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:

2007/04/27

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.”