The Patria case was a political controversy surrounding claims by prosecutors in Slovenia and Austria alleging bribery of Slovenian officials by the Finnish company Patria to help secure an armoured personnel carrier order. Criminal investigations in Slovenia, Finland, and Austria concluded in the mid-2010s. While several individuals were initially convicted, most of these verdicts were later overturned or dismissed. In Finland, all defendants were acquitted due to insufficient evidence. In Slovenia, convictions against key political figures, including Janez Janša, were annulled by the Constitutional Court, and the case was dropped after the statute of limitations expired in 2016. Austria, however, secured one conviction against a middleman involved in the bribery scheme. The CEO stepped down from his position as a result of the affair, but Finnish courts later acquitted all Patria executives due to insufficient evidence. In early September 2008, just three weeks before the Slovenian parliamentary elections on 21 September 2008, the Finnish broadcasting company YLE published an investigation implicating the corruption of the Slovenian Prime Minister Janez Janša.
Janša, who ignored and attacked also the other report about him published in 2013 by the official Commission for the Prevention of Corruption of the Republic of Slovenia, rejected all accusations and called for the journalists to advance some proof for their claims or to withdraw the accusations. On 11 September 2011, the Slovenian national broadcaster RTV Slovenia published a document disproving the claim about Janez Janša being implicated in the corruption and implicating Bartol Jerković, the director of the Croatian heavy industrial company Đuro Đaković Specijalna vozila.
Background
The Patria case has a European and NATO horizon, and it cannot be understood outside this horizon. First, the rush to modernize the infantry armored vehicles for most Western armies since 2002. Second, the consolidation of the European armored vehicles suppliers through General Dynamics acquisitions. Third, the commercial war between General Dynamics and Patria in this field. Last, the peculiar status of arms deals that implies state secret protection on arms trade and on their collateral agreements. However, the abuse of secrecy to conceal unlawful practices such as fake offset agreement, (equivalent to bribery) is not a Slovenian issue, but a real European problem. The Patria case is a chance to look at what happens in the most politically sensitive and covered areas of Western democracies: arms and state security.
Modernization of infantry vehicles
The historic decision of the U.S. Administration to move the conflict against terrorisms outside United States at the end of 2001 led to the invasion of Afghanistan and Iraq. It is a radical change: U.S. had not deployed large infantry on hostile grounds since 1983.1983 Beirut barracks bombing The decision had implications for U.S. allies. Ground troops need modern types of equipment to fight new infantry wars. Modern armored vehicles become a priority: more protected, faster, easily deployable, interconnected with the new digital wars. New vehicles must be capable to inter-operate at several communication levels.
Air superiority was no longer the decisive issue. The capability to control the ground became paramount. The human cost of the new occupation wars is mainly due to infantry lack of adequate protection. More than half of the deaths of U.S. and allies is caused by inadequate armoured protection.Mike Turner, former CEO of BAE: ¨Turner also lamented that Europe had failed to come together on armoured vehicles the way it did with the Eurofighter, so weakening the British armour industry. Current low-intensity wars have seen heavy purchasing of armoured and protected vehicles intended to safeguard Western troops from ambushes and mines, but little of that business has come to Britain."That would have been a great opportunity, but we didn't achieve it" said Turner. Arbuthnot suggested that perhaps only Turner could have achieved it - alluding to the fact that BAE might have chosen to buy up European armoured-vehicle firms rather than ones in America as it actually did. BAE's US acquisitions have made a lot of money selling armour to the Pentagon, but the British tank industry is effectively moribund and that of Europe fragmented.¨ Nov 19, 2008 . The issue of armoured vehicles is pressing and the first concern for ground troops: ¨Seven American service members were killed by two roadside bombs in southern Afghanistan on Monday, according to the NATO-led I.S.A.F. ... An American armored vehicle was completely destroyed¨ - New York Times, Aug 31, 2010.
Industry consolidation: Light Armored Vehicles
General Dynamics is the U.S leader in infantry vehicles which between 2002 and 2003 purchased MOWAG in Switzerland, Steyer-Daimler-Puch Speazialfahrung in Austria, and Santa Bárbara Sistemas in Spain. In 2004, they launched a hostile takeover of Alvis plc.¨In 2004, the board of Alvis approved a £309m takeover bid by General Dynamics. Within three months BAE Systems, which already had a 29% stake in the company, outbid General Dynamics by offering £355m. The action was seen as a defense of the home market from a foreign rival. After completing the acquisition Alvis was renamed BAE Systems Land and Armaments.
European war between General Dynamics and Patria
Major European nations such as France, the UK, Germany, Italy initiated own domestic programs replacing old generation APCs with modern Armored Vehicles. Smaller nations on the other hand initiated process of international tender and procurement for new advanced armored personnel carriers. Portugal, initiated the procurement process right away.¨.Preparation of the tender started in 2002, while the ¨evaluation of the contenders for this procurement program started in autumn 2003¨
Patria and General Dynamics engaged in a competition to win over new defence contracts, notably Belgium, Portugal, where Patria was overpowered by General Dynamics persuasive influence. Patria was astonished when it was excluded from the final round in Portugal and Belgium. Patria is a small national company that produces one of the most competitive Armored Vehicles on the market. Patria's turnover in 2005 was about 300 million Euros and in 2009 reached 500 million Euro. The commercial between Patria and General Dynamics would be akin to fight between David vs. Goliath, as the later is 40 times the size of Finnish Patria.
In 2003 Patria and General Dynamics are competitors for the new Portuguese armoured vehicles. General Dynamics won the contract with the Pandur, in competition with itself, that is General Dynamics Piranha; Patria, the third competitor, was disqualified on technical reasons at the end of 2004. Patria naively appealed against the decision, and Lisbon court dismissed Patria appeal in less than 40 days (by February 2005), so Portugal could pay 365 million Euro in exchange for 260 Pandurs and 516 million (150% of the contract value) of General Dynamics offset.Portuguese Pandur
Then in the Belgian tender in 2006 the finalists are: GD-Steyr Pandur, GD-MOWAG Piranha, Iveco Centauro, and Patria AMV. Patria lost, and General Dynamics won: about 700 million Euro for 242 General Dynamics Piranha and 700 million of GD offset, accurately divided between Flanders and Walloonia (delivery between 2007–2012).
Then Czech Republic. Defense Daily writes in Dec 2005: "As fate would have it, Steyr’s Pandur II (General Dynamics) and Patria’s AMV were the final two contenders for the Czech Republic’s $1 billion wheeled APC contract." Patria won, then the contract goes back to General Dynamics, Pandur.Czechs Choose, Cancel, Then Come Back to Pandur II APCs, 23-Feb-2010
Similar stories for Romania, Ireland, Denmark, Lithuania, Sweden, Spain etc. But General Dynamics has its most conspicuous sales outside of Europe: about $6 billion of Light Armored Vehicles to Saudi Arabia National Guard, via Foreign Military Sales.
Patria had some victories against the U.S. giant: Croatia, Slovenia, Poland, Estonia. And most notably, United Arab Emirates. In 2009 Sweden canceled a contract award to Patria of $338 million for 113 Patria AMV, but restarted the contract in 2010.http://www.defensenews.com/story.php?i=4352624
Purchase of Patria AMV
In December 2006 Slovenia purchased 135 Patria AMV infantry fighting vehicles.Slovenia signs 278 mln eur deal with Finnish defence firm Patria, Forbes,19/12/2006 It is the largest defense acquisition in Slovenian history of military procurement. Participants to the bid included Patria with Patria AMV and a Slovenian subsidiary of General Dynamics, Sistemska Tehnika with Valuk. The government chose the former.
Alleged scheme
On 1 September 2008, the YLE's investigative program MOT stated that Patria paid 21 million euros in bribes for deals for Patria AMV IFVs for the Slovenian military. The money was said to be channelled to officials in the country's Ministry of Defence, as well as the Prime Minister Janez Janša.YLE Claims Stir Political Storm In Slovenia , YLEMot: The Truth about Patria The program covered the ongoing criminal investigation of bribery and gross bribery by Patria officers in Egypt, Slovenia and Croatia. The accusations were said to be based on undisclosed documents which mention the initial letter J., interpreted to mean the premier Janez Janša. According to MOT, the documents were verified from multiple reliable sources. These documents were said to be published when the police investigation is completed and the case is presented to the district court. The police estimates that the investigation should be completed by the end of 2008. Furthermore, former president of the Commission for the Prevention of Corruption of the Republic of Slovenia, described the bribery as "very hard to deny" in the MOT program and stated people from the government were implicated. Later he said he was only making logical conclusions and has no proof for his claims.
According to MOT, 21 million euros, out of the 278 million total in the deal, was paid in bribes. The transfer was concealed by delivering fewer vehicles and less expensive armaments and extensions than officially announced. Money was channeled to a company held by Patria's Austrian agent, Wolfgang Riedl. Riedl would then forward the money to agents, each distributing the bribes to different groups. Businessman Walter Wolf would interact with Slovenian politicians and painter Jure Cekuta with officials at the Slovenian Ministry of Defence. Riedl transferred 2.8 million to businessman Walter Wolf, but Wolf's attempt to forward the money was stopped by his bank, which informed the Austrian money laundering unit.
Response from Janša and the Slovenian government
Janša rejected all accusations, and called for the journalists to advance some proof for their claims or to withdraw the accusations. In the case they would do neither, insisting on the accusations without showing the proof, he announced to bring legal action against the journalists. The following day, the Slovenian Government decided to sue the journalists and the broadcasting company for false accusation. The Ministry of Foreign Affairs left two diplomatic notes to the Finnish Government, calling the country enable the disclosure of the documents relative to the investigation in order to bring light in the issue. On September 6 Slovenian Government communication office asked YLE director Mikael Jungner to air a "second part" of the broadcast, including the viewpoints from other people involved and effectively negating the claims made in the program. This request was declined. In a parliamentary hearing on 9 September 2008, Janša urged the members of parliament to forget the issue for now and bring it back to discussion once some proof has been advanced.