Introduction
The EUR 1.2 billion sale of French ‘Scorpène’ submarines to Malaysia in 2002, and the dubious commissions which accompanied the sale, might have gone unnoticed were it not for the kidnap and murder of a young translator in 2006. The victim, who had worked for a key agent on the deal, was targeted when she attempted to get her share of the commissions. The subsequent murder trial implicated members of Malaysia’s special intelligence branch, who were reportedly bodyguards for then-Defense Minister and future Prime Minister Najib Razak.
With investigations in Malaysia hindered by political sensitivities, the focus shifted to France. DCNS, the French shipbuilding company involved, was raided in 2010, leading to scrutiny over its use of intermediaries to bribe Razak and Abdul Razak Baginda, a key Malaysian agent. These activities were in violation of the Organization for Economic Cooperation and Development (OECD) Convention on Bribery and French anti-corruption laws.
Case Details
- Seller Countries: France, Spain
- Seller Companies: Thales, Navantia, DCNS (now Naval Group)
- Buyer Country: Malaysia
- Goods Sold: Two Scorpène submarines, one second-hand Agosta submarine
- Deal Value: EUR 1.2 billion
- Corruption Sum Involved: EUR 146.5 million
- Start Year: 2002
- Outcome Status: Ongoing legal investigation
Key Individuals Involved:
- Najib Razak – Malaysia’s Defense Minister (1999-2008), later Prime Minister (2009-2018).
- Abdul Razak Baginda – Former director of the Malaysian Strategic Research Center; suspected Malaysian agent for DCNS.
- Altantuya Shaaribuu – Mongolian translator, formerly in a relationship with Baginda; assisted in the deal and was murdered in 2006.
- Azilah Hadri & Sirul Azhar Omar – Malaysian Special Action Unit officers; convicted in 2008 for Altantuya’s murder. The verdict was overturned in 2014 but reinstated in 2015.
- Bernard Baiocco & Dominique Castellan – Former executives at Thales and DCNS, suspected of bribery.
Summary of Corruption Allegations
Corruption allegations center on Abdul Razak Baginda, a close associate of Najib Razak. The most suspicious payment was EUR 114 million to Perimekar, a Malaysian company owned by Baginda’s wife. The payment was officially for “support and coordination services” but raised concerns as Perimekar was only established months before the deal and lacked expertise in defense contracting. Additional payments of EUR 30 million and EUR 2.5 million were also made to undisclosed recipients, allegedly to bribe officials. These commission payments were allegedly used to influence key decision-makers, ensuring the deal’s approval.
Documents seized in a 2010 raid on DCNS revealed a network of intermediaries that facilitated these bribes. French investigators found that the final beneficiaries of the commissions were linked to Malaysia’s ruling party, the United Malays National Organisation (UMNO). In 2016, Najib Razak and Baginda were named as primary suspects in the bribery investigation.
Timeline of Events
1991: Malaysia opened tenders for military acquisitions, including submarines.
2002: Malaysia agreed to purchase two Scorpène submarines for EUR 1 billion from France’s DCNS and Spain’s Navantia.
2006: Allegations of corruption surfaced after the murder of Altantuya Shaaribuu, who had demanded USD 500,000 from Baginda.
2008: The two Special Branch officers were convicted of murder. Baginda was charged but acquitted.
2009: Investigations into bribery related to the submarine deal intensified after French newspaper Libération revealed new details.
2010: Malaysian NGO SUARAM lodged a complaint in French courts. A raid on DCNS uncovered documents linking bribes to Malaysian officials and the ruling UMNO party.
2012: French authorities appointed magistrates to investigate. By 2016, Najib Razak and Baginda were named as likely bribe recipients.
2018: Malaysia reopened the corruption case against Najib Razak after he lost power in a general election.
Investigation Outcomes
The murder of Altantuya Shaaribuu remains a pivotal aspect of the case, raising questions about political interference. Legal proceedings in France continue, with key figures under investigation. Meanwhile, Malaysia’s efforts to extradite Sirul Azhar Omar from Australia have stalled due to his pending death sentence.
References
- World Peace Foundation – Compendium of Arms Trade Corruption
- Tufts University Corrupt Arms Deals: The Malaysian Scorpene Submarine Affair
- Defence Industry Daily, March 20, 2013
- Asia Sentinel, June 25, 2012
- Libération, March 5, 2009
- SUARAM investigation reports
Introduction
The EUR 1.2 billion sale of French ‘Scorpène’ submarines to Malaysia in 2002, and the dubious commissions which accompanied the sale, might have gone unnoticed were it not for the kidnap and murder of a young translator in 2006. The victim, who had worked for a key agent on the deal, was targeted when she attempted to get her share of the commissions. The subsequent murder trial implicated members of Malaysia’s special intelligence branch, who were reportedly bodyguards for then-Defense Minister and future Prime Minister Najib Razak.
With investigations in Malaysia hindered by political sensitivities, the focus shifted to France. DCNS, the French shipbuilding company involved, was raided in 2010, leading to scrutiny over its use of intermediaries to bribe Razak and Abdul Razak Baginda, a key Malaysian agent. These activities were in violation of the Organization for Economic Cooperation and Development (OECD) Convention on Bribery and French anti-corruption laws.
Case Details
- Seller Countries: France, Spain
- Seller Companies: Thales, Navantia, DCNS (now Naval Group)
- Buyer Country: Malaysia
- Goods Sold: Two Scorpène submarines, one second-hand Agosta submarine
- Deal Value: EUR 1.2 billion
- Corruption Sum Involved: EUR 146.5 million
- Start Year: 2002
- Outcome Status: Ongoing legal investigation
Key Individuals Involved:
- Najib Razak – Malaysia’s Defense Minister (1999-2008), later Prime Minister (2009-2018).
- Abdul Razak Baginda – Former director of the Malaysian Strategic Research Center; suspected Malaysian agent for DCNS.
- Altantuya Shaaribuu – Mongolian translator, formerly in a relationship with Baginda; assisted in the deal and was murdered in 2006.
- Azilah Hadri & Sirul Azhar Omar – Malaysian Special Action Unit officers; convicted in 2008 for Altantuya’s murder. The verdict was overturned in 2014 but reinstated in 2015.
- Bernard Baiocco & Dominique Castellan – Former executives at Thales and DCNS, suspected of bribery.
Summary of Corruption Allegations
Corruption allegations center on Abdul Razak Baginda, a close associate of Najib Razak. The most suspicious payment was EUR 114 million to Perimekar, a Malaysian company owned by Baginda’s wife. The payment was officially for “support and coordination services” but raised concerns as Perimekar was only established months before the deal and lacked expertise in defense contracting. Additional payments of EUR 30 million and EUR 2.5 million were also made to undisclosed recipients, allegedly to bribe officials. These commission payments were allegedly used to influence key decision-makers, ensuring the deal’s approval.
Documents seized in a 2010 raid on DCNS revealed a network of intermediaries that facilitated these bribes. French investigators found that the final beneficiaries of the commissions were linked to Malaysia’s ruling party, the United Malays National Organisation (UMNO). In 2016, Najib Razak and Baginda were named as primary suspects in the bribery investigation.
Timeline of Events
1991: Malaysia opened tenders for military acquisitions, including submarines.
2002: Malaysia agreed to purchase two Scorpène submarines for EUR 1 billion from France’s DCNS and Spain’s Navantia.
2006: Allegations of corruption surfaced after the murder of Altantuya Shaaribuu, who had demanded USD 500,000 from Baginda.
2008: The two Special Branch officers were convicted of murder. Baginda was charged but acquitted.
2009: Investigations into bribery related to the submarine deal intensified after French newspaper Libération revealed new details.
2010: Malaysian NGO SUARAM lodged a complaint in French courts. A raid on DCNS uncovered documents linking bribes to Malaysian officials and the ruling UMNO party.
2012: French authorities appointed magistrates to investigate. By 2016, Najib Razak and Baginda were named as likely bribe recipients.
2018: Malaysia reopened the corruption case against Najib Razak after he lost power in a general election.
Investigation Outcomes
The murder of Altantuya Shaaribuu remains a pivotal aspect of the case, raising questions about political interference. Legal proceedings in France continue, with key figures under investigation. Meanwhile, Malaysia’s efforts to extradite Sirul Azhar Omar from Australia have stalled due to his pending death sentence.
References
- World Peace Foundation – Compendium of Arms Trade Corruption
- Tufts University Corrupt Arms Deals: The Malaysian Scorpene Submarine Affair
- Defence Industry Daily, March 20, 2013
- Asia Sentinel, June 25, 2012
- Libération, March 5, 2009
- SUARAM investigation reports
