DTN News: Patria’s AMVs 8x8 Still Causing A Stir In Slovenia
*Sources: DTN News / Defense Media
(NSI News Source Info) LJUBLJANA, Slovenia - June 20, 2009: After nearly two years of going back and forth with the officials, the story of Patria’s AMVs 8x8 seems far from over as allegations of corruption reach Slovenia in what may well be the final chapter of this Slovene-Finnish military saga.
Defense Minister Erjavec at Patria’s presentation in january
At the end of May 2006 the Slovene Army concluded its testing of two AMV (armoured modular vehicle) 8x8 models. The decision had to be made between the Finnish manufacturer Patria and the domestic Sistemska tehnika. While the latter were absolutely convinced that the job would go to them, it quickly became obvious that not everyone shared their opinion.
At first the Ministry of Defence did not wish to reveal the official results of the tests, which led many to believe that it would favour the domestic producer, yet what followed next surprised everyone. The Ministry refused the offer of the domestic provider and opted for the Finnish Patria, represented by a Slovene company Rotis. The decision was a true shock, nay, a major earthquake that has made Slovene ground shake ever since and has recently witnessed some major aftershocks coming all the way from Finland.
On 12th June 2006 the Slovenian Ministry of Defence announced that Patria’s armoured modular vehicle (AMV) had been selected as the preferred vehicle for its armoured vehicle program. The order, negotiated at around EUR 278 million, included 135 8x8 armoured personnel carriers in 4 different versions, including one variant with Patria’s new unmanned NEMO 120mm mortar turret. Ten days later Patria announced the formation of a joint venture company for the Slovenian AMV programme with partners in Slovenia – the Gorenje Group, a household appliance manufacturer and Slovenia’s largest net exporter, and Rotis, a pipe, steel, and machine selling company.
The AMVs 8x8 were to replace the old tanks of the Slovene army. The Ravne-based manufacturer Sistemska tehnika, which had already been supplying the army with AMV 6x6 Valuk models, thought their product – an AMV 8x8 Krpan had the unquestionable advantage over the Finnish Patria.
It was supposedly superior in terms of having the technical, economic and logistics edge over the former (not to mention that Valuk and Krpan have 40% of their parts mutually exchangeable, which could mean a significant advantage in the vehicle’s two-decade-long lifespan). Yet the government’s decision went the other way and left Sistemska tehnika livid with rage; the ground has not yet stopped shaking even after nearly two years of going back and forth with the officials. The minister responds
The Minister of Defence Karl Erjavec justified the decision by saying that the offer of Rotis (representative of the Finnish Patria) was between 10-18% lower than the offer of Sistemska tehnika. Also the Ministry’s criteria, which included the price range, technical and commercial efficiency, long-term benefits for the Slovene economy in the form of offsets and the participation of the Slovene industry in the purchase of arms, were said to be better met by the Finnish manufacturer than the domestic one. Patria was thus chosen because it offered a lower price and benefits for the Slovene economy, since the whole deal was tied to industrial offsets.
Sistemska tehnika, having lost the job for the purchase of AMVs for the Slovene Army, publicly revealed the details of the allegedly disputable offer of their Finnish counterparts, saying that their tender had procedural mistakes.
In the same breath they also talked about the financial and technical characteristics of their product, which supposedly were much better than those of their competition, and expressed their doubts that collaboration with the Finnish Patria would have benefits for the Slovene economy. Sistemska tehnika also questioned whether or not the commission adequately assessed their revised 1,400-page-long offer sent on 29th May 2006, since on that date the commission made its final decision, feeling that their supplemented offer was glossed over, yet their biggest complaint was made against Erjavec’s statement that Patria offered a lower price by some 10-18%.
Rekindled doubts
In March 2007, 38 delegates from the opposition filed a demand for the start of a parliamentary probe into the purchase of Patria’s AMVs 8x8. The investigation was aimed at discovering the links between the involvement and political responsibility of certain individuals, since there was a hint of corruption and clientelism in the whole deal.
It was thus not clear whether or not the contract was signed in terms with the actual tender conditions since it was revealed later on that the ministry did not purchase 135 AMVs with all the pertaining equipment but only 110, and it was not clear how the remaining 25 would be equipped and how much that would cost. The commission discovered that there existed indices that the actual offer of the Finnish Patria was actually different from the contract itself, since the offsets were not included in the contract.
The Minister of Defence Karl Erjavec was not against the parliamentary commission, saying that all the arms purchases of the Slovene Army since the time directly following the independence should also be revised.
The parliamentary commission could probe into the suspicious arms purchases dating in the years just after the independence, since there are some who are said to be involved in these most recent purchases and the purchases made in the past. The opposition thinks that we are talking about the “arms connections” that were active in the past and have come back to haunt the arms commerce once again.
Recent aftershocks
The matters do not look as though they would settle down anytime soon. Just last month the Finnish police revealed that it had arrested two people under suspicion that Patria bribed certain officials to gain contracts with Slovenia and Egypt.
Patria categorically denied all charges made against them. Since corruption is a serious offence in both countries, Slovenia will annul the contract if these allegations are proved in court, thereby putting an end to this exhaustive military saga that has been going along for nearly two years.
These recent irregularities in the purchase of arms have been very resounding and have re-opened many weapon-laden closets; needless to say, old skeletons re-surfaced with a bang. This recent affair is by far not the only of its kind in Slovenia; the one that is especially unpleasantly ringing in the back of everyone’s minds – “the mother of all affairs” – is the arms commerce that followed the independence and which is still a major stain of that period.
In the early 1990s Slovenia sold a lot of arms to Croatia and Bosnia and Herzegovina, which were wrapped in an on-going military conflict with Serbia, yet it was never fully revealed what really went on and what the exact numbers were, both in terms of quantity and the revenue received. There were many initiatives to probe into all this, yet all attempts were shut down and the general public never found out what exactly went on. Hopefully the deal with Patria does not follow suit.
HELSINKI, Finland - September 4, 2009: Finnish defense company Patria said Sept. 2 it was in talks with the Slovenian government to renegotiate a contract for armored vehicles after the deal became hampered by delays and alleged bribery.
Ljubljana signed an agreement with Patria in 2006 for 135 armored vehicles worth $395 million (278 million euros) - the biggest military contract signed by Slovenia.
But now Slovenia wants to slash that order by almost half.
The Slovenian government "would like to reduce the number to around 80," Seppo Seppaelae, head of Patria's land and armament unit, told AFP.
Seppaelae said he expected an agreement to be struck, adding that 13 vehicles had been delivered to Slovenia.
In April, Ljubljana was reported to be considering canceling the contract with Patria due to delivery delays.
The Slovenian government threatened to cancel the contract in 2008 after it emerged Finnish police were investigating bribery allegations related to the deal.
Kaj-Erik Bjoerkqvist, a senior detective in charge of the investigation, told AFP on Sept. 2 that he hoped police inquiries would be completed by the end of the year.
The Finnish state owns 73 percent of Patria, while EADS has a 27 percent stake.
HELSINKI, Finland - September 4, 2009: Finnish defense company Patria said Sept. 2 it was in talks with the Slovenian government to renegotiate a contract for armored vehicles after the deal became hampered by delays and alleged bribery.
Ljubljana signed an agreement with Patria in 2006 for 135 armored vehicles worth $395 million (278 million euros) - the biggest military contract signed by Slovenia.
But now Slovenia wants to slash that order by almost half.
The Slovenian government "would like to reduce the number to around 80," Seppo Seppaelae, head of Patria's land and armament unit, told AFP.
Seppaelae said he expected an agreement to be struck, adding that 13 vehicles had been delivered to Slovenia.
In April, Ljubljana was reported to be considering canceling the contract with Patria due to delivery delays.
The Slovenian government threatened to cancel the contract in 2008 after it emerged Finnish police were investigating bribery allegations related to the deal.
Kaj-Erik Bjoerkqvist, a senior detective in charge of the investigation, told AFP on Sept. 2 that he hoped police inquiries would be completed by the end of the year.
The Finnish state owns 73 percent of Patria, while EADS has a 27 percent stake.
Dragan Bavcar, who chaired the commission deciding on the contract for 8-wheeled armoured personnel carriers, told the press that Defence Minister Karl Erjavec appointed a group of experts for the validation. The head of the 72-member validation group, Miroslav Galun, said the goal was to confirm that the vehicles met the contract demands. 
