Scorpenes double charged price

The actual cost of the two French submarines sold to Malaysia could be half of the total amount paid.

PARIS: According to different sources in France, the two Scorpene submarines sold to Malaysia would have cost about 670 million euros (RM2.1billion in 2002*), about half of the total deal.

The sale of the two Scorpene submarines to Malaysia, signed in June 2002 by the DCN-I in France and managed by the commercial company Armaris one month later, is part of a larger programme called Soumalais. This programme is divided into four contracts – Scorpene, Malsout, Training and Ouessant.

According to the report of the French Ministry of Defence in 2002-2003, total orders for the Malaysian Navy in 2002-2003 were estimated at 686.5 million euros, of which 671. 2 million was for submarines. Knowing the average price of a Scorpene submarine, the question is if it was the price for one or two submarines.

SIPRI, the global database used by researchers in defence, mentioned that France and Spain exported one submarine each to Malaysia, as part of a 1.2 billion euros deal. It also showed that in 2009 (date of the delivery of submarines), US$335 million was paid by Malaysia to France, and US$299 million to Spain.

The database also mentioned a 50% discount. This discount is not the one for the Ouessant submarine on which the Malaysian submariners were trained. This submarine, the Agosta class type, which is about to be transformed as a museum in Malaysia, had been given for free last fall (but Malaysia did pay for it to be restored, according to the Ouessant contract).

These reports suggest that the average price of one submarine sold to Malaysia is about 335 millions euros. An amount confirmed by Armaris – which closed its doors while the Malaysian NGO Suaram was lodging a complaint for corruption in France. Financial reports of the company in 2002 mentioned a contract of 682.7 million euros for the building of the two submarines.

Expensive or not?

In general, it is difficult to estimate the price of a submarine, which varies greatly depending on options. Nevertheless, the average price would rise rather between 400 and 450 million euros for a Scorpene submarine, a price that can easily double depending on options.

For example, the Scorpene sold to Chile cost between 400 and 460 million euros and 750 million euros for India. Compared to it, the Malaysian submarines would have cost between 300 and 340 million euros.

Moreover, according to a public report on the management of the French company DCN, in 2002 the company had lost a lot of money and was criticised for not being profit-oriented (the submarines were sold with heavy financial losses to Pakistan).

Given the competitive environment in 2002, it is also quite possible that DCN sold its submarines at a low price, hoping to hit the market not only in Malaysia, but also other countries in Southeast Asia.
The sale of the two Scorpene submarines, signed on June 5, 2002, is currently the subject of Suaram’s complaint for corruption.

The application for incorporation in civil part of Suaram in France was accepted last December and the appointment of an independent judge should only be a matter of time.
*(1 Euro=RM3.2 in 2002)

Céline Boileau is a Paris-based freelance writer.