A Dutch shipbuilding company under prosecution for allegedly violating Russian sanctions has secured a major contract to construct support vessels for Britain's Royal Navy, sparking outrage among politicians and industry leaders.
The agreement with Damen Shipyards, valued at approximately £200million, emerged weeks after Dutch authorities initiated legal action against the firm in April.
The contract forms part of a larger £850million arrangement between the Ministry of Defence and outsourcing company Serco for naval base support services.
Critics argue the decision contradicts Britain's national shipbuilding strategy and sends taxpayer funds abroad whilst domestic yards could have undertaken the work.
Serco holds a decade-long agreement to deliver support services across Britain's major naval facilities at Devonport, Portsmouth and Clyde, which encompasses the Faslane nuclear submarine base.
The company must supply 24 support craft as part of this arrangement, including tugboats, pilot vessels and barges to assist Royal Navy operations and modernise an outdated auxiliary fleet.
Serco selected Damen Shipyards to manufacture these vessels abroad, declining to disclose the precise financial terms.
The procurement decision means British shipyards will miss out on constructing vessels that experts believe could have been produced domestically.
Dutch firm Damen Shipyards have won the contract, valued at approximately £200million
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Dutch prosecutors launched criminal proceedings against Damen and multiple company officials following a seven-year inquiry into suspected bribery and money-laundering activities.
A separate prosecution concerns alleged violations of European Union sanctions against Russia, specifically involving the suspected transfer of equipment and technology to Russia in late 2022.
The shipbuilder, founded in 1927 and operating across 120 nations, has supplied vessels to Britain's Border Force and Royal Navy previously.
Damen rejected all accusations, stating it maintains a "robust compliance organisation" and adheres to "the highest standard for anti-corruption measures", with independent auditors verifying its procedures.
Regarding the sanctions allegations, Damen insisted the matter involved a single civilian crane delivery in 2022 that complied with regulations then in effect.
The company maintained it "has always acted in accordance with the applicable sanctions packages".
Serco selected Damen Shipyards to manufacture these vessels abroad, declining to disclose the precise financial terms
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British shipbuilding representatives expressed fury over the arrangement, with one industry figure stating that approximately three-quarters of the vessels could have been manufactured by UK firms.
"It just shows there's no interest [in supporting the UK industry]. How on earth can the British government be entering into a contract with Damen, given their own [country] is taking them to court?" a source told The Times.
Parliamentary concern emerged from Lord Beamish, who chairs 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 stated.
Lord Beamish added: "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."
Shadow defence secretary James Cartlidge highlighted how British shipbuilders' frustrations reflect wider defence industry concerns about insufficient government orders despite planned military spending increases to 2.5 per cent of GDP by 2027.
"From Navantia and US defence primes, and now to Damen, all the big contract awards we've been hearing about recently have gone to foreign companies. This flies in the face of Labour's promises in opposition to 'buy British'," Cartlidge said.
"From shipbuilding to drones, the combination of the threats we face and the weakening jobs market means we should be throwing everything at backing our sovereign defence base."
The MoD stated it would refuse contracts with firms convicted of Russian sanctions violations, noting the Damen agreement preceded public disclosure of Dutch legal proceedings. Officials pledged "immediate and decisive action" should Dutch authorities secure a conviction.
Serco defended the arrangement, citing two decades of collaboration with Damen as "a trusted partner" in Royal Navy support operations.