DCNS: Stormy sailing ahead
Joseph Breham, a member of a French legal team that filed complaints in a Paris court in connection with a potentially explosive scandal over the billion-dollar purchase of French submarines by Malaysia is due to land in Kuala Lumpur today (April 28) to seek further information on the case and to speak with their clients, the Malaysia human rights organization Suaram.
As Asia Sentinel has reported at length, the deal was engineered by then-Defense Minister Najib Tun Razak, now Malaysia's Prime Minister, in 2002 and resulted in a massive €114 million (US$151.1 million at current exchange rates) commission for one of Najib's closest associates, Abdul Razak Baginda. The purchase price included two Scorpene-class diesel submarines built by Armaris, a subsidiary of the French defense giant DCN (formerly Direction des Constructions Navales) and the lease of a third retired submarine manufactured by a joint venture between DCN and Spanish company Agosta.
Breham, one of the three lawyers who filed the case with Parisian prosecutors on behalf of Suaram, told Asia Sentinel the French court has opened a preliminary investigation into the matter and that he would be advising his clients on the next steps. Breham said he will also hold a press conference in Kuala Lumpur today to give some details to local reporters. Breham, Renaud Semerdjian and William Bourdon, the lead lawyer, filed the request to investigate bribery and kickback allegations against DCN first in December and filed additional documents in February.
The case has been making headlines in Malaysia - although few in the mainstream media, which are owned by the country's leading political parties -- since the gruesome October 2006 murder of Altantuya Shaariibuu, a Mongolian translator and spurned lover of Razak Baginda who had accompanied him to France on some of the transactions over the submarines. Altantuya was shot in the head and her body was blown up with military explosives in a patch of jungle outside of Kuala Lumpur. Two of Najib's bodyguards, who were directed to intercede with her by Musa Safri, Najib's chief of staff, have been convicted of the killing. Neither Najib nor Musa has ever been questioned by law enforcement officials about the case.
Although records showed Najib was in France at the same time as Altantuya and Razak Baginda, he has repeatedly sworn to Allah that he had never known the beauteous Mongolian. One report filed by a private detective hired by Razak Baginda said she had been Najib's lover first. After she was killed, authorities discovered a letter she had written saying she was blackmailing Razak Altantuya for US$500,000, although she did not say why.
In addition to the cost of the submarines and the whopping "commission" fee, it has now emerged that under the terms of the original contract, the vessels were basically bare of armaments and detection devices. The Malaysian military must pay an additional €130 million to equip them.
"You mean we bought bare metal?" wrote one incredulous and anonymous military official in an email to Asia Sentinel.
The charges go well beyond the Malaysian purchase. 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.
French politicians seem to have a knack for backhanders. On October 26, in a trial that centered on illegal arms sales to Angola, Jean-Christophe Mitterrand, the son of the late president Francois Mitterand, was given a two-year suspended sentence and ordered to pay a €375,000 fine for receiving embezzled funds. The court ruled that he had accepted millions of euros in "consultant fees" on the arms deals between 1993 and 1998. In the dock with him were 42 people accused of selling weapons to Angola in defiance of a UN arms embargo, or of taking payments from the arms dealers and using their influence to facilitate the sales.
The trial, it was said, shined a light into a murky world of secret payments made in cash and discreet deals linking Parisian high society with one of Africa's longest-running wars. But it hasn't shined a light on what happened elsewhere with contracts concluded by the representatives of France, and particularly by DCN.
For instance, 11 French engineers employed by DCN, which peddled subs to Pakistan, were blown up in a bus bombing in 2002 which was first thought to have been perpetrated by Islamic militants. The 11 were in Karachi to work on three Agosta 90 B submarines that the Pakistani military had bought in 1994, with payment to be spread over a decade. According to Reuters, commissions were promised to middlemen including Pakistani and Saudi Arabian nationals. Agosta is a subsidiary of DCN. It is believed that Pakistani military officials blew up the bus in retaliation for the cancellation of the payments.
In the Taiwan case, the French company Thales, formerly Thompson-CSF sold six DCN-built La Fayette-class 'stealth' frigates to Taiwan in 1992 for US$2.8 billion. At least six people connected with the case have died under suspicious circumstances including a Taiwanese naval captain named Yin Ching-feng, who was believed to have been killed because he planned to go to the authorities about fraud connected with the case. His nephew, who was also pursuing the case, a Thomson employee in Taiwan and a French intelligence agent were also among the dead. It gradually emerged that some $600 million in commissions had been paid into various Swiss accounts set up by Andrew Wang Chuan-pu, the Taiwan agent for Thomson-CSF. In October 2008 a French judge finally ruled that no one could be prosecuted because of lack of evidence.
The Malaysian allegations revolve around the €114 million payment 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.
In the complaints filed 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."
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