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Oceanor sitting at both sides of the negotiating table: Muddling of economic interests

Since 1986 public institutions in Norway have supported the development and sale of Oceanor's controversial Seawatch technology with at least 170 million Norwegian kroner. NorWatch can reveal that individuals who have had important positions in Oceanor have later transferred to leading positions within public agencies which have supported Seawatch with large amounts of money. Many professionals are sceptical about this dubious muddling of economic interests, while NorWatch faces secrecy from the public funding agencies.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Since 1986 public institutions in Norway have supported the development and sale of Oceanor's controversial Seawatch technology with at least 170 million Norwegian kroner. NorWatch can reveal that individuals who have had important positions in Oceanor have later transferred to leading positions within public agencies which have supported Seawatch with large amounts of money. Many professionals are sceptical about this dubious muddling of economic interests, while NorWatch faces secrecy from the public funding agencies.

By Harald Eraker

Oceanor's environmental technology Seawatch has not only received financial support from the Norwegian development agency NORAD for projects in Asian countries. Since the mid 1980s the environmental technology company, which was founded in 1984 by researchers with a background from Sintef in Trondheim, has also received financial support for the development of advanced sea buoys from various other Norwegian public agencies.

An inquiry made by NorWatch shows that Oceanor's Seawatch technology has received at least 170 million kroner from Norwegian instututions since 1986. This includes a contribution of more than 102 million kroner from NORAD and the Ministry of Foreign Affairs (UD) to Seawatch projects in Thailand, Indonesia, India, and Vietnam.

For the development of Seawatch technology and testing in Norwegian waters, Oceanor has received a total of more than 67 million kroner from the Research Council of Norway (NFR), the forerunner of the NFR which was the research division on Science and Technology (NTNF), the Norwegian Pollution Control Authority (SFT), the State Industrial and Rural Development Fund (SND), and the UD.

At the same time, several individuals who earlier worked for and were members of the board of Oceanor, have had leading positions within the funding agencies. One of them is Svein Erik Høst, today deputy director of environment and development in the Research Council of Norway (NFR).
In 1987 Høst was in the board of governors of Oceanor, and at the same time he was managing director of the investment company Euroventures Nordica A/S. That year Euroventures Nordica owned 22.6% of the Oceanor shares, and since then they have been a shareholder of the company.

In 1989 Svein Erik Høst was given a position in the NTNF, where he was in charge of the environmental technology programme until 1992. The same programme allocated 10 million kroner to the development of Oceanor's Seawatch technology when administered by Høst.

- This does not surprise me any longer. There is a lot of moral corruption in such contexts, and the same persons are often seated at both sides of the negotiating table, says a source in the Norwegian Pollution Control Authority to NorWatch.

Svein Erik Høst, however, has no problems with the muddling of roles:

- My board membership in Oceanor came to an end before I started as head of programme in NTNF. People often change side of the negotiating table in this country, so we know how to handle this professionally. Besides, it is the programme board, and not the head of programme, who decides on allocations, says Høst.

However, he admits that it is the head of programme who presents recommendations to the programme board, and who hence decide the terms of allocations of financial support to companies.

NTNF's continuation of the environmental technology programme was the Ekspomil programme in the period 1992-1996. This time Tore Audunson, who came directly from Oceanor, was appointed head of programme, while Svein Erik Høst at that time was observer for NTNF in Ekspomil's programme board. Since 1986 Audunson had worked with development of the Seawatch technology in Oceanor, and he left Oceanor when he became head of programme of Ekspomil.

Under Audunson's leadership Ekspomil granted 12 million kroner to Oceanor. Of all the 17 companies which received grants from Ekspomil, Oceanor was given the largest amounts. Ekspomil's final report shows that the other companies' projects were given financial support in the order of more than 5 million kroner and down to one million kroner.

Thus, Oceanor has received a total of 22 million kroner from programmes in the Research Council which were lead by the former Oceanor employees Høst and Audunson.

But Audunson does not have any problems with his switching of roles either:

- The grant to Oceanor was made before I assumed office as head of programme in Ekspomil. It was a kind of preparatory project for Ekspomil which made that decision. Therefore, I do not have a bad conscience because of this, he says.

NorWatch's efforts to get information on this alleged preparatory project and on who decided on the grant to Oceanor, are met by reluctance from NFR:

- We do not want to spend more time on this. You have not documented how you will positively promote NFR through your questions, says Tor Petter Johnsen, who is head of programme of Ekspomil's successor Normil.

Even more money?
The indications are that the total amount which has been granted from public institutions to Oceanor is even larger. The Research Council of Norway has by reference to the Publicity Act refused to inform how much financial support they have granted Oceanor all along.

- NFR and Oceanor have entered into an agreement, which is not public. How much money we have granted them is a business secret, and we release this information with Oceanor's consent only. You have to ask them, says Liv Mellum in the information division of the Research Council on our first request.

Oceanor has flatly refused to give information to NorWatch. But in documents published by NFR, the final reports from the Ekspomil and the environmental technology programmes refer to the mentioned 22 millions granted to Oceanor.

In the light of this fact, NorWatch approached NFR again:

- Why can't you make public how much NFR has granted to Oceanor, when the numbers are published in your own public reports?

- What we meant was that we do not have the numbers of the total support granted to Oceanor. What you can find out from our publications on your own, is no problem, answers Mellum in NFR.

Through public reports from another quarter, NorWatch can establish that Oceanor in addition to the mentioned 22 million kroner received at least 5.5 million kroner from the Research Council in the period 1986-89. Whether Oceanor has received more than a total of 27.5 million kroner from NFR, NFR is unwilling to say.

NorWatch also faces closed doors in the State Industrial and Rural Development Fund (SND). Once again it is referred to the Publicity Act and business secrets. But via information collected from other public documents, NorWatch can ascertain that Oceanor in the period 1989-95 received at least 4 million kroner from SND.

From July 1994 to April 1996 Svein Erik Høst worked with the Ministry of Foreign Affairs. The UD called Høst from NFR to outline the Asia Plan and to act as head of the project.

The objective of the project is unmistakable: "to contribute to a more systematic, co-ordinated and long-range concentration on increased trade and commercial co-operation between Norway and the countries in East and South-east Asia through closer dialogue and interaction between business communities and authorities."

In practice, as the Asia Plan also mentions, this implies, among other things, that Norwegian authorities are to act as "door-openers" for Norwegian companies in Asia. One of the business areas which is given priority in the Asia plan, is environmental technology.

One of Svein Erik Høst's latest achievements as head of programme in UD, was to contribute to the decision to organize a technology seminar in Indonesia in the autumn of 1996. The controversial seminar, in which the Minister of Oil and Energy Jens Stoltenberg participated as head of a delegation of around 150 business leaders from Norway, was, according to the Norwegian Embassy in Indonesia, "probably the largest Norwegian business initiative in a developing country ever".

Environmental technology was again on the agenda of the seminar, where Oceanor participated. Already the previous year the then Prime Minister Gro Harlem Brundtland boasted of Oceanor's Seawatch technology during her official visit in Indonesia. Shortly after Brundtland's visit, Oceanor signed a contract worth 105 million kroner to deliver the Seawatch system to Indonesia, and NORAD granted 30 million kroner to the project from the environmental fund.

However, this was not the first time Norwegian ministers advertised Seawatch. Already during the Rio conference in 1992, Prime Minister Brundtland bragged about Oceanor's product. She also brought the Seawatch case in her suitcase when she made official visits to Thailand and Vietnam in 1996.

- There is reason to ask why Brundtland brought the Oceanor managing director with her to the Rio conference, and why she advertised Seawatch in South-east Asia. In any event, someone in the ministries have been convinced of Seawatch's excellence, say sources from the Institute of Marine Research to NorWatch.

An examination of Oceanor's annual reports shows that the company has struggled with economical losses since the very beginning. The question is whether Oceanor would have survived at all without receiving considerable subsidies from public institutions.

- The entire Seawatch project is based on subsidies from public institutions, Bjørn Henriksen in NFR confirms to NorWatch.

In 1994 and 1995 Oceanor had "horrible accounts", as expressed in an article in the Norwegian newspaper Dagens Næringsliv in December 1996. The giant losses of 34 million kroner in 1994 and 14.8 million kroner in 1995 consumed all the equity capital of the company.

The support from public agencies and the subsidies from NORAD have given Oceanor badly needed customers in developing countries. New applications for support to Seawatch projects in South-east Asia are also under consideration in NORAD. In Norway, however, and in the rest of Europe, there has been little interest in Seawatch.

As the next article in this issue of NorWatch illustrates, the environmental authorities in Norway have not chosen the Seawatch-technology as countries in South-east Asia have done. At present the Pollution Control Authority is considering which systems Norway should go for in the future. Again Oceanor is sitting at both sides of the negotiating table.

It is relevant to ask whether the muddling of interests is the reason why Oceanor exists today.

Financial support to Seawatch

NTNF/NFR  To the development of Seawatch 1986-89 5,500,000 
  The environmental technology programme 1989-92 10,000,000 
  The Ekspomil programme 1992-96 12,000,000
SFT  Seawatch-Europe 1989-95  24,000,000
SND Seawatch-Europe 1989-95 4,000,000
UD Seawatch Vietnam 1996  10,500,000
  Seawatch The Barents Sea 1996 11,750,000 
NORAD Seawatch Thailand 1991 14,400,000 
  Seawatch Thailand 1995 20,900,000
  Seawatch Indonesia 1995 30,100,000
  Seawatch India 1996 27,000,000
  Total sum  In the period 1986-96 170,000,000

Norwatch Newsletter 8/97