Billions lost in defence procurement scandals

Reading the long and never-ending litany of malfeasance, corruption and incompetence in our nation is always a frightfully depressing affair.

It has become so commonplace that even the public has become blasé about it. But we cannot afford to just roll our eyes, mutter under our collective breath and move on; it is, after all, our money that is being plundered.

Of course, it is encouraging to see former leaders like Najib Razak, Ahmad Zahid Hamidi and Tengku Adnan Tengku Mansor, among others, in the dock on charges of corruption and abuse of power. But anyone who thinks that this signals a new toughness against corruption in Malaysia should think again.

1MDB, as horrific as it was, was only the tip of the iceberg, part of a pattern of systematic plunder that has plagued the nation for decades. Worryingly, it is an iceberg that many of today’s leaders prefer not to see, perhaps because it might wash too close to shore.

Take, for example, recent news reports concerning the RM300 million deal to acquire lightweight combat helicopters from American aerospace giant McDonnell Douglas (MD). Two were to have been delivered in July 2017 with the remaining four in December last year.

To date, 35% of the contract value – RM112.65 million – has already been paid but there’s still no sign of the helicopters. It was reported that the local company appointed as the agent for the purchase had its dealership rights terminated by MD. The government might now cancel the project and seek to recover the monies already paid. Good luck with that.

Strangely, when discussing the issue in Parliament, Defence Minister Mohamad Sabu was quoted as saying, “If the helicopters are delivered and the Armed Forces refuse to use them, discussions will be held with other ministries on how they can be utilised.”

He did not explain why the Armed Forces might refuse to accept them but, in any case, which other ministry would have need for combat helicopters? Perhaps Entrepreneur Development Minister Redzuan Yusof might need a few to shoot down out-of-control flying cars.

In the meantime, the RMAF’s fleet of Nuri (Sea King) helicopters has been grounded following the crash of a Nuri in early August this year due to an “unspecified technical fault.” Press reports indicate that the air force is now looking to lease helicopters to replace the grounded fleet.

Coming, as it does, after the defence minister admitted last year that only four of the 28 Russian fighter jets in the RMAF’s inventory are actually able to fly, it does raise questions about the ability of the RMAF to adequately maintain its aircraft.

And then there’s the Royal Malaysian Navy (RMN) which seems to be the victim of one procurement disaster after another.

In 1998, an Umno-linked company which had never built anything but trawlers and police boats before, was awarded a RM4.9 billion contract to supply six offshore patrol vessels (OPVs) to the RMN by 2006. The project was plagued by delays, shoddy workmanship and cost overruns which pushed the final price tag to RM6.75 billion.

It was also discovered that the defence ministry had paid RM4.26 billion in advance to the contractor even though the progress of work done amounted to only RM2.87 billion.

After an 18-month delay, two OPVs, poorly finished and full of flaws, were delivered; it chalked up 298 complaints in its first few months of operation. Reports at the time indicated that it had even failed initial sea trials.

But apparently, we learned nothing from the OPV fiasco because we are embroiled once again in another naval procurement scandal. In October 2013, the government signed an agreement with another local shipyard to supply six littoral combat ships (LCS). The first vessels were to have been delivered in December last year.

The defence minister recently confirmed in parliament that RM6 billion has already been paid but there’s still no sign of the ships. Delivery has now apparently been pushed back to 2023. The minister also hinted that the government might have to pay an additional RM1.4 billion to ensure full completion of the contract.

Explaining the delay, the defence minister said the contractor had failed to submit complete designs, failed to acquire the necessary equipment and failed to adhere to design specifications. If this is true, it would mean that the taxpayers will be paying an extra RM1.4 billion to compensate the company for its own incompetence and negligence.

At the end of the day, having spent billions on defence, we are left with aircraft that cannot fly, helicopters that are grounded, submarines that have problems diving, and ships that exist only on paper. What is the point in tabling grandiose white papers on defence in parliament when we cannot even keep our air and naval assets operational and cannot properly manage the acquisition of needed assets? It’s an absolute disgrace!

And here’s the amazing thing: despite the corruption, mismanagement, malfeasance and incompetence involved, despite the annual auditor-general’s reports and the findings of the Public Accounts Committee, not a single politician, senior general, senior civil servant or CEO has ever been taken to task, leave alone charged, for malfeasance, corruption or dereliction of duty.

Instead, the cabinet, on many occasions, waived late delivery penalties, topped up payments and generally went out of its way to avoid sanctioning the contractors concerned. The cabinet seemed more interested in protecting and helping out cronies than in safeguarding the interests of the nation and giving our men and women in uniform the equipment and support they deserve.

In other democracies, those involved in such scandals would have been charged for malfeasance or at the very least ranked over coals by parliament; but here, we award them with titles, reward them with high paying positions in government-linked companies or allow them to run around making political deals and holiday abroad with key cabinet ministers.

The fact is we’ve created a corrupt system of acquisition that enables politicians to channel lucrative defence projects to cronies who inflate prices but cannot deliver on their commitments, all in the name of promoting bumiputera empowerment. Call it anything you want but there’s no escaping the fact that it’s a gigantic scam that has enabled unscrupulous politicians and their cronies to rake in billions at the expense of taxpayers.

Of course, all these issues took place during the former Barisan Nasional administration; the question now is what is Pakatan Harapan going to do about it? Are they going to clean house once and for all or continue mollycoddling the cronies at the expense of the people? This is particularly important as the government is currently mulling new big-ticket defence acquisitions including next-generation fighter aircraft, trainers and helicopters as well as naval assets.

As well, by the looks of things, some of the old cronies appear to be making a comeback, hungry for new opportunities for plunder.

When the OPV scandal came to light in 2007, Lim Guan Eng, then in opposition, angrily questioned why cabinet approved the increase in contract price twice from RM4.9 billion to RM6.75 billion or 38% even though the OPVs were either not delivered or fully operational at the time. Hopefully, now that he is finance minister, he might be able to prevent history from repeating itself.

The views expressed are those of the author and do not necessarily reflect those of FMT.