Update of the Scorpene kickbacks Scandal

Scorpenes gravy train: Lodin Wok, other corporate bigwigs may be named

Thousands of miles away, French lawyer Joseph Breham is putting the final touches to a presentation he will make tonight in London. There he is due to speak to an international audience, updating them with the latest in the high-profile investigation into kickbacks allegedly paid by arms giant DCN to Malaysian officials including Prime Minister Najib Razak.

Breham is a member of The Solicitors International Human Rights Group (SIHRG), which has been appointed by Malaysian NGO Suaram to represent it in its complaint filed against DCN in Paris in early 2010.

The Scorpene kickbacks scandal is but the tip of the ice-berg in a bigger case of corruption involving international procurement of military hardware. Not only has DCN been accused of bribing Malaysian officials to secure deals, but similar probes are also going on in Taiwan and Pakistan. But in London, on Friday night, the focus will be on Malaysia.

Breham is expected to touch on the complex commercial trail in the RM7 billion acquisition, in which Najib as the then Defense minister had sanctioned the purchase of two second-hand Scorpene and one Agosta submarines.

At first there was Baginda and Perimekar

Interwoven into the Malaysian deal is Najib's close friend Razak Baginda, who allegedly acted as his proxy in the acquisition, and Altantuya Shaariibuu, a beautiful Mongolian lady who was a translator for Baginda. She was also his lover and allegedly Najib's mistress before that. But sadly, she was killed in 2006 in Kuala Lumpur by two of the PM's former body bodyguards.

An obscure and tiny firm controlled by Baginda's wife, Perimekar, had acted as the go-between for the procurement of the subs by the Malaysian Defence ministry. For its work, Perimekar was paid 114 million euros or RM570 million but the word 'commission' was barred, and in the Malaysian Parliament, the term used to justfy the huge payment to Perimekar was for its "coordination and support" services.

"I feel there is no need to bring the matter to the Malaysian Anti-Corruption Commission because the deal was approved by the Finance Ministry, and the purchase of the submarines was in accordance with procurement procedures," current Defense minister Zahid Hamidi was quoted as saying in the Star in July 2010.

Such is the situation in Malaysia where ministers owe allegiance first to the head honcho of the day, then to their own political party and limping in last would be the Malaysian public. This was one of the reasons why Suaram was forced to make its complaint overseas after failing to make headway in Malaysia.

In deep trouble

But the NGO's crusade against big-time corruption may be starting to reap some benefit. Najib's Umno party is starting to feel the heat. Its supreme council leaders are starting to feel uncomfortable when asked by their own countrymen, distinguised world leaders, and business globetrotters, why does Umno condone such visible and large-scale corruption?

RM570 million is no small amount, and more bad news is still to come. Malaysia ends up with exorbitantly-priced submarines that do not suit its territorial waters and worst still, there is a hefty maintenance bill that may eventually push the full cost of the Scorpenes to more than double its original RM7 billion price tag.

"Najib has been give ample time to explain himself but all he has done is to deport William Bourdon. If he was not guilty, he should be the first to call for a public inquiry to clear his own good name but he hasn't and this in itself is telling," PKR vice president Tian Chua told Malaysia Chronicle.

"By now, the scandal is simply too huge to cover up. Umno may be putting on a brave face until the 13th general election is over before they begin to oust Najib. But the damage done to the party's image is irreparable. That his peers in the party can sit there and allow such shenanigans to go on is not only unconscionable but they should also be blacklisted for being a party to it, whether directly or indirectly."

Lodin Wok and the Scorpenes gravy train

A diplomatic cable from the US embassy in Kuala Lumpur revealed by WikiLeaks earlier this year contained a list of Najib's friends, who had some role or other in the 2002 Scorpenes purchase.

One of them is Lodin Wok Kamaruddin, chief of the Armed Forces Fund Board or Lembaga Tabung Angkatan Tentera (LTAT). Now, Lodin has rubbished the speculation that he too may have been one of Najib's private proxies on the Scorpenes gravy train, but he fails to clear the air sufficiently.

Lodin did not only sit on Perimekar's board as a representative of LTAT as he claimed, but his name has also surfaced in the board of a firm called BHIC that took over Perimekar's 'coordination and support services' contract from 2010 onwards.

Was this 'corporate tranfer' effected because it had become too 'hot' for Perimekar? Also, why was the 'coordination and support services' contract extenuated and taken over by Lodin's new firm? Is the Perimekar's 114 million euros just an initial payment? Are there more on the way?

Mighty questions deserving of mighty answers. Perhaps, Breham will shed some light on this tonight.

BHIC takes over from Perimekar?

Meanwhile, let's look again at Lodin Wok Kamaruddin. In addition to his position in LTAT, Lodin Wok is deputy chairman of Boustead Holdings Bhd. These two companies had held 20% each of Perimekar shares through the holding of KS Ombak Laut Sdn Bhd. The remaining 60% is held by KS Ombak Laut.

According to Perimekar financial statements, Lodin Wok is one of the five directors of Perimekar, alongside Baginda's wife Mazlinda Makhzan, Rozana Abdullah Meili, Abdul Rani Mohd Hussin Abdullah and Mohd Hussin Tamby. Lodin also used to sit on the board of the Affin Bank Bhd, which had been one of Perimekar’s bankers.

This string of “coincidences” alone could place the 61-year-old businessman in an difficult position regarding the submarines deals. However, when contacted for comment, Lodin Wok said he had resigned from Perimekar board on July 1, 2010 after the company completed its contract with the government upon the delivery of the two Scorpene submarines. He added that he was a director in the company as a representative of LTAT.

But Perimekar is not the only Malaysian company being involved in the Scorpene deal. And Lodin Wok's involvement may be deeper than he claims. He is the chairman of BHIC or Boustead Heavy Industries Corporation Defencec.

And BHIC's unit, Boustead DCNS Naval Corp, was awarded a RM532 million contract related to the Scorpene submarines by the Defense ministry. The company now undertakes service support of Scorpene submarines from 2010 to 2015. Boustead DCNS Naval Corp is a 60:40 joint venture between BHIC Defence Technologies and the French-based DCNS, started in 2009.

“Lodin was the main character when Najib was Defence Minister when the transaction was done in 2002,” said PKR secretary-general Saifuddin Nasution.

Due to rising prices and to cushion the people from a recession about to blow in, the Najib administration had promised to allocate more money to the people and cut arms spending. In 2010, Najib approved a budget allocation of RM9.1 billion to the Defense ministry or a decrease of RM 1.5 billion from 2009. However, in 2011, the figure was jacked up again to RM11 billion, following an additional allocation of nearly RM500 million due to 'under-estimation' of service costs for the controversial Scorpenes.

Was this due to the BHIC deal?

- Malaysia Chronicle