Thursday, April 29, 2010

MINDEF Twists & Turns over RM8b AWV Purchase

The Ministry of Defence must not twist and turn when explaining the RM8 billion order for 257 8x8 armoured-wheeled vehicles

We have on 22nd April issued a statement in Parliament asking the Minister of Defence to explain the purchase of 257 8x8 Armoured-Wheeled Vehicles (AWV) or Armoured Perosnnel Carriers (APC) for the astronomical amount of RM8 billion. The amount is shocking as each of these non-combat vehicle is priced at a ridiculous RM31.1 million.

Even the top-of-the-range AWVs built by one of the best military vehicle and equipment manufacturer in the world, General Dynamics Land Systems-Canada, LAV III cost US$3.04 million or only RM9.9 million each.

What's more, even the best-in-class main battle tank, as opposed to just an armoured carrier, produced in the United States, M1 Abrams M1A2 deployed extensively in Iraq, Kuwait, Saudi Arabia and Australia cost only US$6.1 million or approximately RM19.8 million!

The Ministry had only yesterday, more than a week after our statement, issued a denial claiming no price has been fixed, and our earlier statement “tidak tepat”.

We call upon the Minister to come clean with the information on the contents of the letter of intent issued to Defense Technologies Sdn Bhd (Deftech), a wholly owned subsidiary of DRB Hicom Bhd, and answer the following questions directly:

1.Was the figure of RM8 billion quoted in the letter of intent issued to Deftech? If not, why did Datuk Seri Dr Ahmad Zahid Hamidi, the defense minister announce the RM8 billion figure while witnessing the signing of agreements worth RM10.4 billion? In fact the full breakdown of cost of each contract was given to the press and published in full in the New Straits Times on 21st April? How can the Minister announce RM8 billion at the 12th Defence Services Asia but the Corporate Communications Unit then deny it a week later? Was the Minister also making statements which are “tidak tepat”?

What is most incredulous is Datuk Seri Zahid's statement publised in the NST on 22nd April which claimed that the “RM10.4b defence deals will help us save costs”.

2.Why did the Ministry of Defence award the letter of intent, with or without the RM8 billion figure to acquire 257 units of the 8x8 AWVs when a prototype of the vehicle will not be ready until 2012? The chairman of Deftech, Datuk Seri Mohd Khamil Jamil told the press that "We have an order for 257 8x8 AWV units but right now, we are going to come up with the prototypes meant for testing purposes by the army before we develop the whole range of armoured vehicles."

3.Will the Ministry agree that purchasing the AWVs at RM31 million each is completely unacceptable, and is more than 300% the price of a top-of-the-range AMV like LAV III? Therefore any purchase of AMVs should not be priced more than RM9 million? In fact AMVs produced by some of the other world renown military vehicles specialists like Swiss MoWAG GmbH costs only RM4 million each. The rakyat deserves a guarantee from the Minister that any purchase will not exceed acceptable limits based on market prices.

We find the Ministry's assurance that “Kementerian Pertahanan sentiasa berhati-hati dalam setiap rancangan pembelian aset kerana ia melibatkan kos perbelanjaan yang besar” completely not credible given the experience over the past decade.

For example, the Defense Ministry had awarded a botched RM24 billion contract to PSC Naval Dockyards to build 27 offshore naval vehicles. The contract was severely criticised by the Auditor General. For the contract to deliver the first 6 boats, the original RM5.35 billion contract ballooned to RM6.75 billion by January 2007. The auditor also reported that the ministry had paid out Rm4.26 billion to PSC up to December 2006 although only Rm2.87 billion of work had been done, an overpayment of RM1.39 billion, or 48%. In addition, Malaysia’s cabinet waived late penalties amounting to RM214 million. The Auditor General also found that 14 “progress payments” amounting to RM943 million were made despite the fact that there were no payment vouchers or relevant documents dealing with the payments…”

We also question the Defense Ministry's purchase of 2 submarines for the cost of RM3.4 billion which had involved an astronomical RM500 million in commissions to a “logistics and support” company belonging to Abdul Razak Baginda, a well-known associate of the then Defence Minister, Datuk Seri Najib Abdul Razak.

We want the Minister of Defence to come clean with the proposed acquisition of the 257 AMVs and do not attempt to hide the details of the transaction with wishy-washy explanations which does not hold water.

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