Fury as Royal Navy contract handed to foreign firm facing legal action over Russia links

A Dutch shipbuilding company awarded a major Royal Navy contract is now suspected of breaching Russian sanctions. Public service outsourcer Serco announced that Damen, a privately owned Dutch company that was established in 1927, would be paid to build two dozen vessels to support the Royal Navy earlier this month. It comes after prosecutors in the Netherlands commenced legal proceedings against the firm in April, on the grounds that it had breached EU-wide sanctions on Vladimir Putin's regime in Russia following the illegal invasion of Ukraine in 2022.

One source also warned that the move showed a reluctance from the government to keep defence procurement in-house. "It just shows there's no interest [in supporting the UK industry]," they said. "How on earth can the British government be entering into a contract with Damen, given their own [country] is taking them to court?"

Serco has not confirmed the costs of the Royal Navy project, but around £200 million of taxpayer funds has already gone to Damen, The Times reports. The Dutch firm has supplied ships to the Royal Navy before, as well as to the UK Border Force.

The Dutch Government also announced it was taking legal action against Damen earlier this year following a seven-year investigation into allegations of bribery and money-laundering, in a separate case to the alleged breach of Russian sanctions.

The sanction breach involved the company allegedly exporting goods and technologies to Russia in the latter half of 2022, after the Ukraine war began in February. Damen has denied both counts, insisting that it meets "the highest standard for anti-corruption measures".

It said the sanctions case was linked to a one-off supply of civilian cranes which "took place within the sanctions legislation in force at the time".

The Ministry of Defence (MoD) said the contract had been signed before the Netherlands launched legal action against the supplier, adding that "decisive action" would be taken if the allegations were upheld.

But the government hasn't managed to offset criticism from parliamentarians including Lord Beamish, chairman of the intelligence and security committee. "The MoD needs to explain why they are exporting UK shipbuilding jobs and support and not ensuring that Serco provides the services via UK businesses," he said.

"There are enough companies in the UK that can do this. It also raises issues around the UK national shipbuilding strategy which was about procuring UK vessels in UK yards. It's not a good look."

A spokesperson for Serco said it had been working with Damen for over 20 years and described the firm as "a trusted partner".

An MoD spokesperson added: "The UK MoD will not contract with any company convicted of Russian sanctions violations. The contract was signed before the Dutch legal action was made public and as no conviction has taken place in this case, we are discussing this issue closely with Serco. But if a conviction is upheld by the Dutch authorities, we will take immediate and decisive action."