The Prime Minister-cum-Defence Minister, Datuk Seri Abdullah Ahmad Badawi announced yesterday that the defence procurement of 12 Cougar EC725 Eurocopter helicopters had been put on hold until better economic times – making history of the shortest-lived multi-billion ringgit defence deal between the issue of Letter of Intent (LOI) and its cancellation.
He has created more queries about the Eurocopter deal now put on hold, which must be answered either by Abdullah in the Defence Ministry reply in the budget debate in Parliament beginning today as well as the subject of the Public Accounts Committee inquiry into the Eurocopter deal, including:
1. Abdullah said that the Eurocopter deal is worth RM1.67 billion and not RM2.3 billion. This figure is also at variance with the price quoted by the Defence Ministry secretary-general Datuk Abu Bakar Abdullah who said last week that the tender price of the Eurocopter helicopters was RM1.l billion. How did the RM1.1 billion Eurocopter deal balloon to RM1.67 billion even before the issue of LOI?
2. Abdullah contradicted Abu Bakar as the latter had said that Eurocopter bid was selected in preference over the other six tender bids because “the company had a complete tender offer that obtained the highest marks based on technical evaluation, an offset package while also being at a reasonable price”.
Eurocopter had announced that its “offset package” if successful in the helicopter procurement is a RM250 million investment in Malaysia, including upgrading Eurocopter Malaysia’s maintenance, repair and overhaul (MRO) capacity in its Subang facility.
However, Abdullah denied the “offset package” was a factor, stating that the government did not ask for a RM350 million development package from Eurocopter for the Subang Aviation Park, adding: “Whatever they want to do, it is up to them. As far as I have been told, they offered it in the tender, we did not ask for it.”
The PAC should inquire into the “offset” dimension of the tender and report on the comparative “offset packages” of all the tender bids for the helicopter procurement.
3. Abdullah also justified the price as compared to the 50 Super Cougars procured by Brazil – at RM141 million per Cougar helicopter (at RM1.67 billion) for Malaysia as compared to RM84 million per Super Cougar helicopter by Brazil, claiming that the 12 Eurocopter units ordered by Malaysia are more expensive as they had different specifications.
He said: “Our requirements are more advanced. That obviously would come with a higher price,” adding that the Malaysian Eurocopters would be capable of search and rescue missions, combat operations and other duties.
PAC should investigate and report on this matter.
4. PAC should broaden its investigation into the history of Nuri helicopters crashes in the past 40 years, costing the government RM86.9 million in losses from 15 crashes, involving 70 officers and personnel apart from 19 deaths.
The first Nuri helicopter crash was on 25th April 1969 killing four RMAF personnel while the last fatal one was in Genting Sampah on 13th July 2007 claiming six lives. A RMAF inquiry concluded that there was no mechanical fault in the Genting Sampah crash.
The PAC should submit a report to Parliament to study all the reasons for all the Nuri helicopter crashes, whether as a result of human error or mechanical and helicopter faults.