudest opposition came from the Center Party, which called the pending sale “a complete scandal,” and the Progress Party, whose foreign policy spokesman and Member of Parliament (MP) Christian Tybring-Gjedde, warned that deliveries from Bergen Engine could wind up being halted in a crisis situation if the company is controlled by Russian interests. He called the government’s handling of the sale “uncoordinated and incompetent.

Several newspapers have also editorialized against the sale, especially after a state secretary in Norway’s trade ministry claimed the ministry “would not and should not” meddle in a sale between two commercial players. Defense Minister Frank Bakke-Jensen had told news bureau NTB in late February that “security around the defense intellingence agency’s vessel had of course been taken into consideration.”

The crew of the Coast Guard vessel KV Svalbard, which has been to the North Pole. Its motors also came from Bergen Engines. PHOTO: Forsvaret

Rolls-Royce ultimately felt they had the government’s green light for the sale until earlier this month, when the government announced it was “temporarily” halting it. Newspaper Aftenposten called it “an embarrassing retreat” when the Conservatives’ Justice Minister Monica Mæland announced the then-temporary halt that’s now been made permanent. Aftenposten and other critics claimed the government simply hadn’t taken the sale seriously enough.

On Tuesday Mæland told Parliament that the government “now has enough information to conclude that the sale process of Bergen Engines to TMH must be stopped.” The reason, she said, “was to ensure that national security interests would not be threatened.” The sale will thus be formally blocked at the next Council of State, on Friday.

Mæland insisted on Tuesday that the government had indeed taken the pending sale “most seriously.” She claimed she couldn’t reveal all aspects of the government’s evaluation because of the classified information involved, but stated that Bergen Engines’ products and technology could have had great strategic value for Russia and strengthened its own military. She claimed Russia has had challenges gaining access to such products and technology because of the sanctions imposed in 2014 (after Russia annexed Crimea). Mæland also concluded that the sale could have given Russia access “to important military and strategic knowledge and technology.” Not even Bergen Engines’ property, located near the entrance to Bergen’s harbour and Norway’s main naval base Haakonsvern, should fall into Russian hands, according to Mæland.

Defense Minister Bakke-Jensen, also from the Conservative Party, has earlier claimed that both Rolls-Royce and Bergen Engines had confirmed that they would honour the government’s decision not to sell to TMH. Now the government has made a full about-face on the deal, and faced a new torrent of criticism from the opposition in Parliament.

‘No full control over national security’
“This is a gigantic turn-around operation by the government at the last minute,” claimed MP Emilie Enger Mehl of the Center Party. “There is no reason to rely on the government having full control over national security now.” She also accused the government of confusing and trying to downplay the issue, as did MP Jette Christensen of the Labour Party, who called for a parliamentary hearing on the case.

“The government long gave us the impression that the sale was just fine,” MP and leader of the Socialist Left party Audun Lysbakken told Norwegian Broadcasting (NRK). “This looks like a retreat, forced upon them by the media and the opposition.”

Even the Conservatives’ own MP Michael Tetzcschner was critical, saying from the podium in Parliament that neither the defense ministry nor the defense establishment itself seemed to take the pending sale seriously. It’s also emerged that Bergen Engines now needs to find new owners or financial assistance from the state. Mæland said the government believes Rolls-Royce will now continue to work towards “constructive solutions” for ongoing operations at Bergen Engines.

The Russian company, TMH, wrote in a press release, meanwhile, that it was “disappointed” over the decision to stop its purchase process. Its officials claimed they had wanted to strengthen Bergen Engines by opening up new markets, developing new products and securing high-tech jobs in Norway. NRK reported that TMH warned it would now evaluate the business-, financial- and judicial consequences of the government’s decision.

NewsInEnglish.no/Nina Berglund