Leaked prosecution documents show a pattern of official misdeeds in two countries
A two-decade campaign by the French state-owned defense giant DCN and
its subsidiaries to sell submarines to the Malaysian ministry of
defense has resulted in a long tangle of blackmail, bribery, influence
peddling, misuse of corporate assets and concealment, among other
allegations, according to documents made available to Asia Sentinel.
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.
Click here to view documents.
The documents were compiled as a result of a raid on April 7, 2010, when
scores of investigators from the anti-organized and financial crime
unit of the French Directorate of Judicial Police swooped down on DCN’s
offices at 19 rue du Colonel Pierre Avia in Paris’s 15th Arondissement,
and four other locations, demanding that stunned officials give them
access to safes, files and computers. They collected thousands of
documents that form the bulk of the files delivered to Asia Sentinel.
Together, they present a damning indictment of Malaysian officials whose
goal was to steer a €114.96 million (US$114.3 million at current
exchange rates) payment through a private company called Perimekar Sdn
Bhd, wholly owned by Abdul Razak Baginda. Razak Baginda was then the
head of a Malaysian think tank called Malaysian Strategic Research,
which was connected with the United Malays National Organization, the
country’s biggest political party.
The payment appears to have been in violation of the OECD Convention on
Bribery, which France ratified on June 30, 2000. On Sep. 29, 2000,
according to document D00015, DCNI, a DCN subsidiary, “took corrective
actions” after France joined the bribery convention. Contracts concluded
after that date were to be routed to Eurolux and Gifen, companies held
by
Jean-Marie Boivin,
DCN’s former finance chief, and headquartered in Luxembourg and Malta
respectively Boivin is being investigated for having played a central
role in the “corrective actions,” with what were described as
“outlandish commissions” traveling through the welter of companies that
he established in tax havens around the world. Among the documents is
one that shows Boivin paid to send Razak Baginda on a jaunt to Macau
with his then-girlfriend, Altantuya Shaariibuu, a Mongolian national who
was later murdered by two of Najib’s bodyguards.
“A separate agreement sets other compensation consisting of a fixed
amount independent of the actual price of the main contract,” one
document reads in reference to the payment to Perimekar. “This has been
made to be consistent with [DCN’s] internal rules and [its subsidiary]
Thales and those of the OECD. The beneficiaries of these funds are not
difficult to imagine: the clan and family relations of Mr. Razak
Baginda. In addition, these funds will find their way to the dominant
political party." Malaysia’s dominant political party was and is UMNO.
Malaysian Defense Spree
The story in essence began when Najib Tun Razak was appointed defense
minister in Mahathir’s cabinet in 1991 and embarked on a massive buildup
of the country’s military, arranging for the purchase of tanks, Sukhoi
jets, coastal patrol boats – and submarines. That kicked off a stiff
competition between French, German, Swedish, Russian and Dutch
manufacturers, who in turn went looking for the most effective cronies
of the Malaysian leadership to help them out. By 1995, according to
document DC00078, DCN’s subsidiary Thales was losing out to the German
manufacturer Kockums AB, which was represented by Amin Shah, dubbed
“Malaysia’s Onassis” because of his business and shipping interests, who
was close to then-finance minister Daim Zainuddin and was suspected of
being a front man for Daim’s interests.
French authorities seemed to counter by paying a “consultancy fee”
according to a handwritten document called a "Consultancy Agreement”
signed in Kuala Lumpur on Oct. 1, 1996 between DCN International
representative Emmanel Aris and a Malaysian Army major named Abdul Rahim
Saad. The purpose was “to reintroduce DCNI in the short list of tenders
after it was rejected by the Government of Malaysia” on Dec. 14, 1995,
according to the French documents.
The remuneration was to be paid in two lots, US$20,000 before Jan. 31,
1996, and US$80,000 after acceptance. Apparently it was successful.
Rahim is now managing director of a company called ARS Sehajatera Sdn
Bhd., which supplies logistical equipment to the Malaysian armed forces.
However, there are questions whether Rahim was ever paid. A memo found
in the DCN files said he “expresses discontent and proclaims his support
for the Agosta [the Spanish manufacturer of the Scorpenes for DCN]
submarines since 1996 but he ‘has not had any news from DCNI to date.’
He says he organized shady activities to promote the French bid…He
complains of not having been paid for his services.”
Eventually, according to the documents, Amin Shah began to lose his
influence with the government after Daim Zainuddin left his position as
finance minister. DCN and its subsidiaries began casting around for
other sources of influence within the Malaysian government.
An attempt to woo Tan Sri Razali Ismail, one of Malaysia’s most
distinguished diplomats, failed. “It was ultimately unsuccessful and Mr.
Abdul Razak Baginda was chosen in his place,” the documents note. “The
role of the latter was to facilitate the submission procedure to the
Malaysian government and the responsible ministers, in particular the
Minister of Defense, with whom he claimed to have a close relationship.”
According to Document D000112, “…Razak Baginda has maintained excellent
relationships with the Defense Minister and Prime Minister. Moreover,
his wife, Mazlinda Makhzan, is a close friend of the Defense Minister’s
wife. Thus, Baginda has become the center of the network. Both companies
are at the center of this network: Terasasi, related to Baginda, and
Perimekar, which was initially controlled by Mohamad Ibrahim Mohamad
Nor,” who was also close to Daim Zainuddin. However, with Daim stepping
down as finance minister after a spat with Mahathir, Razak Baginda took
over sole proprietorship of that company through his wife.
“The major defense contracts in Malaysia as in other countries require
substantial money transfers to individuals and/or [political]
organizations,” the document noted. “In Malaysia, other than
individuals, the ruling party [UMNO] is the largest beneficiary [rather
than Perimekar, the company to which the commission was directed].
Consultants [agents or companies] are often used as a political network
to facilitate such transfers and receive commissions for their
principals.”
The Heart of the Deal
Over the next few years, the documents show, as the contract came
closer to fruition Razak Baginda and Najib maneuvered in France to get
the best possible deal for themselves and UMNO, establishing a tangle of
companies through which funds would ultimately pass.
Their activities included the founding of several companies including
Perimekar in 2000 as a vehicle to funnel the €114.9 million commission
to Razak Baginda and others, with Razak Baginda’s wife the principal
shareholder. The plan appears to have had the approval of Mahathir. A
diplomatic cable to Foreign Minister Juppe said, “The company chosen by
the government for the submarine project is…Perimekar. This choice is
the subject of an official notification from the Malaysian Ministry of
Finance to the Ministry of Defence... Note that this decision of the
Ministry of Finance was taken while the Prime Minister himself held the
post of Minister of Finance, after the departure of Tun Daim.”
The French company appears to have had no illusions as to Perimekar’s
function. Documents note that “Perimekar was a limited liability
company with a capital of MR5 million (€1.4 million) of which 1 million
is available. It was created in August 1999 … it has no record of sales
during 2000. Its ownership is in the process of restructuring.”
As Asia Sentinel has previously reported, document D00087 shows that
Najib demanded a US$1 billion “condition” for Perimekar Sdn Bhd’s “stay
in France.” The notes, however, don’t make it clear exactly what that
means. The information is contained in a note faxed from Francois
Dupont, the Asian representative of Thales International Asia, to his
bosses but the notation in the documents presented to the court doesn’t
elaborate. Dupont indicated that a meeting with Najib on July 14, 2001
would take place with the above mentioned “condition” but it was not
known if the meeting transpired.
Along the way, Jasbir Singh Chahl, one of Razak Baginda’s associates at
Perimekar, decided he hadn’t been paid enough. In several memos to DCN,
Jasbir Chahl demanded a full fourth of Perimekar’s total €114.96
million. Despite several demands, there is no indication that Chahl has
ever been paid. He has been subpoenaed as a witness in the case, but
after first indicating to French lawyers that he would cooperate, he
has since said he knows nothing of the affair. He is said to be
extremely ill and suffering from some form of cancer.
Other documents made public by Asia Sentinel earlier show that at least
€36 million flowed from the DCNS subsidiary to Terasasi Hong Kong Ltd.,
whose principal officers are listed as Razak Baginda and his father.
Najib was defense minister from 1991 through the time when the
submarines were delivered in 2002. Terasasi only exists as a name on the
wall of a Wanchai district accounting firm in Hong Kong.
The 133 official documents uploaded onto this website are from the
Directorate-General of the French National Police and the Judicial
Police Directorate’s anti-organized and financial crimes unit. They were
presented to a French anti-corruption court in May and June of 2011.
Taken together, they present –in French – the clearest picture to date
of the two-decade campaign by the French state-owned defense
manufacturer DCN and its subsidiaries to sell Scorpene submarines to the
Malaysian Ministry of Defense.
Asia Sentinel’s story summarizing what is in the documents is
in a collection in Asia Sentinel's Scribd account.
They tell a story of corruption on both sides of the world that
included – according to one presentation to the court – “blackmail,
bribery, influence peddling, misuse of corporate assets and
concealment.” The documents show that many of these activities were
carried out with the full knowledge if not connivance of top officials
in both the French and Malaysian governments.
There is considerable doubt in Malaysia that these documents actually
exist, and that the story of corruption was fabricated by the opposition
Pakatan Rakyat coalition. Here is proof that they exist indeed. Readers
who speak French may examine them at their leisure.
The documents were sent anonymously to Asia Sentinel because of our
persistence in cataloguing the story of the submarines since October
2006, when Altantuya Shaariibuu, a 28-year-old Mongolian party girl and
translator of sorts, was murdered in a patch of jungle near the suburban
city of Shah Alam and her body was blown to bits with C4 explosives.
It subsequently became apparent that Altantuya had accompanied Abdul
Razak Baginda, the head of Malaysian Strategic Services and a close
associate of then-Defense Minister Najib Tun Razak, to Paris and Brest
during final negotiations for the contract to train Malaysian sailors
and to maintain the submarines once they arrived in Malaysia.
Two of Najib’s bodyguards – one of whom said in a formal statement that
they were to be paid RM100,000 to kill the woman – were convicted of
murder, but the courts carefully stayed away from identifying who had
ordered her death.
The case eventually spread to France, where lawyers led by William
Bourdon were engaged by the Malaysian NGO Suaram to attempt to get to
the bottom of the case. Their efforts led French anti- corruption police
to raid the offices of DCN and its subsidiaries. Thousands of documents
were seized, along with computers and vast stores of documents and
files. For the better part of two months, prosecutors detailed the
evidence in a French courtroom. They will stay on the Asia Sentinel
website as a public service for readers to compile their own evidence of
a scandal that infected two governments.
