In an unusual use of the National Security act to prevent a transaction between private parties, the Norwegian government has announced that it has halted the sale of Bergen Engines to TMH International owing to national security concerns.
Bergen Engines, which is owned by Rolls-Royce, is an engine manufacturer located in western Norway. The company produces primarily gas and diesel engines for power production and marine applications, and has a 166 year history. Its clients range from civil and industrial to military customers in several different countries.
In February 2020, Rolls Royce announced its intention to sell Bergen Engines, as it ‘no longer fitted into the product profile of Rolls Royce Power Systems.’ On 15 December 2020, the Ministry of Foreign Affairs was, in an email from Rolls Royce, informed of the intended sale to TMH International, which is an international industrial company operating in several countries. Rolls Royce stated that among the owners of Switzerland-based TMH International were two persons on the so-called ‘US Oligarch list’, meaning they have been designated by the US Department of the Treasury’s Office of Foreign Assets Control. On 1 February 2021, Bergen Engines announced the sale to TMH, and on 9 March 2021, the sale was suspended in the light of a pending investigation owing to security concerns. This meant that all forms of due diligence between the parties involved also came to a halt.
Two weeks later the Norwegian minister of Justice, Monica Mæland, announced that the sale would be stopped in accordance with the National Security Act sections 2-5. Although many of the considerations were classified and therefore undisclosed, the key public reasons for stopping the sale were given as follows:
Russia would gain access to engine technology that would strengthen their military capabilities, in direct conflict with the security interests of Norway and its allies; the sale would allow Russia access to technology it would otherwise have difficulties with attaining due to strict sanctions regimes implemented in 2014; the purchase of Bergen Engines can be considered as an attempt to subvert export control regulations aimed at Russia to prevent its gaining access to knowledge and technology of ‘great military strategic importance; and because Bergen Engines’ location is strategically important and provides access to Bergen from the coast. This was considered a security risk.