Malaysian Submarine Scandal Continues

Asia Sentinel
by Hamish McKenzie
28 April 2010

French Lawyer Looks for Answers for Scandal in Kuala Lumpur

Joseph Breham, one of a team of lawyers looking into allegations of corruption in a Malaysian submarine purchase from a French defense conglomerate, told reporters in Kuala Lumpur Wednesday that he had filed a 10-page inquiry with the French courts that calls into question the actions of a company with close ties to the Malaysian Prime Minister’s best friend and aide, Abdul Razak Baginda.

Breham is also expected to question several witnesses in Kuala Lumpur about the case, which has broken into the open after years of silence in Malaysia. The inquiry, which now rests with independent French prosecutors, is directed at a €114 million (US$151.1 million) commission paid to a company called Perimekar, which Breham’s legal team suggests was established in 2001 purely for the purpose of receiving the kickback. Najib Tun Razak, then Malaysia’s defense minister, led the negotiations with the French government to buy the two Scorpene-class submarines, build by Armaris, a subsidary of the French defense giant DCN, and to lease a third a few months later, in 2002.

Political reformers in Malaysia say they are placing their hopes on the French investigation to get to the bottom of the payment to Perimekar and its implications because, they say, there is little hope that the Malaysian justice system will bring the truth to light. Despite repeated requests for information by opposition leaders in Malaysia’s parliament, Najib and other top members of the government have refused to answer.

Cynthia Gabrial, who sits on the board of directors of the human rights NGO Suaram, for whom Breham and his colleagues are acting, told Asia Sentinel that “whoever’s guilty must be punished, and if it has the be the French court system that actually brings this issue to surface, then so be it.”

It isn’t likely that anybody will get any answers soon, however. The Perimekar episode goes well beyond Malaysia and is believed to be just a part of years of peddling defense equipment including submarines to countries across the globe by DCN.

Investigating judges looking into some parts of the French establishment have been stalled for years by their inability to obtain defense secrets, partly because of a suspicion that they are related to top figures in French politics. In the past allegations have arisen that sought to ensnare such figures as Edouard Balladur, who ran against President Jacques Chirac, and Nicholas Sarkozy, now the French president, who was Balladur’s campaign manager.

Perimekar, according to the Malaysian government, was paid by DCN for “coordination and support services” during the submarine negotiations. But Breham and Suaram say it’s highly unlikely the company had the ability to carry out such a role.

“Perimekar was created only in 2001, a few months before the submarine contract was definitely signed,” Breham told the press conference. “This means that Perimekar has no experience at all in submarine deals, has no experience in logistics, has no experience in nothing regarding submarines.”

“Perimekar until this contract had never had any contract with any company. The only thing Perimekar had done until this signature of the €114 million contract was lose RM75,000 (US$23,310) in 2002. That was the only thing Perimekar had ever done,” Breham said.

Breham said the French prosecution is particularly concerned about the fact that Razak Baginda’s wife, Mazalinda, was the principal shareholder of KS Ombak Laut Sdn Bhd, which owned Perimekar. He said he hopes the inquiry will answer where the money for the commission came from, where exactly the money went, and if the money stayed in Malaysia.

Perimekar appears to have been subsumed into another company, Boustead DCNS, a joinrbenture between Boustead’s parent company and DCNS, SA, the Frnch defense company. In its annual report, Boustead Heavy Industries described Perimekar as an “associate of the Group” that is “involved in the marketing, upgrading, maintenance and related services for the Malaysian maritime defence industry.”

The inquiry is now at a preliminary stage, Breham said. If the French prosecution finds that the questionable elements surrounding the commission payment to Perimekar warrant further investigation, it will pass the case on to an ‘instruction judge’ who will conduct a deeper inquiry that could last for years. For instance, a similar corruption case involving DCN and the sale of frigate to Taiwan has dragged on for more than 10 years, Breham said. Then, if the judicial power believes there is sufficient evidence of corruption, the case will move to trial phase.

The scandal began to come to the surface in 2006 with the gruesome murder of Altantuya Shaariibuu, a Mongolian translator and spurned lover of Razak Baginda who had accompanied him to France for 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. Razak Baginda was tried along with Najib’s two bodyguards but was acquitted without having to put on a defense in a trial that left more questions than answers. Immediately after his acquittal, Razak Baginda left the country for England, where he remains.

Breham said the French jurisdiction cannot consider the murder of Altantuya Shaariibuu in its investigation. “The only thing that France’s jurisdiction will delve into is corruption.”