Scorpene, Najib and Rosmah

Were the Scorpene costs deliberately understated to take the heat off Najib?

Written by Maclean Patrick, Malaysia Chronicle

Amid accusations the government was shafting taxpayers with another dodgy transaction, the Defence ministry received an additional RM493.3 million in allocations this year, justifying the increase was needed to maintain the country’s two Scorpene submarines.

The additional amount raises the ministry’s total budget to whopping total of RM11 billion. "The main purpose is to maintain our Scorpene submarines as that expense was not included in the budget,” the Star quoted Defence Minister Ahmad Zahid Hamidi as saying.

Indeed, Ahmad Zahid has much to explaining to do. The submarines were purchased in 2002 when Najib Razak was the Defence minister and this is 2011, how come in the 9 years the submarines have been on the defence list of hardware, no-one had bothered to factor in the cost for maintaining the said equipment? Would it not be prudent to have foreseen the cost of maintenance and prepare early?

The Perimekar factor

In 2007, a payment of RM570 million was made to Perimekar, a company linked to Razak Baginda, a close friend of Najib Razak's. There were allegations that this was a kickback from submarines vendor DCN to Najib. However, the Malaysian government insists it is payment for “co-ordination and support service

According to the Defence ministry in June 2011, the initial maintenance costs chargeable by Boustead stood at RM50 million per year for 6 years - apparently that figure was only an estimate. The actual cost would be RM417 million in total, which means an increase of RM117 million or nearly 40 per cent from the original RM300 million price tag.

Can a mistake of such a size be made? After all this is a multi-billion ringgit deal, costing Malaysian taxpayers RM7.3 billion for two second-hand Scorpene submarines that cannot perform their function of patrolling the coastline because the waters were too shallow.

Not only does there seem to a deliberate misjudgement on the part of the decision-maker to purchase the unsuitable subs, there also seems to be a deliberate ploy to announce a lower cost of acquisition, and then later on, seek additional allocations to cover the short fall. This is exactly what is playing out now, and the decision maker was the Defense minister in 2002 - Najib Razak.l

Pundits point at Perimekar's “support services” and ask, should not maintenance cost be included in this deal? If not, what is Perimekar getting RM570 million for? Do not tax-payers have the right to ask what and why they are paying Perimekar for? Should they not query administrative oversights such as the shockingly inaccurate budgetting forecasts? Does the government have something to hide from the people? Is there a collusion? Ministers involved should take care for they too are punishable for abetting corruption by closing an eye.

Numbers that don't lie

The RM570 million payment to the firm linked to Razak Baginda is already at the centre of a French probe. Razak in turn is the former lover of the murdered Mongolian translator Altantuya Shaariibuu. French lawyer William Bourdon has been following the paper trail left by DCN.

Indeed, a breakthrough may have already been discovered and waiting only for open court hearings to begin Paris in September to be publicly announced. As such, it came as no surprise that to stop Bourdon from revealing further details, he was deported from KLIA last month when he came to brief his client, top NGO Suaram, and other citizen groups.

DCNS itself is well-known to have been involved in a retro-commission and kickbacks scandal involving Pakistani and French officials that resulted in a car bomb murder in Karachi in 2002. In this instance, the commission related to the sale of frigates to Taiwan.

The numbers do not lie, the two Scorpene submarines are a money pit for the nation and an international scandal. Imagine, a government that is capable of under-forecasting maintenance for such big transactions, what further proof do Malaysians need of the Najib administration's weak financial amagement?

It does look like the Scorpenes purchase has been a terrible mistake for Najib and Malaysia. It may even cost him his premiership but if the kickback allegations are true, Najib will not walkaway empty-handed. In fact, on the contrary.

But stuck are the Malaysian people. Two submarines that cannot function for the purpose that they were bought for and a hefty maintenance charge they have no choice but to pay. It looks like it is already time for Malaysia to put the Scorpenes on sale, but problem is, the contract that Najib or the ministry of defense signed may mean a sale could incur an even greater loss for taxpayers! Seriously, one is left to wonder, what sort of work does Najib do!