Damen - under criminal investigation in the Netherlands, the Mangalia shipyard - stuck in uncertainty

Damen's problems in Romania seem to be just the tip of the iceberg, in the context in which, in April 2025, the Prosecutor's Office in the Netherlands officially announced the opening of a criminal case against the Dutch shipbuilder, according to an investigation published yesterday on the Follow The Money website, signed by journalists Lukas Kotkamp and Daniel van Kessel.

According to them, in the criminal case in the Netherlands, Damen Shipyards is accused of bribery, forgery, money laundering and violation of the international sanctions regime. Prosecutors claim that, in an attempt to win profitable naval contracts in several countries, Damen allegedly paid considerable sums to intermediaries. The criminal trial is expected to begin in Dutch courts at the end of 2025, and a final conviction could have devastating consequences for Damen: according to European regulations, a company convicted of corruption or fraud is no longer allowed to participate in public tenders organized in the European Union for four years, nor to benefit from European funds. This would also have an impact on the Galaţi shipyard owned by Damen, a shipyard that the Ministry of National Defense and the Ministry of Economy would have liked to transform into one dedicated to the construction of military ships.

The cited source also shows that, against the background of this international scandal, the deep crisis that the Mangalia shipyard - the largest in Romania - under Damen's control has reached is also taking shape. In 2017, the Dutch company took over 49% of the shares of the Mangalia shipyard, and following a special agreement with the Romanian state, it received full leadership of the board of directors, despite the fact that the government owned the majority of the shares, 51%.

At the time of the transaction, Damen had paid 22 million euros for this minority stake, given that the shipyard was mired in debts of over 830 million euros. The hopes of the authorities and employees were high: with Damen's experience and infrastructure, Mangalia was to become a regional center of excellence in shipbuilding. At that time, the shipyard produced 62% of Romania's naval tonnage, had an area of almost one million square meters and was capable of building large warships.

But the enthusiasm was short-lived. After just one year, the shipyard's activity began to decline. A key moment was the loss of a huge 1.2 billion euro contract for the construction of four corvettes for the Romanian Navy, a contract won by the French company Naval. Damen contested the tender and accused information leaks, but the appeal was rejected.

The FTM investigation states that, after the failure, the Dutch company seems to have lost its real interest in Mangalia. The cranes remained motionless, the halls began to deteriorate, and the unfinished ships still lie on land today. Instead of investments, the Navalistul union states that Damen did not make any serious effort to revitalize, and the existing infrastructure, left as a legacy by the South Koreans from Daewoo, began to deteriorate. The so-called modernizations were reduced to replacing the logos on the equipment, not to real works, said Laurenţiu Gobeajă, the union leader, for the cited source.

Meanwhile, the accusations from the Romanian state have intensified. The state-owned company Şantierul Naval 2 Mai SA, which manages the public part of the shares, accuses Damen of embezzling at least 55 million euros from the shipyard's funds. This was allegedly done through a network of invoicing between Damen subsidiaries in Poland, the Netherlands and Galaţi, for services such as document management, IT, human resources or consultancy. According to official documents filed in court, Damen could not justify the delivery of these services or the real value of the amounts invoiced. According to ANAF, these operations would violate transfer pricing rules and the contract signed between the parties. In addition, the bankruptcy report shows that Damen did not even file its balance sheet for 2022, precisely at the time when the conflict with the Romanian authorities was in full swing.

In May 2024, Damen requested the opening of bankruptcy proceedings for the Mangalia shipyard at the Constanţa Court. At the time, the company claimed to have 173 million euros to recover - over 90% of the yard's total declared debts - from its own subsidiaries. Representatives of Şantierul Naval 2 Mai SA consider these claims to be fictitious. In a controversial move, Damen appointed its own judicial administrator, who refused to verify the suspicious contracts and blocked the formation of an independent audit committee, despite the fact that ANAF argued in court that such a committee was mandatory, especially in the context of almost 200 creditors.

Everything was amplified by the 2023 legislative amendment on corporate governance for state-owned companies, a law that prohibits the Government from transferring control of state-owned companies to private entities, as part of commitments to join the OECD and combat corruption.

Damen considered that this change violated the initial agreement and, in January 2024, the Romanian state took action in an international court in Vienna. The Dutch are demanding not only the dissolution of the partnership, but also compensation of 470 million euros for various loans and losses suffered. All this time, the shipyard's activity is practically blocked.

At this moment in Mangalia, over 1,000 workers are staying home, and 400 of them have permanently lost their jobs. Those who remain receive only 30% of their salary. The cited source also shows that the Navalistul union sent a letter to the Dutch Embassy in February 2025, requesting the intervention of the Dutch government, but Ambassador Willemijn van Haaften conveyed that, although she has compassion for the workers, the government cannot intervene in a contractual conflict between commercial entities. In the meantime, potential investors visit the shipyard, but flee as soon as they see the legal documentation and ongoing litigation.

For the employees, the future is uncertain. The once prosperous shipyard, with infrastructure capable of building ten large ships annually, is now an industrial ghost. Without a quick solution, Mangalia risks remaining just a symbol of broken promises and the failure of a naively managed privatization, in which an international player took advantage of the weaknesses of the Romanian system to extract profit, leaving nothing behind.