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Sunday, July 23, 2017

Dredging up the DCNS Scorpene scandal

KINIGUIDE | Interest in the Scorpene scandal has resurfaced since the indictment of two former top executives by French investigators last Wednesday.
This is part of their probe on alleged kickbacks from the 2002 sale of two Scorpene-class attack submarines to Malaysia.
What was the 2002 sale of Scorpene submarines about, again?
In 2002, Malaysia signed a deal to purchase two Scorpene-class submarines, supposedly for one billion euros, from France’s Direction des Constructions Navales (DCN), later renamed to DCNS and then to Naval Group, and Spain’s Navantia. Armaris, a joint-venture between DCN and French defence and electronics giant Thales, was to be the prime contractor for the sale.
At the time of the Scorpene deal, Prime Minister Najib Abdul Razak was the defence minister and the deputy prime minister.
How did that become a scandal?
The sale went largely unnoticed until 2006, when the murder of 28-year-old Mongolian translator Altantuya Shaariibuu began to raise questions about the Scorpene deal.
Altantuya, who had reportedly helped in the negotiations that led to the purchase of the submarines, was also the jilted lover of Abdul Razak Baginda, Najib’s former close associate, who was also one of those involved in brokering the Scorpene submarines deal.
Abdul Razak was also charged with abetment for her murder though he was later acquitted, while two special task force officers who were formerly Najib’s bodyguards were charged and convicted of her murder.
Following the Altantuya case, the opposition alleged corruption in the Scorpene deal.
It was said that RM540 million was paid out in “commission” for the deal, with one of the recipients being a company called Perimekar Sdn Bhd, which is purportedly linked to Abdul Razak and that the payment ultimately benefitted Najib.
Jailed de facto opposition leader Anwar Ibrahim has also accused Najib of having links with both the alleged commission deal and with Altantuya.
It also emerged later that in addition to the cost of the submarines and the whopping “commission” fee, under the terms of the original agreement the vessels were basically bare of armaments and detection devices.
The Malaysian military must pay an additional 130 million euros to equip them.
What were the responses to all this?
Although records showed that Najib was in France at the same time as Altantuya and Abdul Razak, the prime minister has repeatedly sworn to Allah that he had never known the Mongolian.
He has consistently denied any involvement in the murder of Altantuya, with himscoffing at the allegations again during the 2016 Umno general assembly.
The “architect” of the Scorpene deal, Jasbir Singh Chahl had also said that Altantuya was never involved in the contract nor was she an interpreter for the deal.
Meanwhile, back in 2007, the Defense Ministry had denied any wrongdoing in the Scorpene deals.
Hold on, what about the money supposedly paid to Perimekar?
Perimekar, a Malaysia-based company, was said to have been paid RM540 million for the Scorpene deal.
According to French lawyers, the company is wholly-owned by another company, KS Ombak Laut Sdn Bhd, which in turn was controlled by Abdul Razak, whose wife Mazlinda, a lawyer, and former magistrate, was the principal shareholder.
The allegations that Perimekar had been paid the whopping sum of money for “commission” was dismissed by the Defence Ministry.
The ministry said they negotiated directly with the Scorpene manufacturers and did not pay any commission either to Abdul Razak or to Perimekar. However, they conceded that Perimekar has a six-year contract worth 114.96 million euros to provide support services for the submarines.
Najib himself has said that the accusations of the RM540 million commissions were part of the opposition parties’ “concerted and continuous effort” to confusethe public.
The payment to Perimekar, he had stressed, was not a commission but payment for being the "project services provider" and coordinator for a period of six months.
However, human rights group Suaram later said in a complaint filing to France that there were neither such support or services.
The complaint also said that Perimekar was registered in 2001, a few months before the signing of the contracts for the Scorpene sale. It also said that the company “did not have the financial resources to complete the contract”.
It also stated that Perimekar had “absolutely no capacity, or legal means or financial ability and/or the 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 added.
Among the documents from the probe by French authorities into this case, DCN officials had purportedly referred to Perimekar as “...nothing more than a travel agency”.
So what was the French authorities’ role in this?
Suaram, through their French lawyers, filed two separate requests with the French courts in late 2009 and early 2010 against DCNS for paying commissions to Malaysian officials in connection with the Scorpene deal.
The payment of commission is illegal under French law. Even before Suaram’s request, however, judges in the Paris Prosecution Office had 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 investigation by the French authorities sought to determine if Najib had received kickbacks via Abdul Razak, for the Scorpene contract. In March 2012, French authorities appointed two examining magistrates to investigate the case.
Suaram also gained access to the documents related to the case after they filed to become a party to the inquiry.
Did the French prosecutors find anything?
They purportedly found evidence that the then defence minister Najib had sought US$1 billion (RM3 billion) for Perimekar from DCN’s subsidiary DCNI.
According to prosecution papers revealed by Suaram, Najib had supposedly asked for the amount for Perimekar as a condition for a meeting with him on July 14, 2001.
The fax, dated June 1, 2001, was from Francois Dupont, the Malaysian representative for private company Thales Asia International, to one D Arnaud.
Another document obtained by the French authorities allegedly revealed that Terasasi Sdn Bhd, a company owned by Abdul Razak and his father, was also linked to the scandal.
An Agence France-Presse (AFP) report had said that Hong Kong-based Terasasi had allegedly received millions for “consultations”. It was also reported that at least 36 million euro (RM144 million) was funnelled through the Terasasi accounts to Najib as commission for the Scorpene sale.
The probe also found a contract for a “consulting agreement” signed in October 2000 between Terasasi and Thint Asia, otherwise known as Thales International.
French authorities say Terasasi apparently received regular payments from Thint, including one for 360,000 euro (RM1.44 million) that was accompanied with a handwritten note saying “Razak wants it to be paid quickly”. There is no indication which Razak the note was referring to.
The examining magistrates also have documents that show that the money was funnelled from Thint Asia to Terasasi – 3 million euro (RM12 million) when Terasasi was still domiciled in Malaysia, and 33 million euro (RM132 million) after it was incorporated in Hong Kong.
French lawyer Joseph Breham had also claimed that a highly classified document was allegedly “bought ” by Thint Asia for 36 million euro. He had reportedly based this claim on French prosecutors investigation papers.
The classified document is said to be the Royal Malaysian Navy’s evaluation of the Scorpene-class submarines purchased by the government.
Surely there were explanations for those findings?
Jasbir, the “architect” of the deal, explained that the contract between the Malaysian government and Perimekar was for “defined scope of works” and provision of such services was within commercial norms.
Through a Bernama interview, Jasbir said that Perimekar was nominated as the local vehicle to spearhead the submarine project, while Terasasi was incorporated to serve as an external service provider to advise and assist Thales.
Meanwhile, the government has downplayed the French probe into the claims of corruption in the Scorpene deal, saying that there was “no case ” to answer.
Then Defence Minister Ahmad Zahid Hamidi had also said that his ministry has “no information ” about claims that Terasasi had sold state secrets to Thint Asia.
“As far as the ministry knows, to date, there has been no detection of information being leaked out of Malaysia.
“The ministry also does not have any information about claims that Terasasi received periodical payments from Thint Asia,” he had said then.
What else have the French prosecutors done so far, in relation to this case?
In late 2015, almost four years since they first started their investigations, French prosecutors made their first indictment in the case.
It was the former president of Thales, Bernard Baiocco , 72, who was indicted for “active bribery of foreign public officials linked to Najib”.
Thales is the French company alleged to have paid the commissions to Najib and Abdul Razak. After 48 hours in police custody, Baiocco and a director of DCNI were also indicted for “complicity in misuse of corporate assets”.
More recently, three days ago, two more former top executives were indicted by French prosecutors with corruption over the alleged kickbacks.
The two are Phillippe Japiot, former chairperson of DCNI and Jean-Paul Perrier, former chief executive of Thales. It was also reported that Japiot had also been indicted for “abuse of social assets” and Perrier for “complicity in the abuse of social assets”.
Sounds like the French have completed their part in the matter.
Not quite. Indictments under French law are not the same as indictments or charges as understood in American or British common law. France has a two-tiered court system and the Scorpene case is still at the first stage, where an examining magistrate is probing the case.
Examining magistrates are judges who carry out pre-trial investigations into allegations of crime and are given certain powers to facilitate their investigations but are not actually involved in the trials. In the French legal system, the examining magistrate may issue search warrants, order the seizure of necessary evidence, compel witnesses to appear and give evidence, among others.
Once the probe is complete, the examining magistrate can then recommend prosecution for those indicted in the case. A prosecution will then see the case transferred from the examining magistrate to an open court where a trial will commence.
Did Malaysian authorities also investigate these allegations about the Scorpene deal?
Suaram also lodged a report with the Malaysian Anti-Corruption Commission (MACC), who did probe into the case. Opposition MPs claimed that the MACC was seeking mutual legal assistance (MLA) to get help from the French authorities in their probe into the Scorpene purchase.

However, news about the MACC’s probe into the Scorpene deal has been scarce since then. With the recent indictments of the two former executives, opposition groups have once again called for the MACC to “re-open ” their probe into this matter.
What happens now?
Suaram, who has maintained a consistent interest in this case, has claimed that more French indictments are expected over the alleged kickbacks from the Scorpene deal.
“We understand from our French lawyers that several more indictments are expected before the probe wraps up and is brought before an open court,” said Suaram director Sevan Doraisamy and C4 director Cynthia Gabriel in a joint statement, shortly after the indictment of the two former top executives in Thales and DCNI. -Mkini

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