Wartsilla the Industrial ‘Big Bully’

In the year 2009, Wärtsilä Group’s net sales figure was EUR 5,260 million grew by 14 percent compared to the year 2008. Operating profit reached an all time high level of EUR 638 million (525) and the operating margin stood at 12.1 percent (11.4 percent). The cash flow for the review period was very strong at EUR 349 million (278).

Sounds good, doesn’t it? But have you any idea that behind all the great figures hides a big bully of the industrial world?

The company was held up in Sweden’s most scandalous bribery case. The public prosecutor has declared that “it is clear that Wartsila offered bribes to secure orders”. According to Wartsila the payments were surely made, however not with the intention of bribery but some consultancy services it has availed. Rederi AB Gotland a Swedish shipping line runs ferries from Gotland Island to mainland Sweden and vice versa. Of late Rederi AB Gotland custom-built two super fast ferries from a Chinese shipyard. A total of eight main engines were supplied by Wartsila to the shipping line and six auxiliary engines for the vessels, along with propellers for one of them. The orders equaled to EUR 25-30 million. The M/S Visby commenced this year round.

Wartsila had two brokerage agreements with Euro Marine Ltd. This company was partially owned by the key suspect of this bribery case – the technical Director at the shipping company Bo Pettersson. Wartsila paid about EUR 1.1 million in two installments, one in year 2000 and the other in 2001 to the private Swiss bank account of Pettersson.Finnish public prosecutor is contemplating the case as a grave matter under Swedish regulation.

Finnish engine manufacturer Wartsila Ltd has been condemned for having violated an affirmation. Inquiries were lifted on its ability to meet contractual obligations. Apparently, Wartsila has built its agency premises in Karachi - Pakistan in accordance to its unique requirements on a 5 year lease contract from the construction company.

Since it was a personalized infrastructure built specifically for Wartsila, for which Wartsila paid absolutely nil upfront fee. Hence it was agreed in writing that Wartsila will extend its payment of the lease allowance for 5 yrs even in case where it may leave the premises much earlier. As luck would have it, Wartsila departed the facility in the 4th year due to its pre-planned closure in Karachi. Even though the builder promptly provided all the pre-decided facilities like provision of water supply and electricity power, Wartsila falsely claimed that it was not provided so and therefore terminated the contract with the builder.

By the end of four years, having conveniently used the facility, this vague reason given by Wartsila to be leaving premises has increased severe inquiries worldwide customers considering Wartsila`s credibility, predominantly when customers are buying into large allowances and trusting on the company’s brand name, buying large generators.

About time, Wartsila starts acting as a responsible company, instead of enjoying undue liberties at the expense of others.