Malaysian Mindef Chief to Speak on Sub Scandal

Defense Minister Ahmad Zahid Hamidi is expected to take to the floor of the Malaysian parliament tonight to mount a defense of his ministry’s 2002 purchase of Scorpene submarines from a subsidiary of the French defense company DCN.

Although Zahid Hamidi was due to speak on allegations that Malaysian navy documents were sold to DCN to help its bid for the €1 billion contract, the story has widened out with allegations of corruption in French prosecution documents made public June 25 by Asia Sentinel, whetting opposition appetites during the period for questioning.

The purchase of the submarines has long been dogged by allegations that €114.96 million in commissions in violation of the OECD Convention on Bribery were steered to Perimekar Sdn Bhd., wholly owned by Abdul Razak Baginda, the best friend of then-Defense Minister Najib Tun Razak, now the country’s prime minister, and to the United Malays National Organization. Records also indicate that another €36 million allegedly was steered to a Hong Kong shell company called Terasasi HK Ltd., which was also owned by Razak Baginda and his father. It was Terasasi that was accused by French lawyers of selling the navy documents.

The case has become a political football in Malaysia whatever the facts, with the largely ethnic Malay population standing firmly behind Najib. Although revelations about bribery on the part of DCN and its subsidiaries became widely known over the past year because of the work of Suaram and lawyers in France led by William Bourdon, the Kuala Lumpur-based human rights NGO, the prime minister’s popularity doesn’t appear to have been dented.

That is largely because the ruling coalition and particularly UMNO have worked assiduously to attempt to brand Suaram as a tool of the opposition Pakatan Rakyat coalition. Given the racial politics of the country, most of the facts of the case have gone by the wayside. Najib is expected to call national elections later this year and preserve the Barisan Nasional’s majority in parliament, although there are increasing concerns in the business community that the race could be closer than thought. While Najib may retain his personal popularity, UMNO is considerably less well thought of. Many businessmen are said to be holding up investment out of fear of the closeness of the race. One told Asia Sentinel that several government agencies including Special Branch and the Information Ministry are growing concerned about the thinness of the margin.

Some 133 documents from the French Tribunal de Grande Instance that detail much of the case were published by Asia Sentinel on June 25, causing a furor in Kuala Lumpur, with defenders of the government contending that the publication was timed to disrupt Zahid Hamidi’s defense. Asia Sentinel received the documents anonymously a week previously and spent the rest of the time verifying their authenticity and plowing through them to be able to write a story.

Other speculation has arisen over the role of Altantuya Shaariibuu, the jilted girlfriend of the married Abdul Razak Baginda, in the purchase of the submarines. Altantuya was murdered by two of Najib’s bodyguards in 2006. French authorities said there was no record of her having ever entered the country or having anything to do with the transaction.

However, Asia Sentinel, on Dec. 5, 2007, published pictures of the dead woman standing in front of the Eiffel Tower, Louis Vuitton Paris and a variety of other Paris locations. Although stories alleged that Altantuya spoke no French, her father has said she spoke five languages.

It is certain, however, that she had nothing to do with the original purchase of the subs, since she didn’t become involved with Razak Baginda until after the contract was signed. However, she is believed to have accompanied Razak Baginda on a jaunt to Europe that included a trip to Brest in 2005 where he and Najib presented jackets to Malaysian submariners training in France. The French prosecution documents also detail a trip to Macau by Razak Baginda and Altantuya that was arranged by Jean Marie Boivin, the former DCN finance chief, who left the company to establish a warren of companies in tax-free countries that were thought to steer commissions to defense and political figures in other countries including Pakistan, Taiwan and Chile as well as Malaysia.

Certainly, the judicial inquiry in France is in its infancy. Although there is speculation that Najib and others will be subpoenaed, that is probably well down the road. One witness, Manjit Singh Chahl, reportedly has been served or is about to be.

Suaram’s French lawyer, Joseph Breham, in an interview to Radio Australia recently similarly said that the “minimum will be one to two years before an actual trial, because this is in the investigating phase. The actual trial, where people are pleading and so on, won’t happen for a minimum of one to two years.”