Contractor sues over 'unfair termination' of Black Hawk deal - report

Summary

• Defence contractor Aerotree Defence & Services Sdn Bhd files a lawsuit against the government for the unfair termination of a deal to lease four Black Hawk helicopters.

• The company is seeking a court order to reinstate the deal or is demanding RM353 million in damages.

• Aerotree claims the deal was cancelled without due process and that it faced delays due to the Russo-Ukraine War, technical modifications, and the government’s failure to help secure a loan.

Defence contractor Aerotree Defence & Services Sdn Bhd has reportedly sued the government, claiming that it had acted unfairly when it terminated the deal to lease four Sikorsky UH-60A Black Hawk helicopters last year.

A report by The Edge, which cited the company’s statement of claim filed at the Kuala Lumpur High Court, stated that the company is seeking a court order directing the government to follow through on the deal based on an acceptance letter dated April 17, 2023.

If the deal can’t be carried out, the company is reportedly demanding RM353 million in damages, which comprises RM17.5 million in special damages, RM38.7 million in further damages, and US$38.7 million (about RM297.3 million) in additional compensation.

In addition, Aerotree is seeking general damages for loss of reputation, as well as exemplary and aggravated damages decided by the court.

It also wants to block the government from using a RM1.87 million bank guarantee, which Aerotree provided and has since been seized by the government.

The suit was reportedly filed through Messrs Hafarizam, Wan Aisha & Mubarak, naming the Defence Ministry secretary-general, the ministry, and the federal government as respondents.

The Black Hawk is a US-made military medium-lift utility helicopter capable of transporting troops and cargo.

During the 2023 Langkawi International Maritime and Aerospace Exhibition, the defence minister at the time, Mohamad Hasan, said the Malaysian Army’s aviation branch would receive four Black Hawk helicopters leased from Aerotree for training and operational flight assignments.

The lease, according to the statement of claim, is worth RM187.5 million for five years. Aerotree would own, operate, and maintain the helicopters.

This was to replace the older Sikorsky S-61A-4 Nuri that were suspended from service since 2020.

However, the deal was called off on Oct 31 last year after Aerotree reportedly failed to deliver the helicopters after numerous delays.

Explanation and justification

In its statement of claim, Aerotree reportedly attributed these delays to technical modifications, pilot training, and disruption from the Russo-Ukraine War, for which the company had applied for three extensions.

It also reportedly accused the government of failing to help it secure a loan from SME Bank, and a change in the defence minister further delayed the documents needed for approval.

When the loan approval came through, the company had yet to receive a deed of trust from the ministry to facilitate the first payment.

According to The Edge, the company said the government was aware of the reasons behind the delays, but still imposed unfair conditions that made it harder to complete the deal and had set up the company to fail.

It also claimed the termination was unfair and was done without due process, and its appeals had gone unanswered.

The statement of claim also reportedly mentioned the government’s new tender to lease army helicopters.

The tender worth RM185.2 million reportedly closes on Sept 23.

“It said although Aerotree can reapply, there’s no guarantee it will win the bid, and it risks going through the same delays again,” The Edge reported.

The case has been fixed for case management on Oct 23.

Defence Ministry opens new tender for helicopters after king's decree

No 'flying coffins', Agong orders ministry to scrap Black Hawk deal

'Black Hawk helicopter contract to be voided if Oct 30 delivery not met'

Why not procure Black Hawk helicopters on a G2G basis, PN MP asks

Black Hawk delivery expected end of October: Armed forces chief