France's DCNS says India submarine data leak may be 'economic warfare'

Paris: French naval contractor DCNS said on Wednesday it may have been the victim of "economic warfare" after secrets about its Scorpene submarines being built in India were leaked.

India opened an investigation after The Australian newspaper published documents relating to the submarine's combat capabilities, raising concerns over another major contract with Australia.

The leak contains more than 22,000 pages outlining the details of six submarines that DCNS has designed for the Indian Navy.

"I understand there has been a case of hacking," Indian Defence Minister Manohar Parrikar told reporters. "We will find out what has happened."

The submarines are being built at a state-run shipyard in Mumbai and the first one was expected to go into service by the end of the year, the first step in the Indian navy's effort to rebuild its dwindling fleet.

The leak has raised doubts about the security of DCNS's submarine project in Australia where it is locked in exclusive negotiations after seeing off rivals for a A$50 billion ($38 billion) contract to build the Barracuda next generation of submarines.

DCNS, which is 35 percent owned by Thales (TCFP.PA), said it was working to determine if any harm had been caused to clients with a view to drawing up an action plan.

Asked if the leak could affect other contracts, a company spokeswoman said it had come against a difficult commercial backdrop and that corporate espionage could be to blame.

"Competition is getting tougher and tougher, and all means can be used in this context," she said. "There is India, Australia and other prospects, and other countries could raise legitimate questions over DCNS. It's part of the tools in economic warfare."

DCNS, which is also vying for submarine contracts in Norway and Poland, beat Germany's ThyssenKrupp AG (TKAG.DE) and a Japanese-government backed bid by Mitsubishi Heavy Industries (7011.T) and Kawasaki Heavy Industries (7012.T) in Australia.

That 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.

The leaked documents cover the Scorpene-class model and do not contain any details of the vessel currently being designed for the Australian fleet.

Thales (TCFP.PA), whose shares fell 3 percent before paring back some of the losses, declined to comment.

French Defence Minister Jean-Yves Le Drian, who finalised the Australian deal, also declined to comment.

Major Strategic Problem

The breadth of detail in the documents creates a strategic problem for India, Malaysia and Chile, all of which operate the same submarine, an Australian political source with decades of experience in the global arms industry told Reuters.

Excerpts published in redacted form on the newspaper's website contained highly sensitive details of the submarine including technical manuals and models of the boat's antennae.

"If it's 22,400 pages, it's a major stuff-up," the source said. "It's a huge deal.

"It allows them to understand everything about the submarines. What speeds it can do; how noisy it is; what speeds the mast can be raised at ... all of that is just devastating."

A French source close to the matter tried to play down the severity of the leak, saying the documents appeared to be "sensitive but neither critical nor confidential".

The Indian Defence Ministry said in a statement it was investigating the impact of the leak on the submarine program which it said had occurred from abroad. It gave no details.

Uday Bhaskar, a former naval officer, said that if the leak was established, it would amount to a significant compromise of the credibility of the submarines.

India has a fleet of 13 aging submarines, only half of which are operational at any time, opening up a gap with China which is expanding its maritime presence in the Indian Ocean.

Australian Prime Minister Malcolm Turnbull sought to deflect concern about the leak, touting the high security standards in Australia, where the submarine will be built. The Australian reported that the leak occurred in France in 2011.

"But clearly, it is a reminder that, particularly in this digital world, cyber security is of critical importance," he told the Seven TV network.