Editor’s Note: Would appreciate anyone’s comments on this report of typical developing world corruption.Atrocious defense procurement is microcosm of failing state

The Malaysian government  pays Deftech RM7.55 billion (RM29.4 million each), which in turn pays FNSS RM1.7 billion for these 257 vehicles (RM6.6 million each).   How would you feel as a taxpayer if someone tells you that our defence ministry pays RM7.55 billion for some armoured vehicles that are actually worth one quarter of the price?
If you really know what RM7.55 billion (or RM 7,550 million) means, you would most probably be stunned and express some kind of incredulity and exclaimed: “Is our government that bad?
Are they really so daring?”
The answer is yes; and the drama is unfolding right in our parliament, not some anonymous allegations in some websites. Member of parliament Tony Pua asked Defence Minister Zahid Hamidi in parliament why the ministry was paying the exorbitant price of RM7.8 billion for 257 wheeled armoured vehicles,

and Zahid’s answer was that the ministry had no knowledge of the price of RM7.8 billion as claimed by Tony, as the finalized contract price was RM7.55 billion.  Zahid added that he also knew nothing about the deal that enabled the supplier to procure the same armoured vehicles from Turkey at less than one quarter of the MinDef price.
But Zahid’s denial fell flat, as Tony pointed out that Zahid himself witnessed the signing of the agreement that sealed the deal in Angara, Turkey in February this year between the Malaysian supplier Deftech and the Turkish defence manufacturer FNSS,
(which is a joint venture between BAE Systems Inc. of UK and Nurol Holding of Turkey.)
The deal was reported in a press release dated 3 Jun 2011 in BAE System Inc. website as a USD559 million contract awarded to FNSS for the “design, development and manufacture of 257 DEFTECH AV-8 8×8 wheeled armored vehicles and Integrated Logistics Support for the Malaysian Armed Forces”.
The vehicle, though tagged ‘DEFTECH’, is actually a “FNSS-designed PARS 8×8 multi-purpose, multi-mission, wheeled amored vehicle”
Atrocious price hike This means that the Malaysian government is paying Deftech RM7.55 billion (RM29.4 million each), which in turn pays FNSS RM1.7 billion for these 257 vehicles (RM6.6 million each).
If you as a taxpayer are incensed by this daylight robbery of RM6 billion from the public coffer, wait till you hear of market prices that are even much cheaper than that offered by FNSS.

Tony Pua in a statement dated 9 Mar 2011 in his blog reported the following prices for the equivalent armoured vehicles transacted or offered in the market:  ·
The Portuguese Army paid RM4.4 million each for the Pandur II 8×8 armoured vehicles (EUR364 million for 353 units). ·
The latest version of Pirahan III 8×8 armoured wheeled vehicle developed by the Swiss MOWAG GmBH costs RM3.9 million each (USD1.2 million).

With these prices as reference, it is reasonable to expect that, had MinDef conducted an open tender and sealed the deal at arm’s length, we could have slashed the purchasing price down to no more than RM4.5 million from the present RM30 million each, bringing the total contract sum to RM1.15 billion instead of RM7.55 billion.
This means that the Barisan Nasional government has hiked the price by 6 to 7 times through its defence procurement policy that totally LACKS transparency and accountability.
Such an astronomical scale of artificial cost inflation is so mind-boggling that it is probably unheard of even in the most corrupt of countries.Outrageous spending spree
And this armoured vehicle deal is only one case amidst defence ministry’s multi-billion spending spree that saw it splurging on patrol boats and helicopters at equally outrageous prices.

For instance, it is purchasing 6 offshore patrol vessels (OPV) from Boustead Naval Shipyard Sdn Bhd at RM1 billion each (total price RM6 billion), which is 5 times what the Royal New Zealand Navy paid for its OPV, procured at only RM210 million each (NZ$90 million) from the world renowned BAE Systems, which is the second largest global defence company.

Similarly, Malaysia is buying the Eurocopter EC725 helicopters at RM190 million each (RM2.3 billion for 12 units) while Brazil purchased the same helicopters at only RM82 million each.
A quick glance at the figures for these 3 contracts alone – armoured vehicles, patrol vessels and helicopters – would indicate that there could have been a total leakage of RM12 billion arising from these dubious MinDef transactions.

For this amount, we could have provided low cost housing for a quarter million families, housing more than a million have-nots. That Malaysia’s opaque defence procurement is a hive of corruption is well known among international defence executives and documented in a recent exposure from Wikileaks which revealed US Embassy cables during 2004 – 2009 recording conversations with relatives and agents of Malaysia’s top politicians including prime minister (Abdullah Badawi) and deputy prime minister (Najib Razak).

Besides giving specific instances of corruption, the US cable also alluded to such corruption as a major source of political funds that sustains the local power structure.Unacceptable draining of resources
Looking at the larger picture, the leakages of the 3 contracts mentioned above is only a small corner of massive leakages that pervade the entire procurement system of the BN government, as starkly reminded by the freshly released annual report by the Auditor General.
Such annual reports, which unfailingly chronicle widespread corruption and management failure (some to unimaginable extremes) serve as regular reminders that we have been stuck with an entrenched system of governance that extensively and continuously drains our reducing resources.

No need to fear JAIL OR DEATH, Dr M: Just don’t block investigations(??)

No need for Mahathir to fear he will end up like Gadaffi or Mubarak. I do not even want to see him in jail but he must not block full investigations into the host of financial and political scandals under his 22 years as PM
It is quite unworthy and dishonourable for Tun Dr. Mahathir to imply in his blog “My Fears” yesterday that I am “inspired by what happened to Gadaffi and Mubarak” and that I would “love” to see him “dragged to the courts and sentenced to death or to at least a life sentence” and “Maybe like Gadaffi I would be murdered”!
Fevered imagination
I do not know whether Mahathir is becoming a victim of a very fevered imagination, to the extent that he could imagine and blog that I would want him to end up like Gadaffi or Mubarak.
Nothing is furthest from my mind but I forgive Mahathir these wild and preposterous imaginings.
Mahathir started his blog yesterday: “ Lim Kit Siang is reported to have said that I am working hard to ensure the Opposition will not win because I am afraid when the Opposition Government is in place, it will act against all my ‘misdeeds’ when I was Prime Minister.”
Let me state that I stand by every word of my statement of 3rd June 2012, where I said that the former Prime Minister “has been more than his hyper-active self in the past fortnight, not only making preposterous statements about the political situation in the country but doing his utmost to fob off any possibility that the Prime Minister, Datuk Seri Najib Razak might stick to his earlier timetable to hold 13th General Election in June/July”.
I had referred to three such preposterous statements in the previous two weeks, viz:. when Mahathir
>  Made the wild and preposterous statement that the Bersih 3.0 rally was a “preparation” and “warm-up” by Pakatan Rakyat for violent demonstrations to reject the results of the 13th general election should the opposition fail to win it.
>  Made another wild and preposterous statement when warning that the defeat of UMNO would be akin to the Malays losing power in their own country, when the coalition that would replace UMNO/Barisan Nasional would be Pakatan Rakyat comprising PKR, PAS and DAP;
>  Returned again and again to the theme that because of the Abdullah premiership, the Najib government is still weak and not ready for the 13th General Election which he wants to be held off until after the fasting month which ends in August.
Worried sick
In my statement, I said:
“However, the real reason why Mahathir is so hyper-active in the past fortnight and making so many wild and preposterous statements is because the former Prime Minister is worried that the truth will be out about all the financial scandals during his 22-year premiership if Pakatan Rakyat forms the national government in next polls.”
In my statement, I not only supported a proposal that Pakatan Rakyat, if were to capture Putrajaya, should re-open investigation on the RM30 billion Bank Negara forex scandal of 1992, I went a step further and said:
“If Pakatan Rakyat forms the federal government in the next general election, there should be a Royal Commission of Inquiry into the RM30 billion Bank Negara forex losses scandal in 1992, as well as into all the other financial scandals during Mahathir’s 22-year premiership.”
100 billion ringgit man
I referred to Barry Wain’s book on Mahathir, “Malaysian Maverick”, where Barry estimated that Malaysia lost RM100 billion just in four financial scandals during Mahathir’s premiership.
I said Mahathir would not want and would be most afraid of full investigations into these financial scandals.
In ending my statement, I said:
“Yesterday, former Egyptian President Hosni Mubarak was sentenced to life imprisonment for complicity in the killing of protesters during last year’s uprising.
“I am not suggesting that Mahathir should face jail sentences for the financial scandals in his 22-year premiership but at minimum, Malaysians are entitled to know the truth about these financial scandals which would serve as painful national lessons to prevent their recurrence.
“But clearly, this is what Mahathir would not want and would do his utmost to prevent, including outclassing himself in the wild and preposterous statements about Pakatan Rakyat in the run-up to the next general election.”
No need to fear if innocent
Let me assure the fourth Malaysian Prime Minister that there is no need for him to fear he will end up like Gadaffi or Mubarak.
I do not even want to see him in jail but he must not block full investigations into the host of financial and political scandals during his 22 years as Prime Minister – not only into infamous financial scandals under his watch but also how the key national institutions in the country like the Judiciary, the civil service, Attorney-General’s Chambers, the Police, the Anti-Corruption Agency , the Election Commission were compromised and subverted to serve the behests of one man, the Prime Minister.
Mahathir has claimed innocence to any abuse of power in his 22 years as Prime Minister. It is for him to prove his case to the nation, future generations and history.
 MP for Ipoh Timor