Scorpene’s Sting: Malaysia’s Bribery & Murder Scandal

August 04/17: A former aide to Malaysian Prime Minister Najib Razak has been placed under formal investigation by French financial prosecutors as part of a probe into the 2002 sale of two Scorpene submarines to Malaysia. The accused, Razak Baginda, has denied any wrongdoing during his time as advisor to Najib during his stint as defense minister, and who oversaw the procurement from French shipyard DCN International—who then became a new entity called DCNS, which in turn rebranded itself as Naval Group this year. Last month, two French former defense industry executives were placed under investigation as part of the same probe into alleged kickbacks from that submarines deal. The investigation began after Malaysian human rights group Suaram alleged that the EUR 1 billion sale resulted in some $130 million of commissions being paid to a company linked to Najib.

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Malaysian Scorpene (click to view full) The Franco-Spanish Scorpene diesel-electric attack submarine competes on the global market against an array of competitors, especially ThyssenKrupp HDW’s U209/212/214 family. In June 2002, the Malaysian government signed a EUR 1 billion contract with Armaris (now DCNS) and Spanish naval shipbuilder Izar (now Navantia) for 2 SSK Scorpenes and associated support and training. Both submarines have been delivered to Malaysia, though there have been some technical problems. Which pale in comparison to the deal’s other problems. Within Malaysia, the sale has been compromised by an ongoing trial and set of legal actions around the public kidnapping and private execution of Mongolian modeling student, translator, and paramour Altantuya Shaariibuu. Full and impartial accountability for public figures is not a prominent feature of Malaysian justice, but French Journalist Arnaud Dubus added to the pressure with a March 5/09 report in France’s Liberation, “Un cadavre très dérangeant: L’étrange affaire du meurtre d’une interprète mongole qui gène le pouvoir en Malaisie” (Page 30-31). It named very prominent names, offered details, and revealed the contents of documents that Malaysian courts had refused to admit. A subsequent bribery investigation by French authorities has led to the emergence of even more […]

Scorpene TAR

Malaysian Scorpene
(click to view full)

The Franco-Spanish Scorpene diesel-electric attack submarine competes on the global market against an array of competitors, especially ThyssenKrupp HDW’s U209/212/214 family. In June 2002, the Malaysian government signed a EUR 1 billion contract with Armaris (now DCNS) and Spanish naval shipbuilder Izar (now Navantia) for 2 SSK Scorpenes and associated support and training. Both submarines have been delivered to Malaysia, though there have been some technical problems. Which pale in comparison to the deal’s other problems.

Within Malaysia, the sale has been compromised by an ongoing trial and set of legal actions around the public kidnapping and private execution of Mongolian modeling student, translator, and paramour Altantuya Shaariibuu. Full and impartial accountability for public figures is not a prominent feature of Malaysian justice, but French Journalist Arnaud Dubus added to the pressure with a March 5/09 report in France’s Liberation, “Un cadavre très dérangeant: L’étrange affaire du meurtre d’une interprète mongole qui gène le pouvoir en Malaisie” (Page 30-31). It named very prominent names, offered details, and revealed the contents of documents that Malaysian courts had refused to admit. A subsequent bribery investigation by French authorities has led to the emergence of even more documents, and the scandal is becoming a significant presence in Malaysian politics.

Extreme Prejudice: the Altantuya Case

Altantuya

Altantuya

Altantuya Shaariibuu’s murder case took a dramatic turn when the victim was closely connected to EUR 114 million in “commission” payments to Perimekar, a firm owned by a close associate of Malaysia’s current Defence Minister and impending Prime Minister. The monies were paid by Armaris (now DCNS) for “support and coordination services,” a term that may bring to mind the murder of Taiwanese Captain Yin Ching-feng in connection with a bribery scandal involving Taiwan’s DCNS frigates.

If Liberation’s documents are true, Altantuya was murdered on the orders of Abdul Razak Baginda. Baginda is a close associate of Najib Razak, who was Malaysia’s Deputy PM and Minister of Defence, and now Prime Minister. Baginda has been acquitted in a Malaysian court, but Razak himself has been implicated in the associated bribery deal, and Dubus’ report includes details of text messages Baginda was reportedly sent by Razak, which strongly imply efforts by Razak to cover up the case and interfere with police investigations.

The motive for Altantuya’s death was reportedly twofold: EUR 500,000 she wished to claim as her share of the “commission” for the submarines, and the public embarrassment caused to Baginda’s marriage after his paramour tried to collect. The kidnapping was carried out by by agents of the Malaysian Special Branch police, in broad daylight, in front of Baginda’s house, with witnesses present. Malaysian sources have not published full details, but media organizations outside of Malaysia have.

As is usually true in these operations, it’s the small details that matter. The entire wet operation came undone over the non-payment of Altantuya Shaariibuu’s cab fare. The taxi driver hired by Altantuya for the day did not appreciate that his passenger was kidnapped before his eyes, without payment for the fare. He took note of the registration plate of the kidnapper’s car – and filed a complaint at the local police station. This established that the kidnappers’ car was a government vehicle, and fingered its owners.

Somewhere, a cadre of retired Bulgarian KDS professionals are shaking their heads, and wondering what’s wrong with the kids today.

Events & Developments

2013-2017

 

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Caption

August 04/17: A former aide to Malaysian Prime Minister Najib Razak has been placed under formal investigation by French financial prosecutors as part of a probe into the 2002 sale of two Scorpene submarines to Malaysia. The accused, Razak Baginda, has denied any wrongdoing during his time as advisor to Najib during his stint as defense minister, and who oversaw the procurement from French shipyard DCN International—who then became a new entity called DCNS, which in turn rebranded itself as Naval Group this year. Last month, two French former defense industry executives were placed under investigation as part of the same probe into alleged kickbacks from that submarines deal. The investigation began after Malaysian human rights group Suaram alleged that the EUR 1 billion sale resulted in some $130 million of commissions being paid to a company linked to Najib.

March 18/13: Suicide? French lawyer Olivier Metzner, who had acted for DCNS in the French court inquiry, is found dead yesterday in “an apparent suicide.” His body was found floating off in the waters off an island he owned in Brittany’s Bay of Morbihan, and he had left behind a note. The autopsy results have yet to be announced.

Mr. Metzner has represented his share of major criminal figures over the years. If there are are questions concerning the nature of his death, the list of suspects would reach far beyond Malaysia. AFP | Le Parisien [in French] | Malaysia Insider | UK’s Daily Mail.

Feb 13/13: Free Malaysia Today:

“Controversial businessman Deepak Jaikishan submitted his letter for immunity to the Attorney General’s Chambers (AGC) today, and has challenged Abdul Gani Pattail to respond within a month…. In his letter to the AG, Deepak claimed that the details he had given to the media on Prime Minister Najib Tun Razak and his wife Rosmah Mansor’s role in the gruesome murder was merely a smidgen of what he truly knew.

‘I am willing to cooperate with any authoritative bodies in the country to provide further information on the prime minister’s involvement in the abuse of power involving his family, on the condition that I am given protection from any possible criminal prosecution…’ he wrote.”

Deepak claims to have played a role in convincing private investigator P Balasubramaniam to withdraw a statutory declaration, which drew a link between Prime Minister Najib Abdul Razak and Altantuya. See also Malaysia Today | FMT re: “Who is Deepak Jankishan?“.

Feb 7/13: Free Malaysia Today:

“The French probe into Malaysia’s purchase of two Scorpene submarines has taken a leap forward with a key witness agreeing to assist the investigators, according to the human rights organisation Suaram.

Suaram secretariat member Cynthia Gabriel told FMT that the witness, whom she described as “the key negotiator” in the purchase, offered his co-operation after receiving a second subpoena notice last month.”

2011 – 2012

 

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Nov 28/12 briefing
click for video

Sept 22/12: Amnesty International stepped into the Malaysian controversy, citing the Companies Commission of Malaysia’s (CCM) probe into Suara Rakyat Malaysia (SUARAM) over its foreign funding sources, and “misleading accounts” :

“Amnesty is concerned that the recent government actions against SUARAM appear to be linked to the organisation’s legitimate work, in particular a corruption case which it has brought before the French courts. The government began these actions against SUARAM four weeks after the organisation disclosed new information from documents made available by the French public prosecutor’s office…”

The organization does run local fundraising events, which have been successful, but it also says that it will accept money “from any source” to continue its work. The government replies, with a straight face, that SUARAM should emulate the government’s own example of transparency, and allow itself to be investigated. The Malaysian Insider | Malaysia’s New Straits Times.

June 28/12: Espionage? PKR vice-president and Batu MP Tian Chua ups the ante by citing Document 97, and characterizing it as a private company (Terasasi Ltd. of Hong Kong, linked to Razak Baginda) committing espionage by sending secret documents abroad. The recipient was the French bid participant Thompson CSF, which has since become Thales. The documents say that Terasasi Ltd. forwarded the Malaysian Navy’s detailed analysis of the strengths of competitive submarines and proposals from Holland, Germany, South Korea, Turkey, and Russia. Tian Chua asks:

“How did Terasasi got this [information]? It is not the defence ministry, it is just a private company. Not only did they get [this confidential information], they also sent it to the French who had an interest in it… To get paid for what they were reporting to Thomspon, that is treason.”

That would depend on how treason is defined – but it is an open-and-shut case of espionage. The PKR holds the 2nd-most seats (23) in the opposition People’s Pact coalition, behind the social-democratic Chinese DAP (29), and just ahead of the Pan-Malaysian Islamic Party (22). The ruling UMNO Party alone has 77 seats, and its coalition members give it a firm majority of 135/ 222 total seats.

June 28/12: Reading the Docs. Some of the French prosecutor’s documents link payments to the murdered “interpreter” Altantuya Shaariibuu. Reports re: her entry into France are conflicting, but Document 54 says that:

“Noting in particular that a person by the name of SHAARIYBUU Bayasgalan born on 26 February 1979 in Mongolia was issued a temporary residency card on the French territory valid from 27 August 2004 to 26 November 2004. The address declared was 18 rue Houdon in Paris 18.”

An interview between DCNS’ former financial director Gerard-Philippe Menayas and French police (in Document 136) also seems to indicate payments for Razak’s travels with Ms. Shaaribu, via a Malta firm. Gifen was allegedly one of the companies used to transferred funds to Perimekar Sdn Bhd and Terasasi, as a way of circumventing direct payments that would have clashed with OECD laws. Malaysiakini via Yahoo! Malaysia.

June 25/12: Asia Sentinel Scoop. The Asia Sentinel obtains access to a document archive from the French Directorate of Judicial Police’s April 7/10 raid on DCN’s offices in France:

“Some of the misdeeds appear to have taken place with the knowledge of top French government officials including then-foreign Minister Alain Juppe and with the consent of former Malaysian Prime Minister Mahathir Mohamad, according to the documents, comprising 133 separate files and hundreds of pages. They were presented to the French Prosecuting Magistrate at the Court de Grand Instance de Paris in May and June of 2011. French lawyers have begun preparing subpoenas for leading Malaysian politicians including Prime Minister Najib Tun Razak, the current Defense Minister, Ahmad Zaki Hamad and several other figures.

The documents were sent anonymously to Asia Sentinel via a circuitous route that took them to Brussels, Belgium; Lagos, Nigeria; Brazzaville,Congo; Libreville, Gabon; then to Leipzig, Germany and finally to Hong Kong. The documents, written in French, can be found in a collection in Asia Sentinel’s Scribd account.”

Asia Sentinel story | Full document archive.

Asia
Sentinel scoops documents

June 11/12: No opinion. Word that Terasasi Ltd., which is connected to Razak Baginda, had forwarded confidential Malaysian naval documents to French Firm Thomson-CSF (now Thales), leads to questions in Parliament. Well, not quite. MP Nurul Izzah Anwar [PKR – Lembah Pantai] raised an emergency motion aimed at discussing these allegations, but the Dewan Rakyat’s (lower Parliament) Speaker rejected the motion as a violation of Standing Order 23-1-h. Which says:

“A question shall not be asked for the purpose of obtaining an expression of opinion, the solution of an abstract legal case or the answer to a hypothetical proposition.”

It’s an… interesting brand of politics that prevents discussion of expressions of opinion. Or of allegations against the ruling party which the government has not itself confirmed. Free Malaysia Today.

April 8/12: French investigating magistrates are reportedly looking into a Hong Kong-based company called Terasasi (Hong Kong) Ltd. Abdul Razak Baginda is listed as one of the 2 directors of the company. The other director? Abdul Malim Baginda, his father:

“The magistrates have documents that show that the money was funneled from Thint Asia to Terasasi – [EUR] 3 million of it when Terasasi was still domiciled in Malaysia, and [EUR] 33 million after it was incorporated in Hong Kong… theorize that it was part of [EUR] 146 million that may have been funneled to officials of the United Malays National Organization and Najib… One payment was for [EUR] 360,000 accompanied with a handwritten note saying “Razak wants it to be paid quickly.”

See: Asia Sentinel | Malaysia Today.

March 18/12: After 2 years of preliminary investigation by French police, France appoints a pair of magistrates to investigate allegations of bribery in Malaysia. Murder is beyond their purview, but France agreed to the OECD anti-bribery convention in 2000, and a 2007 French law created maximum penalties of 10 years in prison, and/or a fine of 150 million euros. As the Asia Sentinel puts it:

“At the heart of the story are allegations of a massive scandal involving not only Malaysian officials but top French politicians and arms purchases in Pakistan, Taiwan, India, Chile, Argentina, Saudi Arabia and other countries as DCNS geared up to sell naval equipment across the planet. The allegations include blackmail, kickbacks, a string of murders in Pakistan, Taiwan and Malaysia and involvement of such top figures as former French Prime Minister Edouard Balladur and others.”

Different magistrates are investigating different aspects, and magistrates Serge Tournaire and Roger Le Loire will deal with Malaysia. Under the French civil system, these judges are effectively independent investigators, with the power to subpoena witnesses and conduct international surveys. Even so, DCNS has managed to stonewall police searches of key files using “military secrets” claims, and aspects of the DCNS corruption scandal touch both of France’s major parties. That ensures powerful protectors, and indeed, none of the corruption cases against DCNS have been concluded in French courts. The inability to plea bargain has something to do with that as well, but it is not the whole story.

Meanwhile, in Malaysia, the appeal of the two bodyguards sentenced to death for the Altantuya murder has passed its 2nd year, and has been delayed again until after expected elections. Asia Sentinel | Malaysia Today.

French Magistrates appointed

July 22-23/11: French lawyer Willian Bourdon is detained at the Kuala Lumpur International Airport, and subsequently deported for ‘violating the terms of his visa.’ He is acting for the Malaysian NGO SUARAM (Voice of the People) as their French legal representative.

It was Suaram who pressed the French government to open a probe into the deal. French investigators have been poring over DCNS records for months, but there area couple of legal hurdles. One is whether an NGO can act as a complainant in a bribery investigation, which this is. For France, the question is not one of murder, which is outside their jurisdiction, but of bribery, which is within it. If the NGO is deemed to have standing, the investigation would move forward and the documents found to date could become legally relevant. Malaysian PKR party VP and sitting MP Nurul Izzah Anwar was more blunt, at a a 500 guest “Ops Scorpene” fundraising dinner in Penang:

“She claims that Bourdon may have had access to crucial documents that may link Prime Minister Najib Tun Razak to the controversial Scorpene submarine purchases. “But the French court will provide public access to the investigation papers when the case goes on trial in September,” claimed Nurul at the Ops Scorpene fund raising dinner in Petaling Jaya yesterday… hosted by Nurul’s aide, Fahmi Fadzil.”

In response, Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi has “warned certain quarters against running a smear campaign over alleged irregularities” in the 2002 deal. Malaysia’s official Bernama agency | Agence France Presse | Asia Sentinel | Free Malaysia Today | Malaysia Kini | Yahoo News Malaysia.

June 2/11: Wikileaks. An April 2009 diplomatic cable posted on WikiLeaks adds another key associate of Prime Minister Najib to the Scorpene Scandal, but it’s indirect. The cable looks at business leaders who are close to PM Najib Razak and his family, and mentions “Lodin Wok Kamarudin, Chief of Armed Forces Fund Board” (LTAT) in passing.

The key is his involvement in a company called Perimekar, which acted as a go-between for the deal, and appears to have been set up to distribute kickbacks from it. Lodin Wok was Boustead Holdings Bhd’s deputy chair, when the firm held a 20% stake in Perimekar along with LTAT. He also sat on the board of Affin Bank Bhd, one of Perimekar’s bankers, and was 1 of Perimekar’s 5 directors. Boustead DCNS Naval Corp itself is a 60-40 joint venture formed in 2009 between BHIC Defence Technologies (Boustead firm, chair: Lodin Wok) and DCNS. The firm received a RM 532 million contract for Scorpene support services from 2010 to 2015, which makes sense, but it’s also worth noting that “support contracts” are themselves a primary vector for laundering kickbacks in many 3rd world countries.

Given his position, and Malaysia’s deeply entrenched crony capitalist structure, it isn’t surprising that Lodin Wok would be involved in other firms related to the deal. On the other hand, that web of ties may also make him a key figure tying DCNS to any corruption in Malaysia. WikiLeaks | National Express Malaysia | National Express Malaysia: Celine Boileau report.

2009 – 2010

 

SSK Scorpene OHiggins Cutaway

Scorpene cutaway
(click to view full)

Nov 3/10: Malaysian authorities formally close the case, and the investigation, without result. In “Closing the Books on Murder in Malaysia,” the Asia Sentinel recaps the case and says:

“The closure of the case appears to write the final chapter in one of Malaysia’s most sensational murder cases… and a trial that appeared to be rigged to keep prosecutors as far as possible away from Najib, then the deputy prime minister [DID: now Prime Minister], and his wife, Rosmah Mansor… De facto Law Minister Nazri Aziz, in a written statement to parliament, said the case was closed because [private investigator] Balasubramaniam had given conflicting statutory declarations, and that anyway, they didn’t affect the trial of two of Najib’s personal bodyguards and Abdul Razak Baginda [DID: who fled abroad], which ended in April of 2009 after a 159-day trial in which the bodyguards were sentenced to death. They are appealing the verdict, with suspicions running high that they will somehow be given their freedom in exchange for their silence on whoever ordered them to kill the woman.”

A French team continues to probe the sale of the subs to Malaysia, and whether kickbacks were paid to top French and Malaysian politicians. Note that DCNS is majority owned by the French state, which sees its role as an export promoter. Malaysia’s Bernama national press agency | Asia Sentinel | Malaysia Kini: reactions | Canada’s Vancouver Sun.

Malaysia terminates the murder case

March 16/09: The case takes another turn, as Malaysia’s ruling party suspends an opposition lawmaker for a year, after he called Razak a murderer and demanded that he answer questions about his role in the affair. International Herald Tribune.

March 5/09: France’s Liberation newspaper publishes “Un cadavre très dérangeant: L’étrange affaire du meurtre d’une interprète mongole qui gène le pouvoir en Malaisie”, setting forth the detailed allegations. See: Liberation report and link | Malaysian SAPP Progressive Party report | Asia Sentinel | The Nation | UK’s Times Online | | Malaysia’s New Straits Times refers to the affair as a political hatchet job – but the article itself is findable via Liberation’s web site, contrary to this report’s claims | Asia Sentinel in Oct 2007, already concerned with the case’s handling and long delays.

Additional Readings

* Wikipedia – Altantuya Shaariibuu.

* Asia Sentinel – The French-Malaysian Submarine Scandal: the Documents. Includes a subset of 133 documents from French prosecutors’ archives. These documents were among those seized in an April 7/10 raid on DCN.

* Free Malaysia Today (Feb 10/12) – How much for the Scorpenes?

* Liberation (March 4/09) – Liberation report and link, via “French newspaper reveals identity of Altantuya’s alleged assassins

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