Thursday, September 13, 2012

More Defence Scandals

The reprimand by the Sultan of Johor, Sultan Ibrahim Ismail on the acquisition of Rapid Intervention Vehicles (RIVs) at exhorbitant prices highlights the malaise in the Ministry of Defence procurement exercises

On Saturday 8 September 2012, the Sultan of Johor, Sultan Ibrahim Ismail asked that “nobody should take advantage of the situation for personal gains when acquiring equipment for the Special Forces,” adding that recently four Rapid Intervention Vehicles (RIV) were purchased for RM2.76mil or RM690,000 each by the Ministry of Defence.

Sultan Ibrahim then displayed one of the RIV vehicles and another personal vehicle that he purchased for RM150,000.

“Which of these will be your choice? I do not understand why government purchases involve exorbitant charges that do not make sense,” Sultan Ibrahim, who is also a Colonel in the Special Forces, was reported to have said.

The above acquisition follows a series of controversial procurement of defence vehicles by the Ministry of Defence that have raised major question marks over whether the tax payers are getting value for their money.

In 2008 the Ministry of Defence has acquired 12 Eurocopter Cougar EC725 for RM2.3 billion or RM193 million each despite the same model helicopter being acquired for only RM82.8 million each by the Brazillian government.  The Ministry had attempted to justify their higher purchase price to the Parliamentary Accounts Committee on the basis that there were “customisations” on the vehicle to meet the needs of the local air force.

Last year, the Ministry also awarded a RM6 billion contract to Boustead Naval Shipyard to build 6 offshore patrol vessels and a RM7.55 billion contract to purchase 257 units of 8x8 Armoured Personnel Carriers (APCs) from DRB Hicom Bhd.

The RM6 billion contract was subsequently inflated to a RM9 billion contract and the Minister of Defence, Datuk Seri Zahid Hamidi had justified the both the acquisition and the increase in price on the fact that Malaysians are acquiring the state of the art “littoral combatant ships” (LCS).

It was subsequently exposed that the Ministry of Defence had merely “renamed” the German-made “Gowind Class” naval vessels into “LCS”, which is the name for the more technologically advanced ships built for the United States.  We can only interpret that the "renaming" of the ships is done to mislead the public into believing that we were indeed acquiring the best-in-class ships with the RM9 billion contract.

Similarly, it was exposed that while we are buying 257 APCs from DRB-Hicom for RM7.55 billion, DRB-Hicom is acquiring the 257 APCs from Turkish defence contractor for RM1.7 billion.  While DRB-Hicom will still need to install certain optional equipment, such as the turret guns and software systems onto the APCs, it is beyond reasonable believe that such additional “customisations” will cause the bill to be inflated from RM1.7 billion to RM7.55 billion; or from only an average of RM6.6 million to RM29.4 million for each vehicle.

When the above controversies were exposed, I was accused by the Minister of Defence as a foreign spy seeking to expose national defence secrets and criticised as being ill-informed with regards to defence technology.

However, when the critique comes from the Sultan of Johor, the Minister has no choice but to concede an investigation into the glaring financial irregularity.  Datuk Seri Zahid Hamidi had responded yesterday that “the Defence Ministry takes note of the comment positively. [He] will look into the difference in prices between the RIV awarded by Sultan Ibrahim priced at RM150,000 compared with the RM690,000 sold by the supplier.”

We call upon all of the above deals to be investigated and scrutinised not the Ministry of Defence itself, but by an independent Parliamentary Oversight Committee.  Malaysians have no faith that the Ministry will be able to conduct an investigation that is fair and above board.

In the light of procurement transparency promoted by the Government Transformation Programme, it is critical that the Ministry of Defence supports the set up of the Oversight Committee to prove that all is above board.  After all, if all the above transactions are of value for money to the Government, then surely there is nothing to hide from this independent panel.

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