Norsk Hydros LoI cancellation

With reference to earlier press releases on the issue of Norsk Hydro’s reason for cancellation of their Letter of Intent to Farstad Shipping, fuller details have now emerged.

According to Norsk Hydro they had discovered that technical information was handled in conflict with Hydro’s procedures. This was related to an incorrect distribution of technical information during the period between invitation and submission of tender. Hydro referred to two e-mails, of which, one e-mail sent from Norsk Hydro to Rolls Royce Marine on August 24th 2004 was specially emphasised. The emphasis on this e-mail is due to the fact that the e-mail was sent from Norsk Hydro after the invitation to tender was distributed and that it was sent only to Rolls Royce. The other e-mail was sent before the invitation to tender.

This correspondence was completely unknown to Farstad Shipping until Hydro informed them about it. The sender of the e-mail was a member of the Hydro contract team, but not the nominated single point of contact. The receiver of the e-mail was the Design Manager at Rolls Royce. Rolls Royce has towards Farstad Shipping stressed that the e-mail has not been distributed.

Concerning the contents of the e-mail, it deals with comments of technical nature from the Hydro representative, and is linked to a development project originally initiated by Norsk Hydro. These comments were related to an exclusive design for Farstad Shipping and made in a period where communications were not permitted unless through the single point of contact. It was not possible for Farstad to know whether this e-mail had any influence on the final design. As it cannot be documented that equivalent information at this time was accessible also to the other bidders, it was regarded by Norsk Hydro to be in conflict with their procedures. Having seen the contents and date of this e-mail, Farstad can understand that this is in breach of Hydro’s internal tendering procedures.

It is also important to inform that Rolls Royce’s Design Manager (the receiver of the e-mail) has been a board member of Farstad Shipping since the early 1990’s. Farstad would like to stress that at no point in time has there been any reason to question his integrity, and the same applies in this case.

After this became known, questions have been raised, among others in the media, concerning ethics and business culture. Farstad Shipping hopes that the above information will restore some of the damages made to the company’s reputation. They deny that, at any stage in this tendering process, they had been involved in anything which is questionable in relation to business ethics.