Malaysiakini Letter

A construction company for submarine rescue?

Mohd Arshad Raji
Published:  |  Modified:

One ought to be puzzled at the statement made by Deputy Defence Minister Abu Seman in Parliament on March 2 regarding the award to a bumiputera company for submarine rescue services for the Royal Malaysian Navy.

He is reported to have said that the offer made by the company was RM 98.4 million per year for a period of 20 years which was rejected by the ministry. Hence, a fresh offer has to be made by the company.

The deputy minister further said that, ‘the offer to the company was through direct negotiations as the navy wanted to gain full knowledge on the submarine rescue procedures and also to get the best terms for the services’.

The statements made by Abu Seman are littered with contradictions and smell nothing short of an attempt at inflating cost and awarding the contract to a ‘favoured company’.

This has been the issue with most defence-related companies arguing all along ie, why direct negotiations. And worse still, the award was made to a company whose core business is not defence-related, but that of construction. This was what Abu Seman was shy in revealing.

Most in the defence industry will vouch that the Royal Malaysian Navy is about the best of the three services in terms of planning for its force development, as well as in making decisions for capital purchases and support services.

This being so, the statement made by Abu Seman to justify the award through direct negotiations to a construction company is arguable.

Submarine rescue service is a highly-specialised service and the navies within the Asean region (notably Singapore and Indonesia) do not have a dedicated submarine rescue service within their forces.

The service is being outsourced and presently there are only two renowned submarine rescue service companies in the world - one is a US company and the other a UK company.

There are in Malaysia today representatives representing these two foreign submarine rescue service companies. The question asked is why were these representatives not called in to offer their bids?

Knowing that the service required is so specialised, wouldn’t it be better for the navy to have more than one company bidding, thus allowing a thorough evaluation to be made? Isn’t the open tender system the best in terms of getting good value for money?

Certainly the statement made by Abu Seman needs rethinking and knowing our Royal Malaysian Navy, most would agree that the decision to award the job through direct negotiations was not the navy’s but that of someone else with a pecuniary interest.

And on a related matter, many may be wondering who is the British national so closely-linked with the defence ministry. But for those in the ministry, his name has been in circulation along the corridors of the ministry for quite a while and he is a popular figure especially among the top brass of the ministry.

He is full of generosity; readily making contributions for golfing events organised for the top brass. He takes pride to be in the inner circle and he feature regularly at weddings and functions hosted by the ‘Who's who' of the ministry.

Speculations are rife among local defence representatives, suppliers and contractors that this British national is one of the favoured defence equipment 'middlemen' for the defence ministry.

He is said to have been instrumental in securing several defence contracts through direct negotiations with the defence ministry over the last five years or so.

He operates an office from a penthouse located in a posh apartment at Jalan Pinang, Kuala Lumpur. His official business address is in London where he is a registered contractor for the UK’s defence ministry.

The first known contract involving this man was for the supply of the Astros II Multi-Launcher Rocket System (MLRS) for the army in 2002.

The MLRS is a product of Avibras Industria Areospacial International Ltd of Brazil and a total of 18 launchers were supplied to the Malaysian army at the cost of US$207,764,155.00 (RM727,174,542.50 approximately).

This British man is said to have been the middleman for this contract, concluded between the Malaysian defence ministry and the equipment manufacturer.

In a speech by the chief of army at a parade to mark the 76 th Army Day celebrations on March 1, he announced that the army will be receiving its second consignment of 18 MLRS launchers scheduled to be in service by the end of the year, to complete the second MLRS regiment.

The cost quoted by the chief of army was RM27 million which is believed to be an error, as the figure is grossly different to the 2002 cost quoted above.

It is claimed that this British national is once more a party to this contract, which was offered through direct negotiations. Anymore purchase of this same equipment will be a waste of public funds.

What is unusual about the purchase of the MLRS (and being questioned by many) is that the award for the maintenance of the system is believed to have been offered to this same British national.

This deal certainly sounds odd for a strategic purchase like this. Wouldn't it be proper for the maintenance job to be awarded to a Malaysian company; thus developing some local expertise in the maintenance of strategic weaponry?

Little wonder that despite the millions spent on the purchase of assorted weapons over the last five decades, the country has yet to produce a simple weapon indigenously.

In 2007, the army acquired and was supplied with the VERA-E passive surveillance radar, a product of the Czech Republic. A similar product was also acquired by the People's Republic of China (PRC) earlier at the cost of US54.7 million for 10 systems.

It will be interesting to know how much was paid by our defence ministry, which many believe to be many times more than what China had paid. Again, the British national’s role in this deal sticks like a sore thumb.

The question that needs to be asked urgently is how many more defence deals will prominently feature this British national as the middleman? He has no official business representation in Malaysia, nor does he owns a registered company in Malaysia.

Ironically, he is consistently involved in direct negotiation deals with the defence ministry. How could this possibly happen right under the noses of our political masters, is indeed mind boggling.

Can’t they notice the fallacy of awarding strategic defence contracts involving a foreigner without the participation of a local representative? This is a question that only our political masters and the powers-that-be in the defence ministry (both civilian and military) can answer.

Recently, there was talk of acquiring an Airborne Early Warning Aircraft (Aewac) for the armed forces. Will this British national again feature in this deal through the infamous direct negotiations?

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