Dredging Group DEME Cleared of Bribery Charges in Russian Port Project

Antwerp-based dredging company DEME has been acquitted of bribery charges related to a dredging contract at the port of Sabetta in Russia, a major LNG terminal on the Yamal peninsula. The Ghent criminal court declared the case inadmissible, citing violations of the right to a fair trial after determining that key evidence – emails alleging a €12.6 million bribe – had been obtained illegally. This decision follows a lengthy investigation initiated by a criminal complaint from competitor Jan De Nul.

Background of the Case

In 2013, DEME and Jan De Nul both bid for a subcontract to dredge the port of Sabetta, following the initial project award by the Russian Ministry of Transport to USK Most. DEME, through its Russian joint venture Mordraga, ultimately won the contract. Jan De Nul subsequently raised concerns about a potential conflict of interest involving an intermediary, leading to a criminal complaint and an investigation launched by the East Flanders public prosecutor’s office in 2016.

The Investigation and Key Findings

The investigation, which involved search warrants issued by the FBI in 2018 to examine email addresses, centered on a former DEME employee, Sofia M.-N. She had served on the committee responsible for awarding the subcontract and allegedly received €4.188 million in bribes through companies in Cyprus and Panama linked to DEME, in addition to a consultancy fee of €175,000. The prosecution argued these payments constituted a bribe to secure the contract.

Court Ruling and Inadmissibility

Despite the evidence presented, the Ghent criminal court ruled the case inadmissible for all defendants. The court determined that the emails used as evidence of the alleged bribe were obtained illegally, thus violating the defendants’ right to a fair trial. Belga News Agency reported on the ruling on September 4, 2024.

DEME’s Exit from Russia

While the bribery case concluded with an acquittal, DEME has since exited the Russian market. Both the legal entity LLC “DRAGMORSTROY” and Mordraga LLC were liquidated in April and October 2024, respectively. Leave Russia reports that DEME, along with other major dredging companies like Van Oord, Boskalis and Jan de Nul, withdrew from Russian Arctic infrastructure projects. This withdrawal occurred after representing over 98% of dredging works in Russian ports.

Impact on the Dredging Industry

The withdrawal of these major European dredging companies has led to increased costs for dredging works in Russia. According to Andrey Boldorev, Head of the Department for Investments and Strategic Development at FSUE Rosmorport, dredging costs rose by approximately 30% in 2022. Dredging Today highlights the challenges Russia now faces in securing dredging services and equipment.

Key Takeaways

• DEME was acquitted of bribery charges related to a Russian dredging project due to illegally obtained evidence.
• The case originated from a complaint by competitor Jan De Nul alleging a conflict of interest.
• DEME has since liquidated its Russian entities and withdrawn from the Russian market.
• The departure of major European dredging companies has increased costs for dredging works in Russia.