The French state-owned shipbuilder DCN, which sold Malaysia two submarines, must pay a penalty of almost RM3 billion to the Taiwanese government as compensation for "unauthorised commission".

According to the China Post , Paris-based International Chamber of Commerce's International Court of Arbitration ruled on Monday that hundreds of millions of euros is to be paid for kickbacks in the 1991 sale of six Lafayette-class warships for US$460 million each, nearly double the original cost.

DCN must pay roughly 70 percent of the penalty as it held the main stake in the contract spearheaded by French defence giant Thales.

taiwan dcn thales warship frigates Thales said in a statement that the total sum involved was around 630 million euros (approximately RM2.6 billion), including interest.

"Thales has been ordered to pay damages with interest," a company spokesperson told AFP , but added that the company will contest the ruling and appeal.

According to the Taiwan defence ministry lawyers, Thales would pay an estimated 665.38 million euros (approximately RM2.78 billion) for damages and legal expenses.

Including interest, the total compensation could run up to US$1 billion (RM3.2 billion).

The French judicial probe, which opened in 2001, pertained to monies paid to middlemen, politicians and military officers in three countries - Taiwan, China and France - which inflated the cost of the frigate.

In the contract, it is stipulated that none of such payments are allowed, and if any were made, the money should be repaid to Taiwan. The contract also said that any dispute would be settled by the panel of arbitrators.

The decade-long case also involved the suspicious death of the head of procurement for the Taiwanese navy, Captain Yin Ching-feng, who was found floating off the coast of Taiwan in 1993.

His death eventually triggered a corruption investigation where six former top naval officers were later indicted.

The Taiwanese authorities later filed a complaint in the international court alleging that the anti-corruption clauses in the contract had been breached.

Probe on similar ‘kickbacks'

DCN is also being probed for similar kickback deals from the close friend of Prime Minister Najib Razak, Abdul Razak Baginda, who brokered a submarine deal worth approximately RM3.7 billion.

The Malaysian deal is now being probed by French prosecutors, after a complaint was lodged to a Parisian judge on behalf of Malaysian human rights NGO Suaram.

In this case, Malaysian company Perimekar Sdn Bhd, which is headed by Abdul Razak's wife, was paid RM534.8 million for "support services" provided in the deal.

The opposition has questioned the payment, arguing that the money paid was a broker fee but this was denied by the government.

abdul razak baginda najib altantuya murder 201108 The 2002 deal was brokered when Najib was defence minister, and came under the spotlight when Abdul Razak's mistress, Altantuya Shariibuu was murdered.

Altantuya, a Mongolian translator, accompanied Abdul Razak to France to seal the deal.

Najib has, however, downplayed the probe, saying there is "no case".