Rheinmetall: The German-Dutch connection, financial constructions and components

Rheinmetall is a German producer of civil and military products. Recently its G3 machine riffles were located on patrol vessels of the Myanmar armed forces. It is just one of the examples of were the arms by the Düsseldorf-based transnational are used by armed forces severely violating human rights.

The corporation has military businesses on all continents: in Asia (China, Singapore), South Africa, Mexico, the Middle East (UAE and Saudi Arabia), Russia, EU/NATO+ (included Australia) and it has created a lobby office in Brussels in 2018 to deal with “EU and NATO affairs,” and to play “an active role in shaping the increasing consolidation of the European defence sector.”

This article will look into the structures existing in the Netherlands. The company is created over a long time and incorporates Dutch military companies such as Stork and Eurometaal. According to the Catalogue of Netherlands Defense Related Industries of the Dutch Government Commissariat Military Production (CMP) of the Ministry of Economics Rheinmetaal Nederland is active in the fields: Ammunition, simulators, armoured vehicles, missiles/torpedos, sensors (radar/sonar/optronics) and more.

Rheinmetall entities

Rheinmetall Netherlands B.V. in Hengelo is a financial holding according to the Chamber of Commerce. It's capital is over € 9 million. The holding is mentioned in the latest Rheinmetall Annual Report on 2019 (although with € 0.9 million equity). The director, since 1993, is Johannes Vonk. He is borne in 1942, so he nears his eighties. Vonk was previously the financial and commercial director of a major Dutch production plant of ammunition, Eurometaal, and spokesman for the company during a scandal concerning exports of 20,0000 shell cases in the period 1985- August 1987 to Voest-Noricum in Austria, with its final destination Iran at the time of its war with Iraq. Vonk was also spokeperson during a controversial sale of fragmentation grenades (M483A1) to Turkey. Eurometaal, already a Rheinmetall daughter, closed its gates in 2003. But surprisingly still exists as a financial holding and 100% daughter of Rheinmetall Netherlands B.V. directed by a senior seasoned in the military business.

Often financial holdings are located in large office buildings with hundreds or even thousands of companies directed by persons doing a whole range of companies. In Hengelo there are only seven companies located at a terraced house in a living area. Three of them part of the Rheinmetall structures: the already mentioned Eurometaal, Rheinmetall Netherlands and RM Euro BV, the last fully owned by Rheinmetall Industrie GmbH. The others are not directly connected to Rheinmetaal, one of them is how sufficient a caretaker.

Rheinmetall has also a Financial Holding: KSPG Netherlands Holding BV. The 100% daughter holding possesses € 60.5 million, according to the Rheinmetall annual report, which locates KSPG in Amsterdam. But the holding has moved to Ede, where also the major plant of Rheinmetall Netherlands is located. It is governed by the Coen van Leeuwen, who is also director of Rheinmetall Defence Nederland. (See for Chamber of Commerce papers end of this article)

The financial holdings in the Netherlands might have something to do with the Netherlands being a tax haven for multinational corporations.

Rheinmetall Ede
The relations between Rheinmetall and the Dutch armed forces are close. Rheinmetall and the Dutch procurement agency Defence Materiel Organization (DMO) have renewed and expanded their longstanding framework agreement for the supply of various types of ammunition for a period of at least ten years. The framework agreement envisages annual call-offs of around €50 million, meaning that total volume could come to €500 million. The customer is already preparing for the first call-offs. Rheinmetall in Ede is working with Rheinmetall in Kassel on the modernisation of the armoured recovery vehicle, the Bergepanzer 3 Buffalo for the Dutch armed forces a program to be finalised this spring.

Several branches of the Rheinmetall concern are involved in the production of the Boxer multirole armoured fighting vehicle. The vehicle is produced by ARTEC GmbH (founded in 1999), a Joint Venture of Krauss-Maffei Wegmann, Rheinmetall Landsysteme and Rheinmetall Defence Nederland (formerly Rheinmetall Military Vehicles Nederland). The Boxer is in use in the Netherlands, Germany, the UK and Lithuania. The UK Government recently advertised a £180-million contract concerning the Boxer to be part of an alleged job program in Scotland, while everybody knows it may offer some jobs, but against a prize other sectors also would provide jobs, even more so.

The Mission Master Cargo vehicle is unmanned vehicle, four of them were supplied to the UK (spring 2020) by Rheinmetall Canada, with Rheinmetall BAE Systems Land (RBSL) as cooperation partner. In the Netherlands, Rheinmetall Canada's cooperation partner is Rheinmetall Defence Nederland in Ede. The unmanned vehicle thus involves three different parts of the conglomerate. The Netherlands wants to buy the vehicles to improve, what is euphemistically called 'missions', which includes tasks like cargo transport, surveillance, and fire support. It can also serve as a mobile communications relay station.

Components

The Dutch military industry can be characterised by a three tag words: naval vessels, naval systems, and components. Here the third category is relevant. Components were more than 70% of the total military exports in the past five years according to the annual arms export reports: 2015, 87%; 2016, 88%; 2017, 72%; 2018 87%; 2019, 77%.

The annual reports shows two different aspects of component exports, the total value and the countries of destination, but not a) what kind of components are exported and b) where they go if the producers does not know yet – or won't tell - or if they are part of a general license (the Dutch government trusts the NATO/EU+ partners to consider the effect on human rights, conflict and impact on the economy when issuing an export license).

The first hurdle can be sometimes solved by looking into the individual licenses, where a description, value and (final) destination is given. But other difficulties surface. What is not included is which company asks for an export permit, and to which part of the military and security complex components go. Here the most important is if they are sent to another Rheinmetall branch. Export licenses are thus hard to provide.

Deduction

Over the past decade only for category ML6 (ground vehicles and components) the Netherlands issued over 1,700 definite and 500 temporarily (also important in cooperation projects) licenses (of 25.000 in total). Remarkable is a license for the export of vehicles (LAPV) originating in and made by Canada and sold to Saudi Arabia (in use at Ministry of Interior) in October 2015, valued over € 7 million and a smaller license valued € 800.000 one a year earlier for the same notorious vehicle. Why the Dutch government gave an export license for this export to Riyad has never been asked.

However most dominant are sales connected to Germany. The reason to look somewhat closer into Germany is that Rheinmetall is a German company. In 1,054 cases Germany was the destination and/or final destination. The Netherlands was an important client for German arms in 2020 with 823 export licenses valued € 108 million. Visa versa Germany is the second important customer – behind the United States - for Dutch arms over a long period.

To zoom further into these exports is to look into licenses for definitive and temporarily export concerning military vehilces, tanks and artillery produced by Rheinmetall. While companies are not mentioned, the type of vehicle sometimes is. In the past ten years licenses were reported (2010-2020, see annexed pdf) for such military products such as the Boxer, Fuchs, Fennek, Kodiak, Lynx, Marder, Mission Master, Puma en PzH2000. They are in use in EU/NATO+ countries, but also in dubious destinations such as Indonesia, Kuwait, Qatar, Saudi Arabia, Turkey, UAE. The licenses raise questions. While a temporarily licenses for export to Egypt (Fennek) or Malaysia (PzH2000) can be explained. It is difficult to explain definitive exports to Switzerland for vehicles Swiss armed forces do not have in their inventories. It raises questions how and why these happened.

Is Rheinmetall Netherlands, being part of a much wider international concern, used to export to destinations the Dutch government should not issue direct licenses to? This is difficult to deduct based on the information provided, but can not be excluded. The Dutch government likes to hide behind the backs of allies in NATO and the European Union who make their own assessments of security and human rights situation in the country of destination.

The structure of Rheinmetall in the Netherlands is complicated and so are the shipments of component for armoured vehicles and other military products made by German conglomerate.

Rheinmetall Dutch Chamber of Commerce papers

RM Euro B.V.

Rheinmetall Protection

Rheimetall KSPG Netherlands Holding B.V.

Rheinmetall Eurometaal

Rheinmetall fin hold

Rheinmetall

 

Explosive Stuff is a blog on arms trade and production by Stop Wapenhandel

Martin Broek March 2021

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