Fri, Apr 30, 2010 - Page 4 News List

Malaysian group alleges graft in French sub deal

AP , KUALA LUMPUR

A Malaysian rights group said on Wednesday it filed complaints to French prosecutors that allege shipbuilder DCNS paid kickbacks to a friend of Malaysia’s prime minister to aid a US$1.2 billion submarine deal.

Malaysia ordered two diesel-electric Scorpene submarines in 2002 as part of a naval upgrade. Malaysian Prime Minister Najib Razak was defense minister at the time.

Rights group Suaram said it filed two complaints in December last year and February with French prosecutors. The complaint centers on a 114 million euro (US$150 million) fee paid by DCNS to Malaysian firm Perimekar Sdn Bhd to facilitate the deal, Suaram official Cynthia Gabriel said.

Perimekar is owned by the wife of Abdul Razak Baginda, who once was Najib’s aide and a close friend and who was last year acquitted of abetting the murder of his former mistress, a Mongolian woman.

The case could embarrass Najib, who is struggling to consolidate his power a year after taking office. Although the opposition has long accused the government of corruption in the sub deal, this is the first legal action, albeit in a foreign country.

Joseph Breham, a French lawyer hired by Suaram, said French prosecutors agreed early last month to launch a preliminary inquiry into possible corruption and kickbacks paid by DCNS to Perimekar.

This was based on grounds that Perimekar was formed only a few months before the contract was inked, had no track record in submarine services and didn’t have the financial ability to support the contract, he said.

In Paris, a French judicial official confirmed an investigation of DCNS on suspicion of corruption and tax fraud was launched after Suaram filed a complaint in December.

Police suspect a DCNS subsidiary, Armaris, paid Perimekar to help with the submarine deal, he said on condition of anonymity because he wasn’t authorized to discuss the matter publicly.

Gabriel said the fact that French prosecutors have launched an inquiry into the case showed a “lack of transparency and good governance” in Malaysia.

“For far too long, this has been shrouded in secrecy. It looks as if Perimekar was just formed to receive the money. Where did the money go and to whom? We want to know the truth,” she told reporters.

She did not say why the complaint was filed only now, eight years after the deal was made.

Najib has denied there was any corruption. Malaysian defense officials have said the fee was paid to Perimekar for coordination and support services.

DCNS spokesman Emmanuel Gaudez declined to comment, and Malaysian defense ministry officials couldn’t be reached for comment on Wednesday.

Gabriel said Suaram will take legal action against Perimekar and the government in Malaysia if the French court rules there is corruption by DCNS.

Malaysia received its first DCNS submarine last year. The second vessel is to be delivered this year.

Breham said if French prosecutors find sufficient evidence, the case will go before a court but it is likely to last years. Similar allegations of corruption have been made against DCNS in Paris for its arms deals in Pakistan and Taiwan, he said.

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