Saturday, August 14, 2010

Najib must account for the Scorpenes' never-ending costs

Pakatan Rakyat leaders have demanded a clarification from Prime Minister Najib Razak over what they said were never-ending costs for the two problematic Scorpene submarines he bought, in light of the latest RM532 million "in-service support" deal dished out to a government-linked firm.

“This looks like an additional cost the Najib administration has not disclosed before. It will jack up the total bill and re-emphasize the foolishness of the government in making such a wasteful acquisition,” PKR strategist Tian Chua told Malaysia Chronicle.

"But even though nasi sudah jadi bubur (the misdeed has been done), he cannot hide. The public has a right to an explanation and he must account for how he has spent taxpayers' hard-earned money."

The two Scorpene submarines purchased from France’s defense giant DCNS in 2002 were delivered only recently. Since arriving, both ships have suffered some form or other of malfunctioning and were reportedly docked for weeks.

Although the Navy has given both the Scorpenes a clean bill of health, the intimidating way in which they denied the malfunctioning accusations and warned off the media have sparked even greater suspicion than before.

Account to the public on the costs

Indeed suspicion, corruption, blackmail, sex and even murder have marked this arms acquisition, the chunkiest so far by the Malaysian government.

Apart from public worry that the submarines do not cater to national needs as the coastal waters may be too shallow to justify their high-tech costs, the ships have also dragged country into international infamy.

French financial police are investigating the possibility of corruption between DCNS officials and members of Malaysian defense ministry in the deal. On the Malaysian side, Najib was the defense minister who had authorized the purchase, and part of the French probe actually centers on a complaint that a commission of 114 million eurors or RM 570 million was paid to a firm controlled by his close friend Razak Baginda.

Apart from possible graft, Najib, his wife Rosmah Mansor and Baginda were also implicated in the murder of a Mongolian translator Altantuya Shaariibuu, who had allegedly acted as a go-between for Baginda and DCNS.

“The Scorpenes have cost Malaysia much more than the actual billions of ringgit spent. No doubt the damage has been done but it does not mean that Najib can sweep it under the carpet especially when new bills are still coming in,” PAS vice president Salahuddin Ayub told Malaysia Chronicle.

New bills still coming in

Defense Ministry data show the total costs for the 2 submarines excluding annual maintenance came up to 1.34 billion euros or about RM6.7 billion before taking into account maintenance fees. The sum broke down down to 969 million euros for the two submarines, 219 million euros for missiles, 38 million euros for miscellaneous equipment and 114 million euros for commission paid to Perimekar, which is Baginda’s firm.

Maintenance fees were initially agreed at RM600 million for six years or RM100 million per year. However, this was later increased to RM270 million per year.

On Friday, in a filing to the Malaysian stock exchange, Boustead Holdings Berhad announced the government’s decision to award the contract to its unit Boustead DCNS.

“Boustead DCNS Naval Corporation Sdn Bhd had received a LETTER OF AWARD dated 12 August 2010 from the Government of Malaysia for the contract to undertake In Service Support (ISS) for the two Royal Malaysian Navy’s Prime Minister Class Scorpene Submarines (“the Contract”). The Contract is for total contract sums of EUR 193 million and RM 532 million and is effective for a period ending 30 November 2015.

“The contract includes a full Submarine Integrated Logistics Support package. This consists of a comprehensive spare parts package as well as the outfitting of workshop equipment, respective yard facilities and equipment, submarine safety conditioning facilities and their corresponding upkeep and maintenance. The contract also covers tug boat services and the operation and maintenance of the shiplift, transfer system and submarine “umbilical services”.

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