RM11m wasteful defence ‘consultancy’ fees

Zaid Ibrahim believes defence consultants are being used to channel corruption money gained from possible kickbacks.

PETALING JAYA: Former law minister Zaid Ibrahim today demanded an explanation on the government’s need to hire consultants for defence procurement, particularly for the recent purchase of six patrol vessels (SGPVs).


Zaid, the Kita president, said as much as RM11.3 million were paid to several defence consultancy firms on the purchase in a transaction shrouded in secrecy at the expense of taxpayers money.
Documents provided by Zaid showed Boustead Naval Shipyard, former government defence contractor now privatised, had paid fees to European-based firms for “technical evaluation” fees through a Singapore account.


The former minister believed the employment of “agents” to purchase defence was not of military necessity but “necessary to channel corruption money” gained from possible kickbacks.
 “Why is there a need to hire agents? We could easily save (millions) if we let the users (military) themselves decide on what to get,” he told reporters here.

The Najib administration had recently come under fire for the escalating cost of the SPGVs – from RM6 billion to RM9 billion – in a contract claimed to be rife with discrepancies, denting Prime Minister Najib Tun Razak’s pledges to ensure accountability in government procurement methods.

The SPGVs are designed and built by controversial French defence contractors DCNS which is the subject of immense scrutiny.


Bureaucracy is money


DCNS had also supplied Malaysia with the Scorpene submarines in another scandalous deal with purportedly links to a murder of a Mongolian woman and kickbacks worth RM500 million involving persons close to Najib.

The deal is now under investigation by the French authorities.

Zaid said Defence Minister Ahmad Zahid Hamidi must explain on the purchase of the second generation SPGVs from DCNS, especially when Malaysia had already spent RM300 million to purchase the first generation design.

Owning the design was a cost-cutting move so that Malaysia could add additional SPGVs and merely upgrade it with new technologies but based on the original design.

Stopping the use of third parties for defence procurement is one of the ways to curb corruption in the industry, said Zaid.

“We should let the army, navy and airforce to determine on these purchases and not use ‘professionals’ for these procurement,” he said, describing the move as an “outsourcing” process that thickens bureaucracy and paved way for corruption.

Zahid had previously denied any wrongdoing in the SPGV deal and shrugged off demands to disclose contract details on the basis of national security.

Zaid said the “national security” reason was often an excuse to categorise defence procurement contracts as official secrets in a bid to conceal the abuse of power in the process.

Syed Jaymal Zahiid | December 23, 2011