Slovenian Army’s New APCs: Patria’s AMVs (updated)
Related Stories: Contracts - Intent, EADS, Europe - Other, General Dynamics, Other Corporation, Remote Weapons Systems, Tanks & Mechanized
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On June 12/06, the Slovenian Ministry of Defence announced that Patria’s Armored Modular Vehicle (AMV) had been selected as the preferred vehicle for the its armored vehicle program. Patria notes that the order will include 135 wheeled armored personnel carriers in 4 different versions, including one variant with Patria’s new unmanned NEMO 120mm mortar turret. The deal had been negotiated at EUR 278 million (about $367 million), with deliveries to take place from 2007-2013.
That order is still going through, despite an ongoing bribery investigation that led to the resignation of Patria’s President and CEO. That investigation has become significant enough to be added to this article, especially now that it has resulted in a pair of arrests that include Patria’s former CEO. Meanwhile, vehicle deliveries are beginning…
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The AMV’s most frequent competition comes from General Dynamics’ twin subsidiaries: Steyr with its Pandur II, and MOWAG with its LAV III Piranha. The December 2006 Patria release touts their AMV’s status as ”...first of its kind in the world with the unique level of mine protection certified by South African authorities.” Even so, each competitor has seen its share of recent wins.
Patria had won some of these competitions, including a large 690-vehicle contract in Poland, plus 84 AMV orders from Finland so far that include 24 breech-loading 120mm AMOS twin-mortar variants. It has also lost competitions in Belgium (242 LAV III Piranhas for $850 million) The Czech Republic (199 Pandur IIs for $1 billion), and Portugal (260 Pandur IIs for $482 million).
The Slovenian award was a significant win for Patria in this context, and it was also significant as the first sale of their new single-barreled New Efficient MOrtar 120mm system, introduced in June 2006. Patria is better known for its twin-barreled and manned AMOS 120mm mortar turret, developed in partnership with BAE Hagglunds. Despite initial orders of 2 AMOS systems for the Finnish Army and 2 evaluation systems for Sweden, Defense Update describes AMOS as having an “inhibitive price tag.” This may create a market opportunity for the single-barreled EMO, despite its lower rate of fire.
The AMV vehicles will be manufactured in Finland and in Slovenia with local co-operation partners. Industrial offsets will include 30% direct offsets within the contract, and 70% other Slovenian items exported globally. Production will gradually be transferred to Slovenia in 2007 and 2008, with Rotis and Gorenje in prominent roles.
Patria Oyj is owned 25%/75% by the Finnish State and EADS, and its AMV has been in serial production since 2004.
UPDATES:
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Nov 14/08: The Helsinki Times reports that Patria delivered the first of more than 130 armoured personnel carriers to Slovenia.
Nov 13/08: Patria’s former CEO Jorma Wiitakorpi is arrested by Finland’s National Bureau of Investigation (NBI) on suspicion of industrial espionage, aggravated bribery and bribery in business operation. The Helsinki district court also remanded Veijo Vartiainen, the operative head of Patria’s Land & Armament unit, on suspicion of bribery in business operations and aggravated bribery. Wiitakorpi in particular remains both firm and public about his innocence, and both men have been released pending further proceedings. Time will tell. Newsroom Finland | Helsingin Sanomat | YLE News | Patria statement.
Oct 13/08: The Slovenian Defence Ministry denies reports that weapons stations mounted on some of the Patria APCs would not be new. Slovenian Press Agency | Slovenian MoD [in Slovene].
Oct 9/08: From the Finnish Ministry of Defence:
“The Army Materiel Command is selling 20 units of XA-360-APC [DID: XA-360 is the AMV’s designation] Kongsberg Protector weapon systems. It is also renting 20 APCs to Patria for an approximate period of 7 months. The APC weapon systems will be used as part of Patria’s operation regarding Slovenia. Patria will deliver new similar weapon systems for the Finnish Defence Forces. The reason behind this provisional arrangement requested by Patria, has to do with the company’s aim to uphold the agreed time frame regarding deliveries.”
Sept 30/08: The Slovenian Armed Forces present the first APC delivered by Patria. The vehicle will undergo a 4-week validation test before the military will officially take over the vehicle.
The first vehicle is nearly 5 months late, and the Defence Ministry has said that it would penalize Patria for the late delivery in accordance with the contract.Slovenia Government Communication Office.
Sept 23/08: Helsingin Sanomat’s international edition publishes “NEWS ANALYSIS: Patria scandal had little effect on Slovenia election.” It makes a persuasive case, adding that:
”[Social Democrat leader and future Prime Minister Borut] Prime ministerial candidate Pahor has said that the Patria case will be removed form the political agenda, and left to the lawyers.”
Sept 19/08: The Slovenian Ministry of Defence removes Elbit’s ORCWS systems from the program, due to “shortcomings discovered in testing… above all at very low temperatures.” The ministry judged that Patria’s Slovenian intermediary Rotis d.o.o. had failed to secure the contractually agreed quality and reliability level of the weapon stations.
Rotis has suggested Kongsberg’s M151 Protector system as a replacement, and accepted all the risks and costs of the change. This removes the up-gunned 30mm gun option, as the M151 is limited to a range up to 12.7mm machine guns, and 40mm grenade machine guns. The Slovenian ministry has signed an annex to the contract to change that term, though prices and the delivery deadlines have not changed. Slovenian MoD release.
Sept 10/08: Agence France Presse report:
“Slovenia’s parliament ended a marathon special debate on bribery allegations against Prime Minister Janez Jansa Tuesday night by passing a motion of support for the government. But after more than 11 hours of debate, lawmakers urged Slovenian police and the prosecution service to investigate with Finnish authorities and said Slovenia’s defence ministry should cancel a 278-million-euro (402 million dollar) deal with Finnish defence contractor Patria if corruption allegations were proved.
....The motion was backed by 41 MPs out of the 54 that were present in the 90-seat parliament at the end of the debate. Eleven lawmakers voted against the motion while two small parties—centre-left Zares and nationalist Lipa—boycotted the vote…. Jansa urged lawmakers to “close the issue for the moment and reopen it as soon as any proof to these absurd accusations is published.”
Sept 5/08: Agence France Presse reports on the Slovenian bribery charges:
“At the moment, as I have understood things, there is no fear that the deal will be cancelled,” Olli Happonen, Patria’s General Councel, told AFP. He acknowledged, however, that the deal could fall through if the bribery charges are proven [in court], due to an anti-corruption clause in the contract.”
Aug 20/08: Another update re: the Slovenian investigation, from Patria:
“The Patria employee of the former Vehicles Business Unit previously held in detention in connection with the ongoing investigation of the Slovenian armoured vehicle project has been released upon proposal of the police. Yesterday the Helsinki District Court decided to continue the detention of the other Vehicles’ employee.
The National Bureau of Investigation stated yesterday that Jorma Wiitakorpi, former President and CEO of the Patria Group, was interviewed as a suspect in July, and that his position in the investigation has not changed since.”
Aug 18/08: Patria Oyj’s President and CEO Jorma Wiitakorpi resigns. From the official corporate statement:
“The investigations by the National Bureau of Investigation (NBI) are likely to take months. I was Patria’s President and CEO when the customer made the decision regarding the Slovenian project in 2006. Neither Patria’s internal investigation nor the investigations by the NBI have brought up any written or oral evidence that would connect me to the suspected criminal activities. The CEO is, however, a significant aspect of the image of a company and the CEO is responsible for the firm’s entire operations.
At the moment various Patria units are negotiating new, significant projects in many different countries. At the same time our competitors are taking advantage of the situation to arouse suspicions among our customers. In these negotiations it is of vital importance that our customers have full confidence in Patria’s way of doing business also in the future. I have agreed with Patria’s Board of Directors that I renounce my position with immediate effect…. I wish Mr. Heikki Allonen all the best in his new position as Patria’s President and CEO.”
Wiitakorpi will remain with Patria as Senior Advisor to the new President and CEO. See also Questions abut the CEO changeover | Heikki Allonen appointed as the new CEO of Patria.
July 10/08: Patria issues a follow-on release concerning the Slovenian bribery investigations. So far, there have been no indictments:
“The Helsinki District Court has today decided to arrest a second employee of the former Vehicles Business Unit in connection with the ongoing investigation in the Slovenian armoured vehicle project. Patria’s executive management has been questioned in connection with the said investigation.
Patria concern works in close cooperation with the National Bureau of Investigation to clear up for its part all open issues in the investigations on one of its business units.”
May 20/08: A release from Patria discusses allegation that the company bribed senior political figures, in order to secure the Slovenian APC deal:
“The National Bureau of Investigation started on 13 May, 2008 a preliminary investigation concerning Patria’s vehicle deal in Slovenia. The suspected crime is bribery. In the preliminary phase some persons involved in Patria’s deal in Slovenia have been questioned. Three have been arrested for questioning. Two of them have been released and one imprisoned. Also, some other Patria employees have been questioned.
Patria cooperates with the NBI in order to clear the open questions. Patria’s understanding is that its personnel have followed all relevant legislation both in Slovenia and Finland.”
July 25/07: Elbit Systems announces a contract to supply overhead remote controlled weapon stations and unmanned turrets, as well as other electronic and electro-optical systems and components, for the Slovenian Armored Vehicle Program. Their portion is valued at approximately $ 40 million, with deliveries scheduled to take place through 2011.
Elbit Systems is working with Patria AMV, and they will deliver laser detection systems along with their 30mm ORCWS-30 and ORCWS (for 7.62mm or 12.7mm machine guns, or 40mm grenade machine guns) remote-control turrets on board Patria AMV 8X8 vehicles. ORCWS stands for Overhead Remote Controlled Weapon System, and is controlled from within the vehicle using a joystick and screen that shows imagery from the ORCWS’ multi-spectral sensor systems. See “Elbit Wins ORCWS Turret Orders” for more.
June 22/06: Patria announces the formation of a new joint venture company for the Slovenian AMV programme with Slovenian partners The Gorenje Group and Rotis.
Rotis d.o.o. was established in 1990, and sells pipes, steel, and machines. The Gorenje Group is a household appliances maker under the Gorenje, Korting, Mora and Sidex brands; they are Slovenia’s largest net exporter, and recently surpassed EUR 1 billion in annual sales.
