A Prefecture fraud reveals corruption in the Navy

In the recent illegal tender for 4 patrol vessels (OPV) for the PNA, the French state shipyard quoted 50% of what was charged to the Navy in the obscure direct purchase of 2018. Raúl E. Podetti (*), Buenos Aires, July 1 2024

3 de July de 2024 10:37

"The Argentine military purchasing system is one of the most corrupt in the world," says Engineer Raúl Podetti.

A few days ago, last Friday 6/29/24, the illegal tender for the fraudulent purchase of 4 unnecessary patrol vessels (OPV) for the Argentine Naval Prefecture (PNA) was unusually advanced. This process that began at the end of 2023 was one of the last measures of the previous government to favor the dark interest in importing ships that could be built in the country, which was - believe it or not - supported by the naval unions, against the interest of the workers of the national shipyards. But following this saga of
national predation, the new authorities of PNA and the Ministry of Security (MinSeg) continued this process despite being prosecuted for its obvious illegality of origin and being a clear waste of more than 300 million dollars applied to an unnecessary work public held abroad. However, the offers presented allow us to draw some conclusions that are summarized below.

Tender 038/2023 on Friday 6/29/24 was illegal.
By law 27418 of 2017, ships for PNA must be built in Argentina unless there is a manifest inability of the national industry, which is obviously not the case.

The $300 million IPO purchase is unnecessary.
A few years ago, Argentina already bought four other ships identical to those in this tender and does not use them. The fleet of new, unused OPVs is always moored at the Mar del Plata Base, demonstrating that the real interest of certain civil and military officials involved is in “purchasing” these patrol boats, and not so much in “patrolling them.” ” to reduce uncontrolled illegal fishing 200 miles from the Mar del Plata dock, which is kept well guarded and to which four other OPVs would now be added.

The PNA always imports ships very suspiciously.
It is a fact that all 40 PNA ships were imported, in a highly suspicious manner, even though there was always the capacity to make them in the country in a more convenient manner.

The current MinSeg authorities are the same as the 2017 patrol boat fraud.
At that time, the MinSeg and the PNA disregarded national offers and imported 4 patrol boats without bidding for 50 million dollars from an Israeli shipyard, paying double the market price. The shipyard directors who signed with Argentina were imprisoned by the Israeli justice system for the corruption detected in a sale identical to that of the PNA but made to Nigeria, the largest kleptocracy in the world – along with Argentina, in this case. The Anti-Corruption Office has already presented compelling evidence against the Argentine officials and the trial for this case is progressing in the Federal Justice.

The French shipyard, preferred by Argentine officials, is the most corrupt in the world.
This arises from the Compendium of Arms Trade study for the World Peace Foundation carried out at the prestigious Fletcher School at Tufts University, US. There are several cases of international sales (Taiwan, Pakistan, Arabia, Malaysia, Brazil) of ships.
soldiers from the French state shipyard totaling more than 1 billion dollars in bribes that were intended to be covered up with explosions, kidnappings and murders. The Argentine connection is presented in detail in the book L'Affaire Argentine, Stories of Military Naval Corruption which, with these new developments, would deserve to have a second part.

This highlights the scandalous purchase of OPV patrol boats for the Navy in 2018
Unusually, six years later the French state shipyard offers Argentina to build the same ships but at half the price. In this case, the French shipyard had to compete in an international tender and in 2018 it managed to get the Navy to make a much more juicy direct purchase. But to make matters worse, as indicated in the graphic comparisons that follow, the patrol cars offered are now larger (9%), the financing is broader (100% vs. 80%), the eventual total national component could reach 20% (before 0%) and the four ships are now new (before one was used!).

This highlights the scandalous purchase of OPV patrol boats for the Navy in 2018 and adds one more case to the compendium of corruption of this French shipyard. Without a doubt, this is a strong additional element of evidence that the Anti-Corruption Office has to add to its investigation of the 2018 Navy (ARA) procurement case. But the immediate effect should be the immediate disqualification of this French bidder as a supplier of the Argentine State for its criminal role in the increasingly obvious corruption case of 2018 in which it was a fundamental necessary participant.

Direct purchases of boats from PNA and ARA have a 100% premium.
This conclusion is reached after an analysis of market prices based on information on 840 patrol vessels published by the Worldwide Naval Projection Report prepared by AMI International and collected in recent years in 151 countries. In the following graph, the dotted lines indicate the range of average market prices for patrol cars based on their displacement (size). The values in the original database were adjusted with the global inflation rate until 2024 to make them comparable. From there it emerges that:
a) the 4 river patrol boats (58 t) of the PNA purchased in Israel without a tender were paid for at double the market value;

b) the 4 OPVs (1,650 t) of the ARA purchased in France without bidding were also paid at double the market value and triple the value at which Uruguay bought them in 2023.

The unit value of the French offer for June 2024 (77 MMUSD) is also indicated and is compared with the updated value (154 MMUSD/U) that would correspond to what that shipyard charged Argentina in 2018, clearly showing that in that direct purchase there was a 100% markup.

The Argentine military procurement system is one of the most corrupt in the world.
These PNA and ARA cases confirm the result of the Global Defense Integrity Index GDI 2022 carried out around the world by the NGO Transparency International, which places us among the countries with the greatest corruption in military purchases at the level of Bangladesh, Angola, Cameroon, Sudan, Nigeria, Iran, Iraq, Jordan, China, Russia and Venezuela.

The only way out of this network of depredation in Argentina at the hands of civil and military officials is the active involvement of citizens through reporting. This is a special call to the enormous honest majority of the Navy, the Prefecture and the Ministries of Security and Defense so that, upon seeing signs of this obvious corruption, they are encouraged to act in defense of the institutions to which they belong. , which is doing it in defense of the Homeland itself that is being looted.

(*) Raúl Podetti is a naval engineer (ITBA), MSE (U. of Michigan) and MBA (IAE). In the naval field he was a businessman, civil servant and business leader. He is a consultant, postgraduate professor, member of the UBA Naval Vector, director of the Blue Collection (www.raulpodetti.com), and author of L'Affaire Argentine, Stories of Military Naval Corruption. Contact: podettiraul@gmail.com


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