Summer has turned to autumn in London, the chill is in the air, and the Guards in Buckingham Palace have swapped their bright red summer outfits for grey winter greatcoats. Weather never stops the tourists from coming to London though and they will still be thronging Buckingham and the busy streets of London. But on Friday, September 30, 2011 at one of the lecture theatres of the BPP Law School in Red Lion Street, a short walk from Holborn station, a more serious gathering took place. The Solicitors International Human Rights Group (SIHRG) and SUARAM had organised a briefing and fund-raising event on the Malaysian Scorpene SSK procurement case. Speakers included Joseph Breham of SHERPA, the French non-profit organisation that has taken up the case, and Cynthia Gabriel of SUARAM. Approximately 300 to 500 participants were expected, many of them Malaysians residing in London. Hovering over all, larger now in death than in life, is the shadow of Altantuya Shaariiibuu, the Mongolian who was brutally, mercilessly, murdered in the outskirts of Kuala Lumpur. Those who thought they could shut her up by killing her have been proven very wrong. She will continue to haunt them until she gets the justice she deserves. Two police officials from the Royal Malaysia Police have been convicted for killing her, but they lack a motive. Until those with the obvious motive to silence her are arrested and convicted, no matter who or howsoever high they sit, there will be no closure in this case. Why has the Royal Malaysia Police not continued with its investigations until those who gave the order are found? Why has the Attorney-General (AG) of Malaysia not returned the investigation papers and demanded a complete investigation? If Abdul Razak Baginda, who had helped MINDEF Malaysia negotiate the Scorpene SSK procurement contract, is not guilty of giving the order to kill, then who is? As long as these questions are not answered, then the justice system in Malaysia cannot be said to be working and it cannot be considered to be a country of laws, the ideal espoused by John Adams. Inextricably linked with the whole Scorpene procurement scandal is current Prime Minister Dato’ Sri Mohd Najib Razak. He was the Defence Minister when MINDEF bought the Scorpene SSKs, which when they arrived were reportedly malfunctioning and unable to dive. Abdul Razak Baginda, whom I’ve known personally since mid-1993, was reportedly his aide. The Royal Malaysia Police personnel who were convicted of Altantuya’s murder were part of Dato’ Sri Mohd Najib’s security detail. Circumstantial it may be, but hardly the kind of shadow that a Prime Minister would want hanging over him. Also the odds for such a coincidence must be mind-boggling. Yet Dato’ Sri Mohd Najib has persistently refused to submit himself to inquiry. In the US, India or in any European country he would have had to resign and accept examination, but not so in Malaysia. There, Dato’ Sri Mohd Najib instead chose to swear upon the Holy Koran that he never knew Altantuya, in curious alternative to a judicial enquiry. Malaysia owes justice to Altantuya and her family, a justice that the country has yet to deliver. She should be alive and with her family in the grassland steppes of Mongolia; and not a pile of ashes in Malaysia. The attempt to blow up her body with C-4 shows that the idea was for her to ‘disappear’, never to be heard from again. The event of September 30 need not have been held in distant London. It should have been held in Malaysia. But the last SHERPA lawyer to visit Malaysia, William Bourdon, was unceremoniously deported by the Malaysian government. So Joseph Breham had to go to London. And perhaps there is something in that, as it was an English poet, Chaucer, who first wrote that, “murder will out”.
Suara Rakyat Malaysia (SUARAM) was forced to file a complaint with the French authorities in Paris, frustrated by the Malaysian government’s blackout of key details on the price tag for the two Scorpene submarines ordered from ARMARIS (the joint venture between DCNI and THALES) in 2002. SUARAM is also working with Transparency International France to move a strong civil society campaign on such deals as they disadvantaged innocent taxpayers. It hopes that the French authorities will be able to shed light on whether there was any corruption in the Malaysian acquisition of the two Scorpene SSKs and a Agosta 70B training submarine. Malaysia is not the first Asian country where DCNS with the help of some top French leaders have bribed their way to a deal. However, in Malaysia, the initiative to recover taxpayers’ money has come from an NGO and not the government, where as in Taiwan, India and Pakistan, the respective federal administrations are the prime movers. Nonetheless, as in a similar case in Taiwan, the key to Malaysia’s purchase may hinge on a contractual clause that makes vendors liable to repay all bribes, plus associated interest and legal fees. Those familiar with international arms agreements believe this standard anti-corruption clause may be in the contracts governing the submarine sales to Malaysia, India and Pakistan.
Taiwan's Ministry of National Defense (MND) confirmed on July 12, 2011 that it had received the disbursement of more than US$875 million from France's THALES Group that complied with court orders to return the retro-commissions in relation to Taiwan's procurement of six La Fayette-class guided-missile frigates in the early 1990s. The MND said that the total payment also included legal fees, interest and other expenses arising from the deal with the French conglomerate which supplied the ROC Navy with six La Fayette-class frigates in 1991. The International Court of Arbitration under the International Chamber of Commerce (ICC) had ruled in April 2010 that THALES Group had violated a clause in the La Fayette-class FFG purchase contract with Taiwan that articulately barred the payment of any commissions. THALES Group finalised the eventual decision to make the payment to Taiwan on a ruling of the Paris Court of Appeal on June 9, 2010. The court rejected the petition filed by the company to set aside the award handed down on May 3, 2010 in the arbitration against the Republic of China.
So far, MINDEF Malaysia has refused to disclose if such an anti-corruption clause exists in the deals. Even if the French authorities find sufficient grounds to take DCNS and their own leaders to court for corruption, at the Malaysian end, there is doubt that MINDEF Malaysia will push for the recovery of the huge amounts lost to Malaysian taxpayers. “We have to move a step at a time. The French investigations are ongoing and the probe could take another 2 to 3 months. The DCNS office being raided pertaining specifically to the Malaysian case was considered unusual by Parisian standards and has raised the eyebrows of many French media and corruption watchdogs. And that is why we had quite a bit of media attention when we were there,” said Cynthia Gabriel, SUARAM’s Executive Director. In 2002, Malaysia’s then Prime Minister Tun Dr Mahathir Mohamad had mooted the Scorpene SSK procurement programme in the Federal Cabinet, while Dato’ Sri Najib as Defence Minister had seconded the Scorpenes’ purchase. Even at that time, this proposal worried financial analysts because of the added burden to an already soaring national debt. But it was not until after 2006, after news broke that a beautiful Mongolian translator had been murdered in Malaysia and her body blown up with C-4 explosives that the scandal really unravelled. Highly embarrassing details emerged that until now the Govt of Malaysia has refused to acknowledge or to probe. These include high-level government tampering of immigration records to hide the entry of the 28-year old Altantuya Shaariibuu into Malaysia, the use of restricted military-grade explosives in her killing, the involvement of Dato’ Sri Mohd Najib's special aides Musa Safri and Nasir Safar, and the awarding of a side-deal worth €114 million to an obscure firm controlled by his friend Abdul Razak Baginda, who after his release, immediately decamped for Oxford University and apparently hasn’t set foot in Malaysia since. A private eye P Balasubramaniam (who has been residing in Chennai for the past two years in self-imposed exile) hired by Baginda to keep Altantuya from bothering him has since alleged that she was trying to collect her US$500,000 share of the commission for the Scorpenes’ purchase. Bala also linked the PM, his wife Datin Sri Rosmah Mansor and Baginda to her murder and the submarine procurement contract. Two former special bodyguards of Malaysian Prime Minister’s family have been found guilty and sentenced to hang for murdering Altantuya, but they only met her on the night of her death and two key questions were shunned by the judge in their trial--what was their motive and was there someone who ordered them to kill her?
L’Affaire Karachi: The Incident Sarkozy Would Prefer to Forget
The Karachi bus attack occurred on May 8, 2002 when a suicide bomber stopped next to a bus containing French naval engineers from DCNI and local contract workers and blew both himself and the bus up. The explosion resulted in the deaths of 11 engineers and 2 Pakistanis. The engineers were in Pakistan to help the Pakistan Navy to finalise the design details for three Agosta 90B-class submarines that Pakistan had ordered. Both Pakistan and France were quick to pin the blame for the attack on al-Qaeda but as time went by it became apparent that the bombing was not orchestrated by al-Qaeda but most probably by Pakistani intelligence and military interests in retaliation for the French government’s decision to stop the payment of outstanding and occult commissions worth over $30 million to Pakistani officials who had helped France to land the submarine contract. That contract inked on September 21, 1994 involved the sale of three Agosta 90B SSKs. The deal was worth about $950 million and several very prominent and still active politicians were involved in it. The French Budget Minister at the time--the person responsible for overseeing the financial side of arms contracts--was no other than Nicolas Sarkozy, who had been appointed by Prime Minister Edouard Balladur. Balladur subsequently ran for President and was beaten by his arch-enemy Jacques Chirac in 1995. Chirac was aware of rumours that Balladur may have illegally received $2 million in kickbacks that were funnelled back to France to pay for his failed campaign and he got his revenge on Balladur by ordering covert inquiries into the rumours. More crucially, he also put an immediate stop to the commission payments to Pakistan. That decision is now widely believed to have led to Pakistani outrage, which resulted in the bombing as an act of revenge.
Although now outlawed by an international agreement, the paying of bribes in 1994 was legal and widespread to secure global arms sale agreements. In this case they were paid to high-ranking local intermediaries, and were staggered over a period of time. Chirac’s order to cancel the outstanding payments on the Agosta 90B deal has been confirmed in testimony by his then Defence Minister, Charles Millon, along with other witnesses. Millon said that Chirac was keen to purge immoral behaviour. The former French Defence Minister said he had an ‘intimate conviction’, following a review of the contract, that some of the vast sums of money set aside for bribes were actually re-routed back to France, via intermediaries and offshore structures. Unlike the payment of bribes to local intermediaries, which was then legal, it was illegal for bribe money to return to third parties in France. The mid-1990s were the final years of socialist President Francois Mitterand's long period in office (which comprised two terms, from 1981-1995). The Centre-Right opposition led by Jacques Chirac, head of the Gaullist Rassemblement pour la République (RPR) party, won the parliamentary elections in 1993. President Mitterrand was thus forced to have a government and Prime Minister from the political right. Chirac put forward his friend and ally Edouard Balladur as Prime Minister, allowing Chirac to concentrate on his campaign for the presidential elections in 1995. However, Balladur soon acquired presidential ambitions of his own and broke his agreement not to run against Chirac. This caused a bitter political split between the chiraquiens--Dominique de Villepin and Alain Juppe among them--and balladuriens, who included Nicolas Sarkozy. Balladur’s immediate problem was that he had no source of party funding to run his campaign; The RPR backed Chirac, not him. So he and his allies--who included thye then Defence Minister François Léotard as well as Budget Minister and government spokesman Sarkozy--had to search for alternative funds. On April 26, 1995 after Balladur was eliminated in the first of the election’s two rounds, FF10.25 million (about €1.5 million) were deposited into his campaign account in Paris in large denomination notes. One theory is that the money came from so-called ‘special funds’ that French Prime Ministers had access to at his time. These were significant chests of cash that were handed around ministries to be handed out as ministers and prime ministers so wished. The second theory--central to the Karachi affair--is that the money came from the retro-commissions linked to the sale of three Agosta 90B SSKs to Pakistan. During the 1990s, when the submarine sale was concluded, it was still legal for French firms to pay commissions--in reality bribes--to foreign dignitaries and decision-makers to persuade their countries to buy military equipment from France rather than another country. They could even be offset against taxes. This was widespread throughout Europe, and not limited to France. An OECD agreement among member-states in 2000 finally outlawed the practice. However, in 1994, it was already illegal for any of those commissions (i.e. paid to bribe local officials) to be channelled back into France. These are what are known as retro-commissions. In 1992, before Balladur became Prime Minister, France was negotiating to sell Pakistan the three Agosta 90B SSKs. By the summer of 1994, the deal was all but signed for a total value of €826 million (the value negotiated then in French Francs) or Rs101.5 billion, with commissions to Pakistan stipulated at 6.25% of the value of the total (€51.6 million or Rs6.5 billion), when at the last minute, the Balladur government brought in two Lebanese businessmen, Ziad Takieddin and Abdul Rehman El Assir (the latter reportedly a friend of both Asif Ali Zardari and the Pakistan Navy’s Chief of the Naval Staff at the time of the signing of the contract, Admiral Mansur-ul Haq), into the deal. The commissions were then upped by another 4% or €33 million, even though other commissions had already been authorised under the deal. The allegation is that these monies were channelled through ‘shell’ companies, at least one of which is said to have been set up under the direct supervision of then Budget Minister Nicolas Sarkozy. And that they were then used to fund Balladur’s election campaign. Takieddine describes Sarkozy as a ‘friend’.
Admiral Mansur-ul Haq and businessman Amir Lodhi were the two principal Pakistani intermediaries (prior to the entry of Takieddin and El Assir) in the Agosta 90B SSK contract. Admiral Haq has been identified as being the intermediary for the military end of the deal (the money reportedly destined to finance jihadi groups in Kashmir and the tribal regions of FATA, as well as to support ISI operations in Afghanistan), while Lodhi was reportedly acting for the Benazir Bhutto-Asif Zardari end of it. Irfan Qadir, the Prosecutor General for Pakistan’s National Accountability Bureau (NAB), has been quoted as saying that although the commissions were split between the two, Admiral Haq took the blame for Lodhi too.
Prior to the Karachi bus attack on May 8, 2002 a Pakistani employee of DCNI was mugged in Karachi in January 2002 and his mobile phone and briefcase containing details on DCNI employees in Pakistan were stolen. Two days later, a magnetic bomb was found under the car of a French diplomat in charge of Afghan affairs in Islamabad. The bomb was not only timed to go off 18 hours later, but was of such low intensity as to cause minimal damage--a warning in other words. Another incident cited as evidence of al-Qaeda not being involved is that the Pakistani head of a company (Ali Engineering Works) working with DCNI escaped to Baltimore after the attack because of threats from the ISI. However, the most convincing argument is on the basis of three confidential reports compiled as part of the DCNI’s own internal investigations into the attack. In fact, a great deal of the information, especially with respect to the details of the Agosta 90B contract and the names and roles of the intermediaries, is derived from these reports. The third report, dated September 2003, which was subsequently suppressed, is the most explicit in its conclusion that the attack was an act of revenge by the Pakistani ISI for non-payment of commissions. The report bases its conclusions on the fact that although the Saudi government did use its influence with Pakistan to mitigate the impact of the lost commissions, by 2002 there had been a change in Pakistani ground realities. Most pertinently, the Musharraf-led government, under pressure from the US, had started to crack down on various jihadi groups, thereby angering their sympathisers. The report suggests that these new realities, combined with the cancellation of the commissions and the fact that Admiral Mansur-ul Haq had been forced by NAB to return the illegally acquired money (leaving him without any funds to pass on), led the ISI to activate jihadi groups to attack the engineers.
In French political circles, almost immediately. Chirac’s camp knew that his rival Balladur had no party political funding and there were rumours that the latter’s campaign money came via arms deal commissions. In 1995, the newly-elected President Chirac ordered the examination of arms deal commission payments authorised when Balladur was Prime Minister. Chirac ordered that the payments be immediately halted in those where retro-commissions were found or believed to be involved. He also took the precaution to request the Saudi government to intercede with the Pakistani establishment and smooth matters over. Chirac’s camp has presented this as an attempt to clean up public life. However, Chirac’s own track record suggests probity was far from the top of his agenda. What has been widely suggested in the media and by a number of politicians, but unproven, is that it was a bid to cut off the funds of the man who had betrayed him and who could otherwise continue to represent a political threat. There is the opinion of the French Constitutional Council’s own investigators about the dubious provenance of the FF10.25 million that Balladur’s campaign received in cash. If the money did not come from campaign rallies, where did it come from? In January 2010, Luxembourg Police said that some of the funds that had passed through a shell company in the Duchy in 1995 came back into France to finance French political campaigns.
The main investigation into the Karachi bombing murders is led by French judge Marc Trevedic. His is a murder investigation, for under French law the deaths of French nationals abroad can be investigated--and those charged eventually tried--in France. The relatives of the engineers are civil parties to the case. His line of inquiry is that the bomb attack was a reprisal for the scrapping by Jacques Chirac’s government of retro-commissions linked to the Agosta 90B SSK sale. He has ruled out, for lack of evidence, the previously officially-supported theory that it was carried out by al-Qaeda, even though it claimed responsibility for it. The two men sentenced to death in Pakistan for the atrocity have since been acquitted. Importantly, and fuelling suspicions of a cover-up, Trévidic has been refused access to official French documents on the grounds that they are classified as secret for national defence interests. He has also been denied access to transcriptions of the hearings of a parliamentary enquiry into the Karachi bombing in a move organised by the Chairman of the Assembly’s Defence Commission, Guy Teissier, an MP from Sarkozy’s ruling UMP party.
A second inquiry is being led by French judge Renaud Van Ruymbeke. He is investigating the financial background, and specifically whether retro-commissions from the Agosta 90B deal served to fund a political cause. His investigation was launched in spite of opposition from the prosecution authorities in Paris. The prosecution authorities ultimately answer to political masters. As part of the judiciary the investigative judges--also called examining magistrates--are independent. The prosecutor’s office launched an appeal to have Van Ruymbeke’s case quashed on grounds of legal technicalities. According to a January 2010 report by Luxembourg Police, the creation of a Luxembourg company called Heine in late 1994 was supervised and approved ‘directly’ by Sarkozy, who was then Budget Minister. This ‘shell’ company is said to have been used to channel commissions from the Agosta 90B deal. Between 2004 and 2006 the former boss of this company, Jean-Marie Boivin, tried to blackmail the then French government, demanding €8 million in return for silence over what he knew about the retro-commission payments. One of the letters was sent to Sarkozy. Boivin also went to see Sarkozy’s former law firm partner. Boivin claims that on October 26, 2006 he received a visit from two former intelligence agency officials, and was physically threatened. Boivin says they were sent by Nicolas Sarkozy, then the Interior Minister. This was just months before Sarkozy stood in and won the 2007 presidential elections. As President, Sarkozy has promised to help the Karachi victims’ families find justice. But they complain bitterly of the obstacles preventing the investigation from advancing properly, notably the official refusals to hand over information to the judge. Sarkozy has dismissed the allegations about his involvement as ‘preposterous and a fairytale’.
The Karachi scandal could haunt Nicolas Sarkozy for the rest of his presidency. This in turn could have a knock-on effect on his likelihood of getting re-elected as President in 2012. If Sarkozy were found to be implicated in illegal party funding then he could not be prosecuted while in office, because of presidential immunity. But the prosecution of anyone close to Sarkozy over the affair would be politically damaging, not to say politically fatal for him. The Karachi affair has also re-opened political wounds on the right between the balladuriens and the chiraquiens. However, whether the engineers’ families will ever learn the whole truth about the retro-commissions and exactly why they were murdered in May 2002 remains open to doubt.—Prasun K. Sengupta