By Kevin Brown in Singapore | Financial Times
Published: December 22 2009 13:58 | Last updated: December 22 2009 13:58

The Malaysian government is facing a fresh corruption crisis after officials admitted that two US-made fighter jet engines had disappeared from an air force base after apparently being illicitly sold by military officers to a South American arms dealer.

Najib Razak, prime minister, said there would be a full investigation of the thefts, which happened in 2007 and 2008, when he was defence minister. However, opposition parties accused the government of covering up the incidents.

Lim Kit Siang, parliamentary leader of the opposition Democratic Action party, said the authorities had been “super slow” and claimed that the prime minister’s response had painted “a frightening picture of a government of thieves”.

Idris Ahmad, spokesman for the allied Parti Islam SeMalaysia, said “powerful people” had been involved. “We don’t want only the ikan bilis [anchovies] to be arrested while the sharks are allowed to swim freely,” he said.

The General Electric J85-21A engines, each worth about M$50m ($15m), were spares for the Royal Malaysian Air Force’s Northrop Grumman F-5E Tiger II fighters, which fly from the Butterworth air base near the country’s northern border with Thailand.

Ahmad Zahid Hamidi, defence minister, said the engines and associated equipment were “believed to have been sent to a South American country” after being moved to the Sungai Besi air force base in Kuala Lumpur for maintenance.

The defence ministry would not identify the company or the country involved or comment on claims in the Malaysian media that the engines may have ended up in the Middle East.

The F-5 went out of production in 1989 but is still flown as a trainer aircraft by US forces and is in frontline or reserve service with many foreign air forces, including that of Iran.

The defence ministry said several senior officers were being investigated. General Azizan Ariffin, chief of the armed forces, said the engine thefts might have been “the tip of the iceberg”, raising the possibility that other military equipment might also have disappeared.

The disclosure of the thefts is a serious blow to Mr Najib, who has promised a crackdown on corruption as part of efforts to recover support for his long-serving National Front government, which lost many of its seats in a general election last year.

The prime minister last week unveiled a three-year action plan amid concerns about declining investor interest and the impact of Malaysia’s fall to 56th in the 2009 Corruption Index published by Transparency International – down from 47th in 2008.

Mr Najib has flatly denied any personal corruption, including opposition claims of involvement in an allegedly corrupt submarine deal while he served as defence minister.

Corruption charges were brought this month against a senior port executive and two other officials linked to a controversial development near Kuala Lumpur known as the Port Klang Free Trade Zone.

The arrests followed a damning parliamentary report that found widespread corruption and cost overruns at the project, which has run up debts of more than $1bn.