More Trouble over Subs for Najib

Joseph Breham, a French lawyer who has spent the past two years pursuing allegations of massive bribes in connection with the Malaysian purchase of submarines from the French defense contractor DCNS, is expected to deliver fresh details of the scandal tomorrow in Bangkok.

The Malaysia-based reform organization Suaram, which asked French prosecutors to look into the submarine scandal in April 2010, has called a press conference at the Foreign Correspondents Club of Thailand at 2 pm for Breham reportedly to present fresh revelations to reporters.

The press conference is being called in Bangkok instead of Malaysia because Breham’s associate, William Bourdon, was unceremoniously expelled from the country after describing details of the case to a dinner sponsored by Suaram in Penang. Breham sought a work visa to come to Malaysia for the current event but apparently no action has been taken on his visa, so Suaram decided to move the press conference to Bangkok.

There appears to be a growing possibility that Prime Minister Najib Tun Razak could be indicted in France for complicity in the case. Central to the inquiry is alleged illegal commissions that were paid out to Malaysian officials and politicians, which have been deemed illegal and categorized as bribes, after France became a signatory to the OECD convention.

Earlier, Cynthia Gabriel, the director of Suaram, said prosecutors are in possession of more than 150 documents that tie Najib directly to the scandal. Najib was appointed minister of defense in 1991 and oversaw a series of extensive defense purchases of Russian Sukhoi jets, coastal defense vessels and other equipment. Gabriel told the Malaysian website Malaysiakini that the press conference is expected to "reveal further damning details from the initial findings of the prosecutors and to announce the latest developments surrounding the case," adding that it would “help fill in the vacuum of information on gross corrupt and illegal practices involved in arms procurement in the name of Malaysia's national security.”

The most controversial of Najib’s purchases was the US$1 billion paid for two Scorpene-class diesel submarines, for which a company called Peremikar Sdn Bhd, owned by one of Najib’s closest friends, Abdul Razak Baginda, received a €114 million commission that critics have charged was a kickback that made its way into the hands of Malaysian politicians.

So far, the case has gained precious little traction in Malaysia despite nearly six years of sensational revelations involving bribes of hundreds of millions of euros to Malaysian politicians including Najib when he served as defense minister, and the murder for hire by two of Najib’s bodyguards of a 28-year-old Mongolian woman named Altantuya Shaariibuu. Najib has maintained consistently favorable poll ratings and runs well ahead of the United Malays National Organization, the country’s biggest political party, which he heads.

Malaysia’s mainstream news media, which are wholly owned by the component parties of the national ruling coalition, have worked assiduously to bury the story although it has been reported extensively by the country’s ferociously active internet press and bloggers. With the press conference being held in Bangkok, and expected to be attended by journalists from the international press, it remains to be seen if Najib’s luck holds out.

The revelations have picked up in recent months with the appointment of investigating magistrates Roger Le Loire and Serge Tournaire at the Paris Tribunal de Grande Instance, Asia Sentinel reported in April that investigators believe that at least some of €36 million funneled from a DCNS subsidiary through a Hong Kong-based company called Terasasi Hong Kong Ltd. ended up in the pockets of Najib. A handwritten note found in DCNS files said “Razak” wanted the money paid quickly. Najib, of course, is known by his first name. But there are questions whether French defense officials would have known that in a country where people are often addressed by their family names.

Abdul Razak Baginda, a close Najib friend and the former head of a Malaysian think tank who was at the center of the 2006 investigation into Altantuya’s death, is listed as one of the two directors of Terasasi, according to the Hong Kong Companies Registry. The other director is Abdul Malim Baginda, Baginda’s father. Perimekar Sdn Bhd., another company wholly owned by Razak Baginda, received €114 million in “commissions” in the purchase of the submarines. Investigators believe those funds were also directed to UMNO politicians.

The two Armaris Scorpenes, named for the first prime minister of Malaysia, Tunku Abdul Rahman, and Najib’s father, Tun Abdul Razak, are on duty in Malaysian waters.

Cherchez le Sarko

One of the intriguing questions being asked in Paris concerns whether investigators will become more aggressive in examining DCNS’s transactions after former French President Nicholas Sarkozy was turned out of office last month after he lost to the Socialist candidate, Francoise Holland. Sarkozy has repeatedly denied any role in a DCNS scandal that is vastly larger than the one in Malaysia. Beginning in the 1980s, DCNS, a state-owned weapons manufacturer, peddled subs and ships all over the planet including to India, Pakistan, Taiwan, Chile and Argentina as well as Malaysia. Some of the purchases have blown up in scandal and, as in Malaysia, in murder.

In 2002, for instance 11 French engineers employed by DCNS were killed in Pakistan in a bombing first thought to have been perpetrated by Islamic militants. The 11 were in Karachi to work on three Agosta 90 B submarines that the Pakistani military had bought in 1994, with payments to be spread over a decade. According to Reuters, commissions were promised to middlemen including Pakistani and Saudi Arabian nationals. Agosta is a subsidiary of DCNS.

Two French magistrates, Marc Trevidic and Yves Jannier, who were looking into the case on behalf of the victims, said kickbacks ended up in the campaign funds of Edouard Balladur, the French prime minister and a rival of Jacques Chirac in the 1995 presidential election. Sarkozy was Balladur's campaign manager as well as budget minister when the contract for the subs was signed.

Although Sarkozy and Balladur have both denied any wrongdoing, a top-secret memo turned up in October 2008 from DCN, which was state-owned at the time of the alleged kickbacks. Copies of the memo were shown on French television. The memo reportedly said France had stopped paying the bribes after Chirac won the 1995 elections despite requests by Pakistani officials for several years afterwards. Eventually, according to the story, the Pakistanis eventually lost patience and orchestrated the attack on the Agosta engineers in retaliation.

Another case involves the French company Thales, formerly Thompson-CSF, which sold six DCN-built La Fayette-class 'stealth' frigates to Taiwan in 1992 for US$2.8 billion. The warships, designated Kan Ding by Taiwan, were delivered between 1996 and 1998. The website DefenseNews reported at the time that Taiwan was seeking US$882 million, down from US$1.12 billion on its claim against Thales, according to documents filed with the French market regulator Authorité des Marches Financiers.

Taiwan's claim, the website said, was based on allegations that Thales wrongfully paid commissions to agents in the sale of the frigates. Thales said in the filing that it and its industrial partner have consistently contested the claim. A Thales spokesman declined to comment beyond the information contained in the filing. Thales was prime contractor on the sale of the frigates, which were built by DCN.