PROCES - VERBAL - Malaysia Today

More documents

Recommendations

Info

"Wanna Buy a Sub?" (SM Malaisie)it underscores the importance of political connections cin winning a defence contract in Malaysia.Before the French won the contract, submarines hadbeen on the Malaysian navy's wish Iist for almost twodecades. In the 1980s, Malaysia contemplated buyingSweden's Sjoormen-class submarines but the 1986recession stopped the idea in its tracks.In the early 1990s, the navy finally had money tospend. But offshore patrol vessels were then thepriority. In 1995, in Malaysia's biggest-ever defencedeal, a 6-billion-ringgit contract to build 27 craftwent to German ship-builders in a joint venture with aMalaysian firm owned by Amin Shah, a protégé of formerFinance Minister Daim Zainuddin.Submarines returned to Malaysia's radar screen in late1998 when Singapore took delivery of its firstsubmarine--the same Swedish model that Malaysiacontemplated in the 1980s. A submarine force needs atleast five years of training, and the purchase putSingapore far ahead of Malaysia."Singapore has always been our bogeyman," says adefence expert in Kuala Lumpur. "What they buy we'llbuy as well, but a différent variant, and from someoneelse. "Annex' ^.^ .V NkL'O i*: de rté .i .iOther factors made submarines desirable, including the , .2000 kidnapping of tourists from Sipadan Island, offthe Sabah coast, by Abu Sayyaf guerrillas from the ' ,,^r^Philippines Interested foreign 9 p parties, together 9 with ^, ,Seitheir local partners, began jockeying for position.ô "^,^14Defence planners familiar with the deal say that theSwedes were ruled out immediately because they hadsold to Singapore. Dutch Moray-class submarines wereruled out because Malaysia saw them as technicallyunproven. The Dutch were thought to be in the runningwhen, in 2000, Amin Shah shipped two decommissionedZwaardvis-class submarines to his dockyard in Lumut,on Malaysia's west coast, for $10 million. PrimeMinister Mahathir Mohamad even visited Lumut,8br> triggering speculation that the Dutchwould win acontract. They didn't. The two Dutch submarines stillsit in the dock at Lumut.Meanwhile, the private French company Thomson-CSF (nowcalled Thales) had been working with Jasbir Chahl, aIow-profile Malaysian dealmaker, in an attempt to sella Crotale short-range missile defence system to theMalaysian government. (A British firm won the contract
"Wanna Buy a Sub?" (SM Malaisie)in April this year.) Thales introduced Chahl to Frenchgovernment-owned DCN, and the French submarine pitchbegan in earnest. (The Spanish firm, IZAR, though notinvolved in negotiations, shares joint rights with DCNover the Scorpene's technology, and so figured in thefinal contract.)Chahl added local political heft to the project bybringing in Ibrahim Mohamed Noor, a businessman closeto Daim Zainuddin, who at the time in 2000 was financeminister. Ibrahim's private company, Perimekar, was tobecome the local conduit between the Malaysian andFrench governments. Perimekar was owned by Ibrahimthrough his private firm, Simpletech. Chahl held theposition of adviser. (Apart from confirming his yoleas "a key playe( in the submarine project, Chahldeclined to discuss details of the deal with theREVIEW.)Ibrahim then brought in Abdul Razak Baginda, amilitary analyst who heads the Malaysian StrategicResources Centre, a Kuala Lumpur think-tank. He isalso an adviser to Defence Minister Najib Razak, whoMahathir said is the best candidate to take the postof deputy prime minister after Mahathir steps downnext year. Analyst Abdul Razak was brought in "tofacilitate the submission process," according todefence planners."I had been advising the French on strategic issues,on the justification for submarines," says AbdulRazak. "People know 1 am a trained defence analyst,thus my involvement."At the same time, Chahl and Ibrahim were seekinginvestment from the Armed Forces Superannuation Fund,or LTAT, which manages the only pension fund forMalaysian servicemen. A stake in Perimekar would iakethe company's success of interest to the MalaysianDefence Ministry.But June 2001 brought a setback for Perimekar: Daimresigned as finance minister amid rumours of a falloutwith Mahathir, a turn of events that may have beenperceived to have lessened Ibrahim's influence.(Ibrahim was unavailable for comment for thisarticle.)Then, in August 2001, Ibrahim's Simplepech soldPerimekar to Generasi Mulia, which according toexecutives familiar with the deal served to hold theshares temporarily. The sale paved the way for new,well-connected investors to step in.toD(Q POUCE^J\ciaii
Page 5: "Wanna Buy a Sub?" (SM Malaisie)Suj
Page 9: Draft Contract & BGSujet: Draft Con

PROCES - VERBAL - Malaysia Today

Create successful ePaper yourself

Delete template?

Save as template?