Gun Begins to Smoke in Malaysian Sub Scandal

by John Berthelsen

Money may have been funneled to UMNO officials through Hong Kong incorporated company

French investigating magistrates probing the US$1.2 billion sale of submarines to the Malaysian Defense Ministry are targeting, among other things, a Hong Kong-based company called Terasasi (Hong Kong) Ltd., whose principal officers are Prime Minister Najib Tun Razak’s close friend and the friend’s father.

Investigators believe that at least some of the €36 million funneled through Terasasi ended up in the pockets of Najib, who was Malaysia’s defense minister and deputy prime minister when the two Scorpene submarines were purchased from Thales International or Thint Asia. The state-owned defense giant DCN, later known as DCNS, and Thales established a joint company named Armaris to manufacture the submarines in 2002.

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.

Abdul Razak Baginda, the former head of a Malaysian think tank who was at the center of a 2006 investigation into the death of Mongolian translator and party girl Altantuya Shaariibuu, is listed as one of the two directors of the company, which was previously incorporated on June 28, 2002 as Kinabalu Advisory and Support Services Ltd according to the Hong Kong Companies Registry. The other director is Abdul Malim Baginda, Baginda’s father.

The Terasasi offices are located on the 19th floor of an office at 3 Lockhart Road in the Wan Chai district of Hong Kong. There is no indication in Hong Kong government records of what Terasasi’s business is. It is only listed as a “local company.” However, French authorities say Terasasi apparently received regular payments from Thint Asia. One payment was for €360,000 accompanied with a handwritten note saying “Razak wants it to be paid quickly.”

The magistrates have documents that show that the money was funneled from Thint Asia to Terasasi -- €3 million of it when Terasasi was still domiciled in Malaysia, and €33 million after it was incorporated in Hong Kong. There is no indication at this point where the money went. French investigators, however, theorize that it was part of €146 million that may have been funneled to officials of the United Malays National Organization and Najib, who traveled with Abdul Razak Baginda several times to France as defense minister at the time the Malaysians purchased the submarines from DCNS.

On at least one trip in 2004, Altantuya, then Razak Baginda’s lover, accompanied him to France as a translator. He later jilted her, impelling her to come to Kuala Lumpur to demand US$500,000 from him. In a handwritten letter found after her death, she wrote that she was attempting to blackmail him, although she didn’t say why. Two of Najib’s bodyguards were convicted of shooting her in the head and blowing up her body with plastic explosives in September 2006, possibly to hide the fact that she was pregnant when she was killed. Because her killing does not appear to be connected to the scandal, French investigators are not looking into the causes of her death or the reasons behind it.

Although Razak Baginda was charged with abetting her murder, he was released without having to put up a defense and fled to the UK, where he remains. Najib’s former bodyguards remain on death row in Malaysia. Their appeal against the death penalty has been delayed, presumably until after national elections expected in May or June this year.

It was previously revealed on the floor of the Dewan Rakyat, Malaysia’s parliament, that Perimekar received another €114 million as a commission on the sale of the vessels. Perimekar at the time was wholly owned by another company, KS Ombak Laut Sdn Bhd, which in turn was also controlled by Razak Baginda and Mazalinda. Perimekar is now 20 percent each owned by the military retirement system LTAT and Boustead Holdings.

Two years of police investigation at the behest of the Malaysian NGO Suaram into the sale of the submarines culminated recently with the appointment of investigating magistrates Roger Le Loire and Serge Tournaire at the Paris Tribunal de Grande Instance, according to Agence France Press, which said the probe involves three contracts for the submarines which were signed on June 5, 2002.

According to the documents, the contracts had two components: the sale of two submarines built by Thint and the Spanish shipbuilding firm Izar, for €920 million; and the delivery of “logistical support” from Perimekar Bhd – the €114 million -- to train the first 200 Royal Malaysian Navy personnel although there is no indication that the company had the wherewithal to train them.

Under the bribery conventions of the 32-member Organization for Economic Cooperation and Development, the French defense contractors could be liable for criminal sanctions if it is proven that no real services were delivered by the companies. Under French law, violators are liable for up to 10 years in prison.

Joseph Breham, a lawyer with Solicitors International Human Rights Group which was engaged by Suaram, said in October last year that DCNS often budgeted as much as 8 to 12 percent of its total receipts as "commissions" to grease sales of armaments in third-world countries. Breham said Perimekar had received the commission for "supporting the contract," which he said was a euphemism for unexplained costs, and also for "housing the crew" of the submarines in France.

In France, before 2002, any money used to bribe foreign officials was tax deductible. When the former finance director of DCN made a claim for €31 million allegedly used to bribe the Malaysians for the purchase of the Scorpenes, Breham said, the Minister of Budget questioned such a large bribe, although he did eventually authorize the tax break.

The contracts cited by AFP included the €114 million one paid by the Malaysian government to Perimekar. The second, called “C5 contract of engineering business,” was concluded in August 2000 between DCNI, a subsidiary of DCN, and Thales International Asia worth some €30 million. The third was the “consulting agreement” signed in October 2000 between Thint Asia and Terasasi.

The French investigators are also studying one of the invoices issued by Terasasi in August 2004 for €359,450 sent to Thint Asia. For investigators, “it appears that… the amounts paid to Terasasi ultimately benefited Najib, the defense minister, or his adviser Razak Baginda.”

Olivier Metzner, a lawyer for Thales, told the French daily Le Parisien that “we have already demonstrated to investigators that there was no corruption in this case.” However, a confidential memorandum made available to Asia Sentinel and the Malaysian website Free Malaysia Today states that: “The beneficiaries of these funds are not difficult to imagine: the family clan and Razak Baginda relations. In addition, these funds will find their way to the dominant political party (UMNO).”

John Berthelsen is the editor of Asia Sentinel

The A-G Chambers practises selective prosecution, says MACC

by Kuek Ser Kuang Keng@www.malaysiakini.com

The Malaysian Anti-Corruption Commission investigates all allegations of corruption made to it, but it is the Attorney-General's Chambers that refuses to file in court some of the cases the MACC deems valid.

"Come, show me which case has not been investigated by MACC. There is not even one case that we did not investigate," its Deputy Commissioner (Operations) Mohd Shukri Abdull (left) told a forum in Shah Alam today.

"The problem is, many people want the cases to be charged in court, but if you ask me on this issue, you are asking the wrong person. To us, there are valid cases (to be charged in court), but to the Deputy Public Prosecutor, there is no case to answer, so what can we do?" Shukri told the participants, who responded with loud cries of lawan (fight).

Giving the audience a dry smile, Shukri replied: "How to fight? MACC has no (prosecution) power."

The articulate senior officer who has 27 years of combating graft behind him, was trying his best to convince the excited audience that MACC was free from political interference and doing its best to haul up corrupt politicians to face the music.

The cheers and applause from the floor suggested that his explanation was well received by the hundreds at the forum titled "Political Bribery: Reality or Perception", organised by Malay daily Sinar Harian.

"If my officers and I were to act according to our hearts, we would arrest all! But we can't, because the charges must be based on evidence, not sentiment," Shukri said, attracting another round of applause from the floor.

The other three speakers at the forum were PKR Strategy Director Rafizi Ramli (right), BN’s Kota Belud MP Abdul Rahman Dahlan and Political Analyst Chandra Muzaffar.

The forum's moderator was International Islamic University of Malaysia lecturer Maslee Malik. Responding to Shukri’s ‘complaint’ Rafizi quickly came to his defence.

“MACC has no prosecution power"

"If you want to blame, don’t blame Shukri but blame Abdul Rahman because he is the member of Special Parliamentar yCommittee on Anti-Corruption,” said Rafizi. And Shukri who was sitting beside him immediately extended his hand and shook with Rafizi, sending the audience into fits of guffaws.

Rafizi then took potshots at Prime Minister Najib Abdul Razak’s earlier promise that MACC will be given more power should BN retain two-thirds parliamentary majority in the next general election.

“If I were the Prime Minister, no need to amend the constitution just replace the attorney-general with someone who can work with the MACC,” he suggested.

Abdul Rahman (right) then criticised Rafizi for not respecting the principle of separation of powers, pointing out that should the MACC be given both the power to investigate and prosecute, it would create another problem.

Rafizi quickly corrected Abdul Rahman that he was suggesting to change the A-G, not to give MACC prosecution power, but Abdul Rahman claimed that it was the stance of Pakatan Rakyat representative in the parliamentary committee.

Earlier, Shukri also stressed that his officers in the commission, though having different political inclinations are very professional when it comes to carrying out their duties.

“I have to be very transparent here. My dad and mum are green colour, but people don’t know what colour I am, even my parents don’t know, that is my right. “When it comes to investigation, I’m professional, I’m colour-blind,” he added.

Our Government promotes "ignocracy"

by Tengku Razaleigh Hamzah*

There are many interesting implications inherent in the topic of my address to you today: Malaysia: The Future is in Our Hands.

When I say the future is in your hands, I am not referring to the lines on your palm. I am saying the future is in your hands because it is with these hands that you are going to elect the people who will represent your best interest in the government.

Some people told me that we are poised on the cusp of change, and the choice that you make is significant, perhaps not so much for you as for your children, grand children and great-grand children. To put it another way, the future of innocent children yet unborn for generations to come is in your hands.

In other words, it is not the King who will decide the future for us, it is not what the Prime Ministers want that will be of any consequence. It is not the VVIPs or the so-called political analysts who are going to decide the future of our land. It is you, and here I include the ordinary citizens of the country, meaning the farmer, the teacher, the petty trader, stall keeper, the trishaw puller, the watchman, the bread man and even the unemployed vagrant who is going to decide the destiny of our children.

The issue of choice is sacrosanct to human beings who have been endowed with free will. You are born to be free. It is not for the government or the opposition to decide whether you should be free or not. Remember, nobody can dictate your choice unless you let him.

Therefore, more sacrosanct than any other day is the day of election. It is a day when you will hold the country’s future in your hands. In fact, no other election has been so much talked about and anticipated with as much anxiety and expectations as the forthcoming elections. The coming election appears so important that it may be likened to the ‘battle of the century’ for our country.

There are many Malaysians who complain about the government but are not registered voters. They make loud comments but lack the will to make a difference. They do not commit themselves wholeheartedly to seek change and to exercise their voting rights to choose a better government.

Your future is in your hands and if you fail to treasure the right, and exercise the right with wisdom, then you and no one else is to blame for your own destiny.

As the Qur’an says in chapter 13, verse 11: “Truly, God does not change the condition of a people unless they change what is in themselves”.

Now the next issue is, are we able to exercise our mind with wisdom? Unfortunately, as a people and as a nation, we are not able to do so. We are born free, but our minds have become captive.

In our country, the problem of the captive mind has its origins in the race dilemma to an extent that we have become incapable of devising an analytical method independent of current stereotypes about Malays, Chinese, Indians and the others. Our thinking is based completely on a racial world view when it comes to matters of politics, education, economics, planning, and so forth.

Needless to say, we promote a racial world view that thrives on the policy of divide and rule. The citizens of the land are exiting the country in large numbers, and the gap is filled, not by people with equivalent skills and potentials, but by unskilled labour from abroad. Public universities have no places for locals, but they are absorbing large numbers of foreign students. It is sad that our own people should be deprived of the benefits of a good education – a resource that has been described as the global currency of 21 economies.

And yet education is seen as the best solution to the economic uncertainties of the times, as it enables our people to compete, collaborate and connect in a way that drives our economies forward.

And today, we have the captive mind, the product largely of our education system, which has failed to generate its opposite, the creative mind. The captive mind feeds on trivia and fragmented knowledge, and students are not taught to be philosophical, universal or intercultural.

Our educational curricula do not encourage the moral and intellectual reform of the mind. If we look west, we find that the development of education took place as part and parcel of the evolution of society and civilization as a whole. But in our own case, the education system has failed to impart the fundamentals of scientific thinking and reasoning in relation to our own society.

Captive minds tend to avoid major issues such as the concept of good governance, meaning of development, the effect of corruption on society and the rule of law.

Again, as it stands today, in the area of economy, there is no honest intellectual inquiry to find out why, despite many years of implementing the New Economic Policy, inequitable distribution of income continues to plague the people, and why we are lagging behind countries that do not have as much resources.

To this very day, the electorate has not understood the implications of the New Economic Policy which has produced results that are diametrically opposed to the original intention of bridging the gap between the haves and the have-nots. The longer we try the policy, the further we are from the original goal.

If the doctor keeps on prescribing the same medicine which produces opposite results, then something must be wrong with the doctor, and something more serious must be wrong with the patient who keeps on trusting the same doctor.

Today, the discrepancy between vision and reality has taken on an alarming turn. It has gone far beyond economics into the realm of ethics and morality. In numerous instances it has taken the form of corruption and decadence which has pushed the economy further down the drain.

Today, we are saddled with a spiraling national debt brought to exist by wanton corruption and wasteful spending. It is feared that in relation to Singapore which is free of foreign debts, if we are not careful, it won’t take us long before we become another Greece. The problem continues to escalate, despite being highlighted by the Auditor General year after year in his annual reports. It has been estimated that we can easily save RM25-30billion without changing any of the deliverables if only we can get rid of corruption and cronyism.

Professor Alatas once said that we have different types of governments such as democracy, autocracy, theocracy, and so forth, and now we need to describe our government as one that keeps the people ignorant. According to him, we need to use new terms such as “ignocracy” to describe a government that wants to keep the people ignorant.

And yet for a democracy to succeed it is of cardinal importance for us to make informed choices. We have the power to cast away our misfortune by casting our votes for the right candidates. But our captive minds are unable to guide our hands in making the right choices for our future and the future of our children.

When I say that the future is in your hands, it is not merely a reference to your individual role as a voter. I must add that the future is in your hands in a larger collective sense. In those days, the duty to educate and inform was left to educators and writers, as well as the government. Today we can no longer trust them to act as purveyors of truth. It has become our responsibility to hold the future in our own hands. In this effort, we are thankful for the new technology which has flung open the doors of democracy, making it easier for us to organize and share information.

Therefore, through our efforts at educating and promoting political consciousness, let us hope that the people of this country, in the rural and urban areas alike, will cast away their slumber, and wake up to greet the dawn of a new day, as we did fifty five years ago when the Tunku called this nation into being in the name of God, the Compassionate and the Merciful, a nation that “ever seeks the welfare of its people”.

*Speech by Tengku Razaleigh Hamzah at the “Road Map For Achieving Vision 2020” Book Launch Ceremony at Syuen Hotel, Ipoh, April 1, 2012

Only Captive Minds hang on to the NEP, says UMNO's Ku Li

by Shannon Teoh@www.themalaysianinsider.com

Tengku Razaleigh Hamzah resumed his attack on the New Economic Policy (NEP) today, stating that “captive minds” continue to support it despite Malaysia moving further from its objective of redistributing wealth through pro-Bumiputera policies.

The UMNO veteran said there has been “no intellectual inquiry” into why “despite many years of implementing the NEP, inequitable distribution of income continues to plague the people” as “we have become incapable of devising an analytical method independent of current stereotypes about Malays, Chinese, Indians and others.”

“If the doctor keeps on prescribing the same medicine which produces opposite results, then something must be wrong with the doctor, and something more serious must be wrong with the patient who keeps on trusting the same doctor.

“Our thinking is based completely on a racial world view when it comes to matters of politics, education, economics, planning, and so forth. Needless to say, we promote a racial world view that thrives on the policy of divide and rule,” the Kelantan prince said at a book launch in Ipoh this morning.

Tengku Razaleigh, popularly known as Ku Li, had in February said “as a former Finance Minister, let me emphasise that it was never the intention of the NEP to create an incubated class of Malay capitalists.”

His statement further fueled scrutiny of former Prime Minister Tun Dr Mahathir Mohamad’s policies after the Najib administration decided to settle out of court the RM589 million debt owed by former Malaysia Airline System Bhd (MAS) chief Tan Sri Tajuddin Ramli.

The settlement sum was undisclosed, prompting intense public criticism and attacks from the opposition over the right of taxpayers to know the amount of public funds recovered.

Tajuddin, 65, had served as the airline’s executive chairman from 1994 to 2001 and was a poster boy of former finance minister Tun Daim Zainuddin’s now-discredited policy of nurturing a class of Malay corporate captains on government largesse during the Mahathir administration.

Ku Li, one of the greatest critics of the NEP and Dr Mahathir’s handling of the policy, had challenged the long-serving prime minister for leadership of UMNO in 1987, which he subsequently lost by a narrow margin.

He said in his speech today that the country’s education system does “not encourage the moral and intellectual reform of the mind” resulting in a lack of debate on major issues such as good governance, corruption and rule of law.

“To this very day, the electorate has not understood the implications of the NEP which has produced results that are diametrically opposed to the original intention of bridging the gap between the haves and the have-nots. The longer we try the policy, the further we are from the original goal.

“The discrepancy between vision and reality has taken an alarming turn. It has gone far beyond economics into the realm of ethics and morality. In numerous instances it has taken the form of corruption and decadence which has pushed the economy further down the drain,” he said.

He said “wanton corruption and wasteful spending” had resulted in spiraling national debt that now amounts to RM456 billion or 53 per cent of the GDP, which “if we are not careful, it won’t take us long before we become another Greece.”

GE-13 Outcome Difficult to Predict, says Dr. UMNO

by Melissa Lee, Malaysia Chronicle

Former Prime Minister (Tun) Mahathir Mohamad admitted that it would be difficult to predict the results of the 13th General Election due to the "confusing" signals received from the ground.

"What is certain, it won't be easy for BN to get two-thirds majority this time. The Opposition now is not like that of the past, and the current situation is rather confusing," Bernama reported Mahathir as saying.

Such an acknowledgement must have been hard for Mahathir to make, given that the Pakatan Rakyat opposition coalition is led by Anwar Ibrahim, who he has tried hard to chop down to size and even oust from the political arena completely.

In 1998, fearing Anwar's popularity and growing clout with the Malays, Mahathir threw trumped-up sodomy and corruption charges at his his former Deputy and succeeded in jailing Anwar for 6 years. It was only after Mahathir retired that the Federal Court could summon enough courage to overturn the charges and acquit Anwar.

Now 64, Anwar is poised to lead the Pakatan into its second General Election as a coalition. Although denied formal registration by the Registrar of Societies, the Pakatan parties of PKR, PAS and DAP have signed a Common Policy Framework and agreed on a joint manifesto - the Buku Jingga - for GE-13 which is expected to be held before the end of this year.

Gaining strength

Since the 12th General Election in 2008, the Pakatan has been gaining from strength to strength, with two of the four states it governs - Selangor and Penang - praised by the Auditor-General as being the best managed. Both Penang and Selangor have also drawn most FDIs, trouncing the BN-ruled states.

A resurgent Anwar and Pakatan are now rated as having an even chance on improving on their 2008 electoral performance, with many pundits predicting they might even wrest the Federal Government from Prime Minister Najib Razak. Mahathir apparently shares this view, saying that the various assumptions made about the support for BN were fluid, with some people saying it was increasing and others saying otherwise. Mahathir did not point the finger at anyone, but a day ago, he called on Najib to allow 'outsiders' to contest for seats under the UMNO ticket.

Mahathir lamented the shortage of 'smart' Malays in UMNO, for which perhaps he is most to blame due to his refusal to soften his hardline stance during his 22-year rule from 1981 to 2003. Indeed, during his tenure, Malaysia experienced huge 'brain drain'' including from the Malay community, but Mahathir had always dismissed the issue as minor and with a 'let them leave if they wish' stance.

"None of Mahathir policies contributed to building a succession line in UMNO, so what is there to say now. And the damage was not only to UMNO but extended to the overall economy, where Malaysia lost talent beyond what it could afford. The effects on the economy are being played out now and if not reversed soon by fresh policies and reforms, we can expect further all-encompassing deterioration," Ramon Navaratnam, the Chairman of the Centre for Public Policy Studies, told Malaysia Chronicle.

Najib failed to deliver

In recent weeks, former Finance Minister Daim Zainuddin had predicted BN would easily win in only three states - Johor, Melaka and Pahang. A large portion of the blame has been directed at Najib for failing to lead UMNO-BN out of its quagmire.

UMNO appointed Najib as its President in 2009 after forcing his predecessor Abdullah Badawi into early retirement for losing 5 states out of 13 to the Pakatan as well as the BN's long-held two-thirds majority in Parliament. Mahathir and other UMNO leaders had hoped that Najib would reverse the slide and regain the crucial two-thirds majority, which would allow them to amend key laws to stay in power for perhaps a few more decades. But Najib's clumsy political maneuvers were soon rejected by the people, who now see him as a fraud.

In his comments, it was telling of Daim to point out that if Najib failed to improve on Badawi's results, he would have to step down in favor of either his deputy Muhyiddin Yassin or a 'new challenger'. So far, no dark horse has emerged but bets are on that it could be Gua Musang MP Tengku Razaleigh Hamzah, who has lambasted Najib for his haphazard policies and weak leadership.

During Najib's tenure which began in April 2009, Malaysia suffered its worst bouts of racial and religious intolerance. Extremist groups such as PERKASA and JATI were sponsored and allowed to flourish. At the same time, Najib preached policies of moderation to the West. But it looks like even they have found him out, with the influential Washington Post slamming him as a "champion of double-talk".

Nonetheless, even with his mandate to rule expiring in March 2013, Najib has continued with the same strategies of gutter politicking against Anwar, using racism and religious bigotry to scare the Malays into voting for UMNO so that it can 'protect' them from the non-Malays.

Economy soft and Corruption rampant

Meanwhile, the economy remains neglected and soft due to Najib's frequent overseas trips which have been criticized for burning a hole in taxpayers' pockets. Corruption remains at a record high, with Malaysia slipping 4 spots to 60 in the 2011 Transparency International Corruption Perception Index. Malaysia scored 4.3 compared to New Zealand, the least corrupt at 9.5, and Somalia and North Korea who each scored 1.0, making them the two most corrupt nations in the survey. In ASEAN, Singapore scored 9.3 and Brunei 6.3.

Malaysia Chronicle