Saturday, April 17, 2010

Malaysia's Submarine Scandal Surfaces in France

Murky arms deal linked to international pattern of kickbacks

A potentially explosive scandal in Malaysia over the billion-dollar purchase of French submarines, a deal engineered by then-Defense Minister Najib Tun Razak, has broken out of the domestic arena with the filing of a request to investigate bribery and kickbacks from the deal in a Paris court.

Although the case has been contained for eight years in the cozy confines of Malaysia's courts and parliament, which are dominated by the ruling National Coalition, French lawyers William Bourdon, Renaud Semerdjian and Joseph Breham put an end to that when they filed it with Parisian prosecutors on behalf of the Malaysian human rights organization Suaram, which supports good-government causes.

Judges in the Paris Prosecution Office have been probing a wide range of corruption charges involving similar submarine sales and the possibility of bribery and kickbacks to top officials in France, Pakistan and other countries. The Malaysian piece of the puzzle was added in two filings, on Dec. 4, 2009 and Feb. 23 this year.

For two years, Parisian prosecutors, led by investigating judges Francoise Besset and Jean-Christophe Hullin, have been gingerly investigating allegations involving senior French political figures and the sales of submarines and other weaponry to governments all over the world. French news reports have said the prosecutors have backed away from some of the most serious charges out of concern for the political fallout.

The allegations relate to one of France's biggest defense conglomerates, the state-owned shipbuilder DCN, which merged with the French electronics company Thales in 2005 to become a dominant force in the European defense industry. DCN's subsidiary Armaris is the manufacturer of Scorpene-class diesel submarines sold to India, Pakistan and Malaysia among other countries. All of the contracts, according to the lawyers acting for Suaram, a Malaysian human rights NGO, are said to be suspect.

With Najib having moved on from the defense portfolio he held when the deal was put together in 2002 to become prime minister and head of the country's largest political party, the mess has the potential to become a major liability for the government and the United Malays National Organisation. Given the power of UMNO, it is unlikely the scandal would ever get any airing in a Malaysian court, which is presumably why Suaram reached out to French prosecutors.

"The filings are very recent and have so far prompted a preliminary police inquiry on the financial aspects of the deal," said a Paris-based source familiar with France's defense establishment. "There isn't a formal investigation yet. The investigation will most likely use documents seized at DCN in the course of another investigation, focusing on bribes paid by DCN in Pakistan."

The source said police have confined their inquiry to bribery allegations so far and have not looked into the 2006 murder of a Mongolian woman in Malaysia who was a translator on the deal for Najib and his friend, Abdul Razak Baginda, during a visit to Paris.

There have been numerous deaths involving DCN defense sales in Taiwan and Pakistan. Prosecutors are suspicious that 11 French submarine engineers who were murdered in a 2002 bomb blast in Karachi – first thought to have been the work of Al Qaeda – were actually killed in retaliation for the fact that the French had reneged on millions of dollars in kickbacks to Pakistani military officers.

The Malaysian allegations revolve around the payment of €114 million to a Malaysia-based company called Perimekar, for support services surrounding the sale of the submarines. Perimekar was wholly owned by another company, KS Ombak Laut Sdn Bhd, which in turn was controlled by Najib's best friend, Razak Baginda, whose wife Mazalinda, a lawyer and former magistrate, was the principal shareholder, according to the French lawyers.

"Over the past years, serious cases have been investigated in France by judges involving DCN," lawyer Renaud Semerdjian told Asia Sentinel in a telephone interview. "This is not the first case of this kind that is being investigated. There are others in Pakistan and there are some issues about India. To a certain extent, every time weapons of any kind have been provided, suspicion of violation of the law may be very high."

As defense minister from 2000 to 2008, Najib commissioned a huge military buildup to upgrade Malaysia's armed forces, including two submarines from Armaris and the lease of a third, a retired French Navy Agosta-class boat. There were also Sukhoi supersonic fighter jets from Russia and millions of dollars spent on coastal patrol boats. All have come under suspicion by opposition leaders in Malaysia's parliament but UMNO has stifled any investigation. Asked personally about the cases, Najib has responded angrily and refused to reply.

Despite efforts to bury it, the case achieved considerably notoriety after the murder of Altantuya Shaariibuu, a 28-year-old Mongolian translator and Razak Baginda's jilted lover, who participated in negotiations over the purchase of the submarines. By her own admission in a letter found after her death, she was attempting to blackmail Razak Baginda for US$500,000.

She was shot in October 2006 and her body was blown up with military explosives by two bodyguards attached to Najib's office after Razak Baginda went to Najib's chief of staff, Musa Safri, for help in keeping her away from him. Not long after being acquitted in November 2008 under questionable circumstances of participating in her murder, Razak Baginda left the country for England. The bodyguards were convicted but no motive was ever established for their actions despite a confession by one which was not allowed in court, but which said they would be paid a large sum of money to get rid of her.

The submarine deal was never brought up in court during a months-long murder trial that was marked by prosecutors, defense attorneys and the judge working studiously to keep Najib's name out of the proceedings. A private detective hired by Razak Baginda to protect him from the furious Altantuya filed a statutory declaration after the trial indicating that Najib had actually been the victim's lover and had passed her on to Razak Baginda.

The detective, P. Balasubramaniam, said later that he was unceremoniously run out of Kuala Lumpur. He eventually emerged from hiding in India to say he had been offered RM5 million (US$1.57 million) by a businessman close to Najib's wife to shut up and get out of town. He also said he had met Nazim Razak, Najib's younger brother, and was told to recant his testimony.

In the current complaint in Paris, the issue revolves around what, if anything, Razak Baginda's Perimekar company did to deserve €114 million. Zainal Abidin, the deputy defense minister at the time of the sale, told parliament that Perimekar had received the amount – 11 percent of the sale price of the submarines – for "coordination and support services." The Paris filing alleges that there were neither support nor services.

Perimekar was registered in 2001, a few months before the signing of the contracts for the sale, the Paris complaint states. The company, it said flatly, "did not have the financial resources to complete the contract." A review of the accounts in 2001 and 2002, the complaint said, "makes it an obvious fact that this corporation had absolutely no capacity, or legal means or financial ability and/or expertise to support such a contract."

"None of the directors and shareholders of Perimekar have the slightest experience in the construction, maintenance or submarine logistics," the complaint adds. "Under the terms of the contract, €114 million were related to the different stages of construction of the submarines." The apparent consideration, supposedly on the part of Perimekar, "would be per diem and Malaysian crews and accommodation costs during their training. There is therefore no link between billing steps and stages of completion of the consideration."

As Asia Sentinel reported on April 1, services for the subs are being performed by a well-connected firm called Boustead DCNS, a joint venture between BHIC Defence Technologies Sdn Bhd, a subsidiary of publicly-listed Boustead Heavy Industries Corp Bhd, and DCNS SA, a subsidiary of DCN. Boustead's Heavy Industries Division now includes Perimekar as an "associate of the Group. PSB is involved in the marketing, upgrading, maintenance and related services for the Malaysian maritime defence industry," according to Boustead's annual report.

Originally Boustead told the Malaysian Stock Exchange that the service contract was for RM600 million (US$184.1 million) for six years, or US$30.68 million annually. However, the contract later ballooned to RM270 million per year. Boustead Holdings is partly owned by the government and has close connections with UMNO.

"There are good grounds to believe that [Perimekar] was created with a single objective: arrange payment of the commission and allocate the amount between different beneficiaries including Malaysian public officials and or Malaysian or foreign intermediaries," the complaint states. - source

Wednesday, April 14, 2010


KUALA LUMPUR, April 14 — Datuk Seri Hishammuddin Hussein has instructed the police force to act fairly when it provides security for what is expected to be a highly-charged Hulu Selangor by-election.

Pakatan Rakyat (PR) politicians have previously accused the police of being biased when dealing with them, while showing leniency towards Barisan Nasional.

“[The] police will be professional when performing their duties. I have told the police to fair to everybody.

“We want everyone to move freely and campaign in a healthy manner. But we know the ways of PKR and we can guess the issues that they will try to bring up and relate to the police, but I told the police to be patient, strong and professional in their actions

Hishammuddin added that the police should not be goaded by such statements and needed to exercise discipline when faced with provocation.

“The police have been slapped and bitten, but even in that situation, they have performed their duty with integrity. It is something that we have to go through,” he added.

Commenting on the security build-up for the eleventh by-election since 2008, Hishammuddin said that the police were prepared and ready.

He confirmed that over 1,000 police personnel will be deployed during nomination day on April 17.

He also hoped that the political parties will co-operate with the police and ensure a smooth polling process.

“Now is up to the party machinery to be responsible and enable the democratic process by allowing the voters to vote,” he told reporters during a press conference in parliament.

He also warned PKR not to cause any ruckus during the election.

“When we face ... PAS or DAP candidates, the incident of clashes, I can say that it does not exist. But when it comes to PKR, I can say that there must be unwanted incidents from the nomination date. I hope everybody and party members are disciplined,” he said.

Conversely, Hishammuddin was confident that BN will be ethical in its campaigns.

“We are more careful and disciplined in Umno and Barisan Nasional. We must be proactive in our strategies by not playing [up] sensitive issues such race, religion and not resort to personal attacks. On our side, we are confident,” he said.

The Hulu Selangor by-election was called following the death of PKR MP Datuk Dr Zainal Abidin Ahmad late last month.

In Election 2008, Zainal, a former Selangor deputy mentri besar, defeated MIC deputy president Datuk G. Palanivel by a slim majority of 198 votes.

There are 64,500 voters in Hulu Selangor, with the Malays making up 52.7 per cent of the total while the Chinese constitute 26.3 per cent, Indians approximately 19 per cent and other races at 1.7 per cent.

Last night, PKR and PR de facto leader Datuk Seri Anwar Ibrahim announced Zaid Ibrahim as the PKR candidate.

Monday, April 12, 2010

Malaysia’s Watergate

One thing the Minister said that was not recorded in the Minutes of the Meeting is that this Israeli link fiasco would become Malaysia’s Watergate if not properly handled. Therefore they must make sure that this matter is kept highly confidential and no one is supposed to know about it. I would call it Israelgate rather than Malaysia’s Watergate.


Raja Petra Kamarudin

IGP: No infiltration by any Israelis

No Israeli was ever involved in the upgrading of the police force’s information and communication system as alleged by Opposition Leader Datuk Seri Anwar Ibrahim.

Inspector-General of Police Tan Sri Musa Hassan said this was because Master Plan Consulting (MPC) Sdn Bhd, the company awarded the job to carry out the upgrading work, terminated Asiasoft Sdn Bhd’s contract.

The termination was carried out when it was revealed that Asiasoft’s Singapore partner had two former Israeli intelligence officers on their payroll.

“The Home Ministry had awarded the upgrading work to MPC in 2005. MPC then engaged a local bumiputra company called Asiasoft Sdn Bhd to carry out the work for them.

“In 2007, Asiasoft sold 30% of the shares to Asiasoft Pte Ltd Singapore. When we conducted a due diligence check on their Singaporean partner, we discovered the presence of the Israelis in the company,” he said.

MPC immediately terminated Asiasoft’s contract.

Musa said police then conducted a thorough investigation into the matter and found there was no infiltration by any Israelis.

He said they were investigating who leaked out classified police investigations (Editor's Note: this is the key issue for the PDRM) and what motivated Anwar to make such “serious and damaging” allegations in Parliament. -- The Star


In the first episode in this series of articles (Round 1 of 10: Hishammuddin's bullshit revealed) the Minutes of the Meeting between the Minister and the Royal Malaysian Police (PDRM) was revealed.

Basically, the focus of the meeting was to discuss how the leak about the Israeli connection managed to surface and for how long this leak has been going on. The meeting was more about damage control than about the security of the nation. They wanted to see what they could do to protect the image of the government and the PDRM.

One thing that must be noted here is the following:

On 27 June 2008, Malaysia Today revealed that Israeli intelligence had penetrated Bukit Aman. Malaysia Today said, Izhak David Nakar served in the Israel Air Force and developed the intelligence system for the Israeli Defense Force. Ido Schechter is a captain in the Israeli Air Force. They are both behind PDRM’s computerisation program. (Read more here: )

On 11 September 2008, I was detained under the Internal Security Act for the ‘crime’ of slandering the Deputy Prime Minister’s wife and for insulting Islam.

On 7 November 2008, the Shah Alam High Court ruled that my detention was illegal and subsequently ordered my release.

On 23 November 2008, a meeting was held between the Minister and the Police to discuss how Malaysia Today managed to get the information about the PDRM-Israeli connection and how they could do damage control to protect the image of the government and the Royal Malaysian Police. (Read more here: )

A new ISA Detention Order was then prepared but my detention was held back because the government had already filed an appeal against the Shah Alam High Court’s decision in ordering my release (the hearing which was still ongoing).

In February 2009, halfway through the appeal hearing, the government suddenly retreated after they decided it was taking too long and after three months I was still walking free. The government felt that it would be better to abandon the appeal (which they did) and instead detain me under a fresh Detention Order.

Two days before they came for me I received word from my Deep Throats in Bukit Aman that they are coming for me and that I should go underground if I do not wish to spend the rest of my life under detention without trial.

On the insistence of my Deep Throats in Bukit Aman I went underground and the police went to my home and found an empty house. This was confirmed by the security guards who said that the police came to my house and camped outside my house for several days before giving up and going home.

One thing the Minister said that was not recorded in the Minutes of the Meeting is that this Israeli link fiasco would become Malaysia’s Watergate if not properly handled. Therefore they must make sure that this matter is kept highly confidential and no one is supposed to know about it. I would call it Israelgate rather than Malaysia’s Watergate.

The problem they faced, though, is that Malaysia Today has Deep Throats in Bukit Aman who are feeding us ‘sensitive information’. Therefore, they must neutralise Malaysia Today by sending me back to Kamunting and then korek, korek, korek from me who my Deep Throats in Bukit Aman are.

My Deep Throats in Bukit Aman were understandably very worried. They knew that if the Special Branch got me then it would be a matter of time before names begin to surface. And that would mean my Deep Throats in Bukit Aman would be at risk.

Around midnight, 36 hours before I went underground, some ‘visitors’ came to my house. There was a heated argument when I said I was adamant to stay and would go to Kamunting if it comes to that. The ‘visitors’ felt that I was being rash and that it is not about me going to Kamunting but about what will happen to the Deep Throats in Bukit Aman once the Special Branch works on me. Even hardcore Communist Terrorists eventually break, even if it takes many years, they told me. You are not as tough to withstand what they can do to you and will definitely break and put everyone at risk, they argued.

From the point of view of my Deep Throats in Bukit Aman, the issue is not about my articles on Altantuya or about my Statutory Declaration. It is not even about me allegedly insulting Islam. Those are all just smokescreens. It is about the damage I am doing to the IGP with the many revelations that Malaysia Today has made over the last few years.

Who are all these people behind the companies involved in the computerisation work for the Royal Malaysian Police? Who are the people behind Web Power? Yes, a good question indeed. And we shall provide the answers in the next episodes in these series of articles. So stay tuned.

In the meantime, read this letter from the IGP to the Prime Minister dated 3 November 2006. Clearly, the IGP was the main thrust behind this project.

Remember, in November 2006 the government already knew about the Israeli link. Only when this information became public knowledge in June 2008 did they attempt to do damage control by terminating the sub-contractor and then use front companies to cover their tracks. Read more