DEFENCE Minister Mohamad Sabu said today that the Governance, Procurement and Investigating Committee (GPIC), headed by former auditor-general Ambrin Buang is currently investigating procurement and financial issues in the Defence Ministry (Mindef) and urged that speculation into the investigations be stopped.
Mohamad, popularly known as Mat Sabu, said in a statement that the GPIC is investigating the matter as was the case in the land swap deals in Plentong and Tebrau recently.
“The ministry will then take the findings to the cabinet before reports to the MACC and the police are made for further action.
“Parties not involved in this investigation should not be making speculations on issues that are being investigated by GPIC, such as the purchase of helicopters which will disrupt the investigation process,” he added.
Mohamad was referring to reports from Free Malaysia Today that military helicopters bought during the previous administration for over RM300 million have yet to be delivered to the Royal Malaysian Army.
The report said that six MD530G light scout attack helicopters, manufactured by MD Helicopters of US aerospace giant McDonnell Douglas, were ordered in 2016 by Mindef, then headed by Hishammuddin Hussein.
The helicopters, better known as “Little Birds”, had reportedly impressed Mindef officials during a demonstration at the 2015 Langkawi International Maritime and Aerospace (Lima) exhibition.
But an investigation into the deal has revealed more startling details, including the fact that the army never took delivery of the helicopters.
The publication reports that a local company – the appointed agent in Malaysia for MD Helicopters – has strong ties to “a very senior” Mindef official and made a proposal to the ministry to acquire the six MD530G.
This proposal was submitted to former prime minister and finance minister Najib Razak for approval.
The acquisition was given the green light through direct negotiation, and the deal was exempted from undergoing value management checks.
The terms of the contract, signed in November 2016 stipulated that the helicopters were slated to be delivered in two batches. The second batch was scheduled to arrive last year.
The company was paid 35% of the contract value, amounting to some RM113 million.
However, due to absence of due diligence, Mindef was not aware that the company had previously been terminated as the local agent for MD Helicopters due to failure to meet financial obligations.
The Malaysian air force had also raised concerns over the ability of the MD530G.
“One complaint was that it did not have a combat-proven record,” a retired air force official was reported as saying to the news portal.
A proposal sent to Hishammuddin in 2015 quoted the price at US$60 million (RM251 million), but three months later, the price was inexplicably inflated.
In checks about the company, it was found to have been making financial losses prior to the deal, and the helicopter deal is reportedly its first contract, and its first multi-million ringgit agreement. – THE MALAYSIAN INSIGHT
RM300 million for US-made helicopters, bought through dubious firm and never delivered
KUALA LUMPUR: Military helicopters bought during the previous administration for over RM300 million have yet to be delivered to the Royal Malaysian Army, a source close to investigations into allegations of corruption and mismanagement in the purchase of defence assets told FMT.
It is understood that six MD530G light scout attack helicopters, manufactured by MD Helicopters of US aerospace giant McDonnell Douglas, were ordered in 2016 by the defence ministry (Mindef) then headed by Hishammuddin Hussein.
The helicopters, better known as “Little Birds”, had reportedly impressed Mindef officials during a demonstration at the 2015 Langkawi International Maritime and Aerospace (Lima) exhibition.
But an investigation into the deal has revealed more startling details, including the fact that the Malaysian army never took delivery of the helicopters.
“It was found that the helicopter which performed at Lima 2015 wasn’t really an MD530G but another variant, the N369FF,” the source told FMT.
FMT contacted Mindef for more details but was told that investigations are still ongoing.
The ministry recently published its findings on suspicious “land swap” deals involving military land, and urged the Malaysian Anti-Corruption Commission to investigate what it said could be discrepancies resulting in the loss of some half a billion ringgit involving 16 projects.
FMT now understands that after Lima 2015, a local company with strong ties to “a very senior” Mindef official (“Company A”), which was the appointed agent in Malaysia for MD Helicopters, had made a proposal to Mindef to acquire the six MD530G.
The proposal was then submitted to former prime minister and finance minister Najib Razak for approval.
It is understood that the finance ministry gave the green light for the acquisition from Company A through direct negotiations.
It is also learnt that the Economic Planning Unit exempted the deal from undergoing value management checks.
A contract was signed in November 2016, in which the helicopters were to be delivered in two batches with the second batch scheduled to arrive by last year.
As per the contract, Company A was paid 35% of the contract value, amounting to some RM113 million.
“The main issue is that no real due diligence was done with the government,” said the source, adding that the approval was given just about four months after submission of the proposal.
“The decision-making process for vital military assets would take time so that market research, due diligence, and value management checks could be done.”
The source said in the absence of due diligence, Mindef was not aware that at the time the agreement was made with Company A, it had already been terminated as the local agent for MD Helicopters over its failure to meet financial obligations.
“This was very irresponsible because it opened up the government to the risk of financial losses and a failure to obtain the helicopters.”
There were also concerns among the top brass of the Malaysian Air Force about the ability of the MD530G.
“One complaint was that it did not have a combat-proven record,” a retired air force official told FMT.
The contract was also “vague and lacked key details”, including issues over military specifications and the certificate of airworthiness (CoA), required by helicopters in order to operate.
There was also another major problem with the deal.
In 2015, Company A sent a proposal to Hishammuddin worth US$60 million.
“Just three months later, it submitted another proposal, this time over US$70 million,” the source told FMT.
“In just three months, the price inexplicably went up by over 20%.”
A separate investigation into Company A found that it was financially weak before the deal was struck, having suffered losses in 2015 and 2016.
The deal is also believed to have been the first contract for the company, which had no experience in implementing a multi-million ringgit agreement.
“It only owned computers, furniture and office supplies valued at under RM50,000. Mindef could have gone directly to MD Helicopters and saved millions in taxpayers’ money.”
FMT is contacting Hishammuddin for a response. – FREE MALAYSIA TODAY
THE MALAYSIAN INSIGHT / FREE MALAYSIA TODAY
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