Australia warns shipbuilder DCNS after massive security leak

[August 26, 2016]  By Matt Siegel

SYDNEY (Reuters) - Australian defense officials warned French naval contractor DCNS to beef up security in Australia, where it is preparing to build a A$50 billion ($38.13 billion) fleet of submarines, in the wake of a massive data leak, a government spokesman said on Friday.

DCNS was left reeling after more than 22,000 pages outlining details relating to submarines it is building for India were published in The Australian newspaper earlier this week, sparking concerns about its ability to protect sensitive data.

A senior Australian defense official, acting on orders from Defence Industry Minister Christopher Pyne, warned DCNS that the government was deeply concerned by the implications of the leak, a spokesman for the minister told Reuters.

DCNS is locked in exclusive negotiations with Australia to build a fleet of 12 next-generation submarines after seeing off its rivals, Germany's Thyssenkrup AG and a Japanese government-backed consortium of Mitsubishi Heavy Industries and Kawasaki Heavy Industries.

DCNS said earlier this week that the leak, which covered details of the Scorpene-class model and not the vessel currently being designed for the Australian fleet, bore the hallmarks of "economic warfare" carried out by frustrated competitors.

TKMS Australia, the German shipbuilder's local subsidiary, declined to respond to the accusation. Mitsubishi Heavy Industry also said that it had no comment.

A senior industry source who was involved in the Australian submarine bidding called the allegation an "extraordinary" attempt to deflect attention from DCNS' security shortcomings.

"Clearly there's been a massive leak. And for the French to seek to blame either the Japanese or the Germans under some banner of 'economic warfare' is hysterical," he told Reuters.

An employee looks at the propeller of a Scorpene submarine at the industrial site of the naval defence company and shipbuilder DCNS in La Montagne near Nantes, France, April 26, 2016. REUTERS/Stephane Mahe/File Photo

The French victory in one of the world's most valuable defense contracts was a major blow to Japanese Prime Minister Shinzo Abe's push to develop defense export capabilities as part of a more muscular security agenda.

Australian Defence Minister Marise Payne visited Tokyo this week to meet with her Japanese counterpart, Tomomi Inada, in the first such visit since the contract was awarded.

DCNS and TKMS are currently locked in another competition for a lucrative contract to replace Norway's fleet of aging Ula-class submarines. The European shipbuilders, the world's biggest suppliers of conventional submarines, regularly lock horns.

($1 = 1.3115 Australian dollars)

(Additional reporting by Nobuhiro Kubo in TOKYO; Editing by Simon Cameron-Moore)

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