Thursday 5 April 2012

Scorpene deal: Bribery under the probe

The French court is looking into alleged payment of bribes in the sale of the French submarines to high-ranking Malaysian officials, including Prime Minister Najib Tun Razak.

 Céline Boileau
 | April 5, 2012

PARIS: The French judiciary which has officially started its investigation into the Scorpene deal is targeting on information that there was corruption involved in the sale of the French submarines to Malaysia.

The focus of the suspicion is on the €146 million that could have ended up in the pockets of Malaysian officials, including current Prime Minister Najib Tun Razak.

After two years of police investigation following the complaint filed by Malaysian NGO Suaram, the case on the Scorpene deal will be judged by Roger Le Loire and Serge Tournaire at the Paris Tribunal de Grande Instance.

According to AFP, the investigation will look into the three contracts for the submarines worth €1.2 billion, which were signed on June 5, 2002.

The main goal was to deliver Malaysia’s first submarines and train its Royal Malaysian Navy (RMN) personnel.

According to documents reviewed by FMT, the contracts had two components: the sale of two submarines built by French naval shipbuilder DCNS and Spanish shipbuilding firm Izar, for €920 million; and the delivery of “logistical support” from a Malaysian company, Perimekar Bhd, worth €114 million, to train the first 200 RMN personnel.

According to AFP, the alleged corruption could involve high-ranking people in Malaysia such as Abdul Razak Baginda, a close associate of Najib, the then defence minister.

The suspicion is based on the fact that commissions and dividends might have gone to Terasasi Sdn Bhd and Perimekar, the two companies owned by Razak Baginda and his relatives who are the main shareholders.
The judges will have to determine if real services had been delivered by these companies.

According to the AFP, the three contracts will be the main focus of the probe.

Confidential memorandum

The first contract is for “support services” for which €114 million would have been paid by the Malaysian government to Perimekar.

The second one, called “C5 contract of engineering business”, was concluded in August 2000 between DCNI, a subsidiary of DCN, and Thales International Asia (Thint Asia), worth some €30 million.

The third agreement covered a “consulting agreement” signed in October 2000 between Thint Asia and the Terasasi. A total of €36 million had ave been collected by Terasasi Malaysia and Terasasi Hong Kong.

The French investigators are also studying one of the invoices issued by Terasasi in August 2004 for €359,450 sent to Thint Asia.

This is because there is a hand-written note that mentions that “Razak asked if SF [supporting fee or commission] can be considered fast enough”.

For investigators, “it appears that… the amounts paid to Terasasi ultimately benefited Najib, the defence minister, or his adviser Razak Baginda”.

But Olivier Metzner, lawyer for Thales, told a French newspaper (Le Parisien) that “we have already demonstrated to investigators that there was no corruption in this case”.

Nonetheless, a confidential memorandum made available to FMT stated: “The beneficiaries of these funds are not difficult to imagine: the family clan and Razak Baginda relations. In addition, these funds will find their way to the dominant political party (Umno).”

According to Malaysian law, all major defence contracts must go through a local company.

For lawyers William Bourdon and Joseph Breham, who are handling the matter for Suaram, “this instruction should help shed light on the origin and the recipient of commissions regardless of nationality”.

Under French laws, giving bribes to foreign officials is a crime punishable by 10 years in prison.

Celine Boileau is a freelance writer based in Paris.

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