RM534.8 million commission for Scorpene submarines – why Perimekar?

Commission paid was under the guise of support and coordination services
by Richard Teo

The pathetic explanation given by the Defence Ministry regarding the purchase of the Sukhoi SU30MKM fighter and Scorpene submarines raises more suspicions than answers.

The public is not concerned with the laborious explanation regarding the negotiations carried out by the Defence Ministry neither are they interested in the approval levels and the checks by the technical and price committee.

What the tax paying public is interested is why was the contract awarded to Perimekar to prepare support and coordination services for six years. The contract value was 114.96 mil euros(RM534.8 mil) to be paid in stages according to the level of progress of the project.

What kind of support and coordination services that Perimekar can provide that the Defence Ministry is not capable of providing?

The pertinent question that begs to be answered is why was the contract awarded to Perimekar. In view of the substantial amount involved (RM534.8 mil) was there any open tender for the contract?

Perimekar for all intent and purpose is jointly owned by Lembaga Tabung Angkatan Tentera, Boustead Holdings Bhd and KS Ombak Laut Sdn Bhd.

The ownership of Perimekar reveals one interesting fact. None of them appears to have any expertise in the area of Defence equipment. So how could they provide any support and coordination services to the Defence Ministry?

The revelation of the owner of KS Ombak Laut Sdn Bhd is even more fascinating.A political analyst by profession and a close associate of DPM, Najib, Razak Baginda owns Ombak Laut.

The public deserves an answer why a contract of such proportion (RM534.8 mil) was awarded to a political analyst for a job that could easily be monitored by the Defence Ministry.

The nature of the contract albeit under the guise of support and coordination services is nothing but a concealment of commission paid to parties or party closely associated to the Defence Ministry.

[Kit – NST report “No commission paid, says Mindef” reproduced below:


No commission paid, says Mindef

KUALA LUMPUR: The government has denied giving political analyst Abdul Razak Baginda a RM540 million commission for the purchase of two Scorpene submarines worth US$972 million (RM3.68 billion) for the navy.

It said no commission was paid to Perimekar Sdn Bhd for the purchase of the submarines two years ago, as alleged by certain quarters.

It said the submarines were procured through direct negotiations in accordance with the government’s procurement procedures.

Negotiations were carried out with the manufacturers Armaris (French) and Navantia (Spanish), which had obtained the approval of their governments.

Perimekar was given a contract to provide support services and co-ordination for six years, said the Defence Ministry yesterday in a statement. It said the contract was worth E114.96 million (RM534.75 million) and was paid in stages according to the project status.

“The contract worth E114.96 million was not a nett profit for Perimekar as the amount covered the direct costs payments for the support services scope and also the indirect costs for the co-ordination services as stipulated in the contract.”

It also said Perimekar was owned by the Armed Forces Superannuation Fund Board, Boustead Holdings Bhd and K.S. Ombak Laut Sdn Bhd.

The statement said the Defence Ministry had decided to appoint a local company to provide the support services and co-ordination as it was a more effective method.

The statement also touched on the purchase of the 18 Sukhoi SU-30 MKM fighter jets worth US$900 million by the government in 2003.

The Defence Ministry said the purchase of the jets did not involve the government as it was a business deal between Russian company Rosoboron-export and a local company.

“The purchase of the jets was done in a direct negotiation deal with Rosoboronexport. This direct negotiation is in tandem with the policy of Russia and other countries which have a policy to monitor the sale of military equipment produced by companies in their countries so that the military equipment will not fall into the wrong hands,” it said.

Based on that scenario, all contracts for the purchase of defence equipment are signed by a representative from the Defence Ministry, on behalf of the government, with principal companies from the foreign countries.

This was also true in the purchase of the Sukhoi jets. The purchase was in accordance with the country’s Defence Equipment Procurement Contract Procedures.

The statement was issued to counter allegations by certain political parties about the purchase of the submarines and jets.

“The allegations have brought much confusion and misunderstanding to the people. The allegations have also led to a negative perception and suspicion that the purchase of the equipment for the use of the armed forces was done without following the proper procedures, was not transparent and was wasteful.

“The ministry hopes that all parties will understand the situation and no longer issue confusing statements that could paint a negative perception towards the armed forces, the Defence Ministry and the government.”

  1. #1 by Tai Lo Chin on Thursday, 3 May 2007 - 6:34 am

    Aiyah why ask the obvious?

    Get Perimekar’s accounts lodged with Registrar of Companies (its public document) and check the items to see in what way they relate “direct costs payments for the support services scope and also the indirect costs for the co-ordination services as stipulated in the contract”. Get information from mole (ex worker from that company). Investigate leads from people known to and in whom confided by Altantuya Shaariibuu. Razak Baginda knows most. That is something he has to leverage for his freedom and life.

  2. #2 by Tai Lo Chin on Thursday, 3 May 2007 - 6:54 am

    This business deal between Russian company Rosoboron-export and a local company, can’t get information from local, you need contact with people in Rosoboron-export, contacts in Russia, Spain and France to shed light. (Isn’t it coincidental Altantuya Shaariibuu knew French and Russian?) Great to know local M’ysian company has ‘expertise’ to provide ‘support services’ for Scorpene submarines & Sukhoi SU30MKM fighter. Wre need one of these jets to fall from the sky or submarine to do a Kursk Submarine Disaster to find out hhow good are these military hardware or support services.

  3. #3 by BoDo Singh on Thursday, 3 May 2007 - 7:33 am

    Every time there is a general election around the corner, they go around shopping for expensive defense equipment. It is not hard to figure out why?

  4. #4 by Bigjoe on Thursday, 3 May 2007 - 8:04 am

    These kinds of deals are the legendary stuff of banana republics and basket case nation. They don’t even hide it very well, disguise it with some expertise and make a legitimate business out of it.

    This thing is going to come back again and again and its why Najib will never make it to PM. I would watch the defense spending for more stuff like these. Its guaranteed to come back again and again.

  5. #5 by smeagroo on Thursday, 3 May 2007 - 8:46 am

    And for the opposition to use this weapon against BN and particularly Najib is of no use. Simply becos Ijok folks are simple folks and anything that goes to the millions baffled their puny brains. They can only digest figures up to the 100s.

  6. #6 by cherasusie on Thursday, 3 May 2007 - 8:46 am

    who trying to con who?

    defence ministry try to con….ACA can check.

    ACA try to con…POLICE can check

    POLICE try to con…GOVERNMENT can check

    GOVERNMENT try to con…AMMO can check

    AMMO try to con…MICky & McApeck can check….silence… A NEW CON JOB up somewhere…malaysia boleh…

    answer: no body con nobody


  7. #7 by Godfather on Thursday, 3 May 2007 - 9:03 am

    Boustead is a publicly-listed company. Can they be compelled to explain the terms of the shareholders agreement between LTAT, Boustead and Ombak Laut ? The standard practice in Bodohland is to have a contract that allows the Sdn Bhd company to have total control over disbursements (at the expense of more established companies in any joint-venture) so that the bulk of the profit is skimmed by this Sdn Bhd company.

    Worse, the liabilities for non-performance of the joint-venture are usually made on a “joint-and-several” basis so that the more established companies can “cover” for the financial inadequacies of the Sdn Bhd company. In other words, the liabilities are fully on the established companies, while the cream goes to the Sdn Bhd company. I’m actually astonished that companies like LTAT and Boustead are prepared to go along with such an arrangement since managers of these institutions are trustees for the armed forces fund and should be beyond reproach.

    AAB, show us what the scope of work is under the “maintenance contract”. Show us what the milestone payments are. Don’t hide under the OSA.

  8. #8 by Loh on Thursday, 3 May 2007 - 10:09 am

    Was the service charge calculated as a percentage of the value of the purchase? If so, then it is a commission in whatever name that money is paid for. If the services were based on work done, then the cost of work done can be itemised. One wonders what sort of services private companies are able to perform better than the Ministry of Defence, in matter concerning defence. Indeed, the Ministry should be able to engage consultants, even specially for the said purchase. It is difficult to believe that the company, Perimekar would have a ready supply of the required technical personnel to provided the services, if required of the contract. So, what prevents the ministry from doing what Perimekar are bound to do, to engage the required consultants, for the job. There cannot be any rational explanation other than the fact that there will be no kickbacks when the services are provided from within the Ministry of Defence. So, the answer is when money can be legally made, though not morally, why not. This is institutionalised system of transferring public funds into private pockets, through a complicated process. But it is legal! To change the system, we have to change the government.

  9. #9 by Jonny on Thursday, 3 May 2007 - 10:37 am

    it is not government’s money. it is PEOPLE’s MONEY. We should all wise up to this fact before the next election. Whatever goodies given to bribed Machap and Ijok people, are all from PEOPLE’s MONEY. No wonder we’re getting more and more corrupted by the years. It is above table now as said by Tun.

  10. #10 by Jonny on Thursday, 3 May 2007 - 10:38 am

    To do business in Bolehland, whether you’re a foreigner or local – abide by the above table and under table rules. Lest, it is a hazard to actually do an honest trade / business in Bolehland where apa-apa pun boleh.

  11. #11 by HJ Angus on Thursday, 3 May 2007 - 10:49 am

    I think the French defence industry has been corrupted for some years now.

    Some months back there was a insight(BBC) report on what went on with defence projects involving Dassault industries and the defence minister was implicated with a few witnesses missing or killed in mysterious circumstances. A few high-class madames were mentioned in the story

    – but no one blown to bits.
    That’s a Malaysian first.
    If one analyses the kind of work done for such a hefty fee, it could include the following:

    Check documents are in order
    Check goods in working order before shipment
    Check goods delivered safely
    Check end users properly trained
    Prepare maintenance contracts

    Not bad for a few days work over the six-year contract.
    Oh I forgot to add
    Entertaining the rich and famous at luxury lifestyle resorts. That’s requires real moolah.

  12. #12 by k1980 on Thursday, 3 May 2007 - 11:24 am

    What kind of support and coordination services that Perimekar can provide that the Defence Ministry is not capable of providing? Well, take the analogy of a school teacher giving private tuition to students from his/her school classes. The students taking tuition will be given school exam tips and sample answers not given to those not taking tuition from the above teachers. In short, money can open many doors, including the door to hell in the case of the mongol interpreter

  13. #13 by Jimm on Thursday, 3 May 2007 - 12:02 pm

    It’s the BN policies and controlling the goverment, allows them to create ‘internal’ wealth. All senior goverment officers and key figures in GLC happens to be a form of instruments (ATM) for the cash flow and balance sheet. As TDM have done well to his earlier master plan to craft out such ‘harmonised’ wealth sharing equity to those who believe and willing to work with his team. They all have signed a form of MOU with protection from the law of this country and the ruler council. All these are a form of structure planning making Malaysia a much richer country and able to compete with the rest of the world especially in economic areas.
    Believe it or not, it have created a personal ‘ATMs’ to those who knows how to slot in along these opportunities gaps and will not be purnish after all.

  14. #14 by dawsheng on Thursday, 3 May 2007 - 1:38 pm

    RM534.8 mil can lift a lot of hardcore poor Malaysians out of poverty but it went in to the pockets of a few cronies. This is a clear case of how corruptions and cronies of the ruling party destroy Malaysia bit by bit, abandoning the poor rakyats, gabe them false promises and continue to torture them.

  15. #15 by sheriff singh on Thursday, 3 May 2007 - 1:55 pm

    If the DPP is smart and brave enough, they can try and raise these issues when Altantuya’s murder trial come up for hearing in June as perhaps Altantuya knew something.

    But that would be wishful thinking.

  16. #16 by HJ Angus on Thursday, 3 May 2007 - 2:00 pm

    Sheriff singh

    I think the AG’s office is using all their brainpower to read the report on the IPCMC.

    So far they have reached page 25 of the Introduction.

  17. #17 by k1980 on Thursday, 3 May 2007 - 2:06 pm

    Razak Baginda owns Ombak Laut— so the government will stop any more queries because it will be subjudice to the Altantuya murder case. Next, all matters pertaining to Perimekar, Lembaga Tabung Angkatan Tentera, Boustead Holdings Bhd and KS Ombak Laut Sdn Bhd will be classified under the OSA. And then the ISA will be applied on those who try to link Razak Baginda with Altantuya, in effect throwing out all the charges against the former. Welcome to justice and democracy, Taliban-style.

  18. #18 by lakshy on Thursday, 3 May 2007 - 5:20 pm

    Didn’t someone mention in parliament that there was no payment of commission by the government? Was it not then said that if the russians or french wanted to pay commission it was upto them? But of course malaysians are so bodoh as to think that the french or russians would have paid commissions out of the goodness of their heart and not by increasing the supply price, which is paid for by taxpayers money.

    Now how come you have a different spin coming from mindef? Which is true? Someone must have misled parliament then? Why not gat PAC and ACA to investigate this?

  19. #19 by undergrad2 on Thursday, 3 May 2007 - 7:00 pm

    French submarines, Sukhoi jets and Altanuya are a volatile combination – unstable at best. Now we see the emergence of the middleman shell company the conduit and the cover to all things illegal and all matters unlawful.

    Malaysians are so intrigued by it all that they forget to ask why the country needs the French submarines and the Sukhoi jets not only as opposed to other submarines and other fighter jets from sources other than France and Russia, but why the country needs them at all!

    The French are not held in high regard this side of the western hemisphere when it comes to integrity. Neither are the Russians. Is that the reason why these self-serving UMNO leaders choose to do business with them?

  20. #20 by undergrad2 on Thursday, 3 May 2007 - 7:10 pm

    We may be seeing a new era for Malaysia.

    It is the era of collapsing bridges, falling buildings, buildings on fire, derailing of trains and now crashing of airplanes and sinking submarines!

    Malaysia is good at politicizing issues which have nothing to do with politics and which should have remained that way. It began with language and education, moving to religion and now defense.

  21. #21 by accountability on Thursday, 3 May 2007 - 10:16 pm

    deny all they want lah – nobody believes them anymore

    (except for the uneducated-rural and politically-brainwashed folks – eg. batu talam, machap, ijok…)

  22. #22 by kurakura on Thursday, 3 May 2007 - 10:41 pm


  23. #23 by bbtan on Thursday, 3 May 2007 - 10:58 pm

    It is surprising that this money grabbing people (and they say that the Chinese are greedy) sometimes try to impart their Islamic values to the rest of Malaysians.

  24. #24 by Godfather on Friday, 4 May 2007 - 10:26 am

    Stealing or money grabbing is not the domain of the Chinese. It is the domain of those who have been in power for too long – supported by an ignorant electorate – and who think that they can get away with anything.

  25. #25 by ihavesomethingtosay on Friday, 4 May 2007 - 10:13 pm

    We will be told sometime in the near future that China and Japan is a threat and it is ok to invest in a missle defence shield and cruise missiles…….

    Why not invest in a few more coconut head? and some banana plantation, so that we might all listern to a few of those coconut heads and become fast – a truly asian banana republic.

  26. #26 by JACK THE RIPPER on Wednesday, 9 May 2007 - 12:00 pm

    The amount of big sum should have invest on the Bomba force, Sea-speed boat for Border Patrol Units to prevent pirates from threatening our fishermen + at the sametimes improve the massive illegal immigrants entry thru sea.

    The gist is what the hell we need submarine is for???? Despite the commission.
    Are we going to having war with our neighbors countries.

    Having so much of fund we can do so many things, sigh.. what a corrupted Umno Junky.

    What if im a Prime Minister…

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