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OHB-System Disclaims Wikileaks Report of CEO Comments on Galileo

berry_smutny_OHB_lorez.jpgBerry Smutny, OHB-System CEO. OHB-System photo
Glen Gibbons
January 16, 2011

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OHB-System AG, builder of Galileo navigation satellites, has issued a statement from its chairman denying a WikiLeaks report that the German company’s CEO had told U.S. embassy officials that the European GNSS program was a “stupid idea” and “a waste of EU tax payers money.”

The January 14 posting on OHB-System’s website quotes Manfred Fuchs, chairman of the Bremen-headquartered company’s supervisory board: “The OHB Group expressly repudiates all the statements attributed to Mr. [Berry] Smutny in the WikiLeaks documents and affirms its full and complete commitment to ‘Galileo’ as the European Union’s first major space technology infrastructure product. The OHB Group will be devoting its entire resources and all its skills and abilities to ensuring the success of this project.”

On November 28, 2010, Wikileaks began publishing 251,287 leaked United States embassy cables of classified documents from U.S. embassies around the world.

The subject of the OHB statement was an October 22, 2009 diplomatic cable purportedly recounting a meeting on October 2 between Smutny and economic officials at the U.S. embassy in Berlin. On Thursday (January 13, 2011) the Norwegian daily “Aftenposten,” which has gained access to the WikiLeaks documents and is reviewing and posting a selection of them, published the embassy wire on its website. Smutney joined OHB-System on July 1, 2009.

Despite Smutney’s negative assessment of the Galileo program, which he reportedly characterized as being “championed by French interests,” the embassy officials reported that “Smutny said his company would gladly accept contracts to build the satellites,” adding that “Smutny anticipates the EU Commission (EC) will award his company a contract . . . to build a significant portion of the Galileo satellites.”

Indeed, in December 2009, OHB-System won the bid for the full operational capability (FOC) Galileo spacecraft in a reversal of fortunes for EADS Astrium, which had the contract to build the in-orbit validation (IOV) version. On January 26, 2010, Smutny signed the first work order covering the manufacture of 14 satellites, with delivery of the first satellite set for July 2012, followed by two satellites every three months.

According to Fuchs’ statement on the OHB-System website, the Galileo satellite contract “is proceeding according to schedule and will be completed in time and on budget.”

In their October 22 communication, the Berlin embassy officials reportedly wrote that Smutny believed that “the EU has grossly underestimated the complexity of the complete Galileo system, and additional cost overruns and schedule slips are likely. He said industry experts estimate the final Galileo cost to be about 6.5 billion euros (assuming the previously desired 32 satellite constellation), but in his opinion the final cost will balloon to around 10 billion euro.”

The dispatch was identified as coming from “Murphy,” presumably U.S. Ambassador Philip Murphy, who in December was criticized for his alleged comments in WikiLeaks documents by parliamentary representatives of the Free Democratic Party (FDP), the junior party in Germany’s ruling coalition.

The cable was classified as “confidential” by Acting Global Affairs Unit Chief David L. Fisher for reasons 1.4 (b) and 1.4 (d). These, according to the agency’s Foreign Affairs Handbook on State Department terms, concerns “foreign government information” and “foreign relations or foreign activities of the United States, including confidential sources,” respectively.

Under the most recent policy statement on classified national security information (Executive Order 13526, issued December 29, 2009), “‘Confidential’ shall be applied to information, the unauthorized disclosure of which reasonably could be expected to cause damage to the national security that the original classification authority is able to identify or describe.”

Among State Department officials copied on the Berlin embassy message was David Turner, deputy director of the Office Space and Advanced Technology, who is well-known in the GNSS community.

According to the embassy note, Smutny criticized French interests for aggressively corralling EU support for Galileo, adding, “Smutny said no matter how much the French would like Galileo to be built International Traffic in Arms Regulation (ITAR)-free, this is highly unlikely given that there are not sufficient replacements for some radiation-hardened US ITAR-controlled components that Galileo will need.

“Smutny pointed out that the EU already strayed from the concept of a completely indigenous EU system when they procured the Galileo clock — the heart and soul of the system — from the Swiss. Smutny said he recommended early on that Galileo try an[d] procure a US-origin clock, but this idea was immediately rejected by Galileo decision makers.”

On January 4, Aftenposten published a WikiLeaks document, purportedly a November 20, 2009 report from the embassy in Berlin also citing the October 2, 2009 meeting with Smutny, in which the U.S. economic officers said that the OHB official “spent a great deal of time accusing the French of economic espionage.”

In Fuchs’ statement on the OHB-System website, the company’s chairman said, “I wish to stress that we maintain excellent relations with all French institutions and companies in the French aerospace industry out of conviction. I personally have numerous close friendships with representatives of the French space sector. In addition, I would like to expressly emphasize that the OHB Group and the Fuchs family have always unreservedly been proponents of the “Galileo” project initiated by the EU.

Immediately after the Wikileaks documents were published, I therefore asked Mr. Smutny on the basis of the provisions of his service contract if there was any truth in the statements attributed to him. Mr. Smutny declared in a statutory oath that he did not make the statements attributed to him. I have no knowledge causing me to question this declaration.”

In fact, OHB's success in the GNSS field was undoubtedly aided by the presence of Paris-based Alain Bories, OHB Technology senior vice-president for strategy and business developmen, who joined the company in 2006 from France's Thales Group where he was a vice-president deeply involved with that company's Galileo activities.

Copyright © 2011 Gibbons Media & Research LLC, all rights reserved.

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