Corruption: Bane of Malaysian National Security

Recently, a total of RM4.27 billion of agreements to improve the country’s defence and security industries were inked during the Langkawi International Maritime and Aero-space Exhibition (Lima) 2013. With defense spending being a contentious issue in Malaysia, the walls of Malaysian defense contracts remain hidden behind the government veil.

Malaysia has a ‘high risk’ of corruption in defense contracts. Hence, placing Malaysia in the same league as Bangladesh, Pakistan, China, Russia, Kazakhstan and Jordan by Transparency International. Meanwhile, two top Malaysian defense companies, Boustead Naval Shipyard Sdn Bhd and Sapura Group received low scores in the 2012 Defense Companies Anti-Corruption Index by Transparency International. They both scored 2.94 and 13.24 respectively, out of 100. In other words, they are highly corrupted-government-backed defense corporations.

In 2002, a report by an American think tank noted that many foreign arm manufacturers generally use well-connected Malaysian as their lobbyists for contracts. The commission paid to such representatives is estimated to range between 10-20 percent.[1] In 2008, Malaysia ratified the United Nations Convention against Corruption which one of its basic principals is the prevention and combating of corrupt practices and transfer of illicit origin and returning such finds to the countries of origin. However, based on recent events particularly the Scorpene scandal, not much if not nothing has changed since 2002.

Under the Tenth Malaysia Plan, the total allocation for defense is RM23 billion. Yet, within that, Najib’s administration has managed to allegedly be involved of a scandal worthy of a Hollywood made movie of sex, scandal, and murder. The scandal Najib’s administration has been allegedly involved revolves around the sale and purchase of highly confidential Malaysian government defense documents with a French defense company. The transaction also included a RM7.3 billion deal to purchase two Scorpene submarines for a kickback worth €114 million from DCNS (a French defense company) to Perimekar (company linked to Abdul Razak Baginda, Najib’s close friend).[2] Among other defense contract scandals linked to Najib before and after him becoming Malaysia’s Prime Minister include, the 2 Scorpene and one Agosta submarines purchase in 2002 worth RM7billion, 18 Sukhoi jet fighters in 2003 worth RM3.5billion and the 12 Eurocopters EC275 helicopters in 2008 worth RM2.3billion.[3]

Not forgetting is questionable difference between the acquisition cost of RM7.55 billion relative to the base system of only RM1.7 billion in the case of the controversial procurement of the littoral combat ships (LCS – Frigate Class).[4] Reversing way back in 1993, when Najib was the Defense Minister, he was also responsible for the acquisition of 27 Offshore Patrol Vessels (OPVs) that was originally to cost just RM4 billion but the cost later blew up to RM24 billion. However by mid 2006, only two barely operational patrol boats were delivered. These two patrol boats not only managed to whip up 298 complaints but payments worth RM943 million had been made despite the fact there were no relevant documents dealing with the payments.[5]

Defense contracts in Malaysia has been deemed to severely tainted with corruption. This comes to mind in a leaked cable from Wikileaks that purported all Malaysian politicians, agents, civil servants and military personnel all received a 30 percent commission in any military procurements.[6] Also noted that although the Malaysian Ministry of Defense has published a reference book with basic policies, it does not always follow these procedures.[7] Also, according to former law minister Zaid Ibrahim, as much as RM11.3 million of Malaysian taxpayers money was wasted on ‘consultation fees’ to European based forms for “technical evaluation”.[8]

 

Table 1: Military Spending (% Of GDP) on Selected Countries 2008-2011[9]

2008

2009

2010

2011

Australia

1.9

1.9

2.0

1.9

Germany

1.3

1.4

1.4

1.3

Malaysia

2.0

2.1

1.6

1.6

Indonesia

0.6

0.6

0.7

0.7

Thailand

1.6

1.9

1.5

1.6

Brunei

2.5

3.3

3.2

Singapore

4.2

4.4

3.7

3.6

*GDP refers to Gross Domestic Product

 

Australia and Germany have proven that military of a developed country does not need a high percentage of military expenditure. Those two countries have also in the context of military expenditure, proved that it doesn’t take much to defend itself from any unknown enemies, thus severing the need to carry out corrupt practices in order to procure military requirements as opposed to Malaysia’s reputation. Malaysia may spend lesser than Singapore and Brunei but it doesn’t explain the shopping spree and billions spent of corruptive defense contracts by the Malaysian government, particularly Najib administration’s  substandard military assets.

Meanwhile in the South East Asia region, even the strained relationship between Malaysia and Indonesia has not affected Indonesia’s military expenditure. The only two countries that amassed high expenditure of military spending are Brunei and Singapore. Although the issue that needs to be pointed out is the need for Malaysia to spend a lot on military expenditure when the nearest threat is piracy and smuggling. In which piracy cases in the Malacca Straits have decreased over the years. However, the recent Sabah incursion has shocked Malaysians as Malaysia is not a usual hotbed for terrorist activities or attacks.

 

Table 2: Piracy Cases in Malaysia 2004-2012[10]

  2004 2005 2006 2007 2008 2009 2010 2011 2012
Numbers 38 10 6 4 2

 

Table shows a steady decline of piracy cases from 2004 until 2008. In 2009 until 2012, it seems there no longer to be any piracy cases in the Straits of Malacca. Meanwhile, according to the 2012 Trafficking in Persons Report, Malaysia is placed on the Tier 2 watch list for being a destination, a source and also a transit country for men, women and children subjected to conditions of forced labour and women and children subjected to sex trafficking.

That being said, the military expenditure does not reflect the intention of the Malaysian government particularly under Najib’s administration to resolve the urgency of human smuggling. Not to mention the porousness of northern Malaysian borders which in February 2013, a Thai policeman was arrested for attempting to smuggle 20 elephant tusks in Southern Thailand from Malaysia.[11] Before that, on 7the December 2012, Customs in Port Klang seized over 2,300 pieces of elephant ivory.[12]

million

 

Graph 1 displays that the Najib’s administration spends less than half on development expenditure and triple more or less each year on operations and yet the quality of defense contracts acquired are severely sub par, our armed forces are equipped with unqualified and dangerous equipments. With the fleeting funds for expenditure, this has caused for the unavailable funding for additional EC725 Eurocopter, the Malaysian military is forced to extend service life and upgrade for 15 of the current 28 S-61 helicopters to keep them in service.[13]

Also to be noted, while the operational expenditures have increase, the cutbacks on development expenditures also have caused for a reduction of ready-to-use MIG-29s. The Royal Malaysian Air Force (RMAF) originally had 18 MiG-29s but lost a pair of them in training accidents, while the other eight have been phased out and cannibalized to support the remaining eight.[14] In 2011,  the Malaysian government also contracted a deal with Boeing to acquire eight F/A-18 jets worth USD$17,262,617.[15]

 

Malaysian Transparency versus Foreign Defense Transparency

As Malaysia is roped in the same league as Bangladesh, Belarus, China and Russia, countries such as Australia and Germany are the only two countries with very low risks of corruption in their defense countracts.

 

Table 3: Corruption risks in Military for Selected Countries[16]

Country Australia Germany Malaysia
Finance The military owns no commercial enterprises, and scandals involving unauthorised private ventures by defense personnel are rare Less than one per cent of defense expenditure is spent on secret items and this must be reviewed by the FAC, although findings are only shared with a few members of the legislature. All spending must be recorded in official records and there is no evidence of off-budget expenditure occurring. Systems are in place to determine the conditions under which information can be classified. Military-owned businesses are in existence, though these are found to be subject to rigorous auditing. A percentage of the budget allocated to secret items is unknown and they are not believed to be audited.

there is no official information regarding the extent of off-budget spending.

Personnel Numbers of personnel, pay rates, and appointment systems are transparently disclosed, and strong payment systems are in place Payroll systems are recognised to be effectively organised and chains of command are kept separate from chains of payment. Appointments and promotions are perceived to be undermined by a degree of cronyism and non-meritocratic selection criteria. A Code of Conduct is not publicly identifiable, nor is anti-corruption training or outcomes of the prosecutions of personnel.
Operations Private Military Contractors (PMCs) are utilised and are subject to the general public service Code of Conduct regulations, rather than more specific mechanisms of scrutiny. Though there is little evidence of trained professionals being deployed to monitor corruption risk in the field, the government states that ‘Points of Contact for the Prevention of Corruption’ are deployed to address this need. There is a lack of anti-corruption military doctrine, training, and monitoring has been assessed. There is no information to indicate that corruption risks in contracting on operations are guarded against through guidelines or training
Procurement There is strong transparency regarding the procurement cycle and purchases, and a Joint Standing Committee contains oversight power. The Federal Financial Plan 2011-2015 includes information about actual and planned defense purchases, though a full list of future planned purchases is not available. The procurement cycle is not disclosed and parliamentary scrutiny is lacking; defense purchases are only made public ex post facto. Although suppliers are required to sign integrity pacts, there is no evidence that having compliance programmes in place is a prerequisite.

 

Both Malaysia’s top military linked companies, Boustead Naval Shipyard and Sapura also have the distinction to be roped in the same league as DCNS (French defense company linked to Scorpene scandal) for being the defense company that does not have basic anti-corruption systems in place. Although, the Malaysian government has denied of any wrongdoing particularly to the procurement of the submarines, there is much to doubt of the transparency of Malaysian defense contracts particularly when not only Najib’s administration spend billions on a submarine that could not submerge in the first few months of arriving in Malaysia.[17]

To which before the failure-to-submerge-submarine, two fighter jet engines worth USD$29 million[18] were stolen during it’s way to maintenance[19]. The question that remained unanswered were the competency of the contractors responsible for the security in Malaysian military bases.

Defense Minister Datuk Seri Zahid Hamidi then criticised the Government Defense Anti-Corruption Index by Transparency International as “baseless”. According to him, the research that lead to the index was biased against Malaysia. This proves that there is a need for an Oversight Committee in the Malaysian government to decide the legality  and competency of any defense contracts.

 

Malaysia on the Offensive

There is sense of urgency by the Malaysian government to amp up military purchasing yet, according to the Global Terrorism Index of 2012, Malaysia is ranked 90 out of 158 counties, indicating Malaysia as a country free of militant attacks. Thus, the sense of urgency of Najib’s administration begs the question, if most military expenditure in acquiring military defense assets are either faulty, late, not effectively kept and of substandard quality as displayed by history, who are Najib and Zahid Hamidi protecting? Zahid Hamidi has dismissed Transparency International’s report as being biased towards Malaysia yet, Malaysian defense spending has been shrouded in secrecy, it does not paint a picture perfect painting of military expenditure by the Malaysian government. The reasoning behind the purchase of two faulty submarines to prevent a repeat of the 1511 attack and seizure of Malacca by the Portuguese is not as nearly a reasonable justification to waste RM3.4 billion of taxpayers money on two submarines[20].

According to Zahid Hamidi, the government allocated RM21 billion of the development expenditure under the Ninth Malaysian Plan to acquire armoured vehicles, multi-role support ships, combat aircraft and next generation patrol vessels. Under the Tenth Malaysia Plan, the allocation rose to RM23 billion. The two Scorpene submarines themselves are categorized submarines with offensive power[21], thus, not only the Malaysian government bought two faulty submarines but the purchasing implies an offensive stance against the aggressive China’s maritime power.

If Najib is serious in dispelling accusations of corruption in the procurement of defense contracts, it would be wise for an independent public Oversight Committee to launch an investigation or simultaneously supervise the procurement of military assets. Malaysia is a signatory to the UN Convention against Corruption (UNCAC) in 2008 with a legal obligation to “prevent, investigate and prosecute” cases of international corruption. The recent Scorpene debacle displays a hypocrisy by Najib and his administration in preventing corruption. This is even though the French government has released hundreds of documents detailing that not only individuals but also the Umno were the biggest beneficiaries of the Scorpene contracts.[22]

 

Failure to Protect: Sabah

The military was sent to Sabah on the 5th of March 2013 to assist the police special forces in dispelling Filipino intruders from Sabah. The deployment began with attacks using F-18 and Hawk fighter jets as with the using of bombs to achieve the objective.[23] In the first wave of air raids on the 5th of March, at least four bombs were dropped on Kampung Tanduo[24]. 8th of March saw several rounds of shelling in Kampung Tanduo and Tanjung Batu, Felda Sahabat.[25] The deployment also included the use of unmanned aerial vehicles (UAVS) and the use of artillery assaults.

The lives of Malaysian security forces may have been spared from the air raids but the lives lost within the course of the Sabah incursion rose to 69.[26] Those deaths seem to be rising with the deaths of a woman and two children in Tanjung Batu in 25th March 2013[27]. The deaths included the deaths of 10 Malaysian security forces[28] and the death of a boy who was shot dead in the red zone. This also includes the arrests of 108 individuals under the new security law, Security Offences (Special Measure) Act (SOSMA) 2012 and other 268 arrested in accordance to other laws.[29] The damage was done, ties between Malaysia and the Philippines negatively affected, thousands of Sabahans have become refugees in their own states and the security of Sabah as well as the entire country have been compromised.

In a knee jerk reaction towards Sabah’s bloody incursion, the Defense Ministry takes over Sabah’s eastern coastline from the Prime Minister’s Department in which the coastline will now be monitored by the Malaysian Martitime Enforcement Agency (MMEA), the Malaysian Royal Navy and the Ministry itself.[30] However, the question remained to be answered, why was the Prime Minister’s Department responsible for monitoring Malaysia’s coastline and not the Defense Ministry nor the Immigration Department prior to the incursion considering the incident in Semporna few years ago?

Malaysian high risk waters include 200 nautical mile Economic Exclusion Zone, the Spratly Islands (called by the Malaysian military as the Gugusan Semarang Peninjau – GSP operational area), the Malacca Straits and of course, the waters between Sabah and the Philippines.[31] And yet, the waters between Malaysia and the Philippines were under the Prime Minister’s Department.

There are 25,332 employees in the Prime Ministers Department in 2009. And yet, even with that much eyes and brains, none of them could be bothered with the ground situation of Sabah’s maritime security. At the same time, according to the Americans, the American government has supplied Malaysia with eight radars. Not to forget the Australians periodically flying theirs P-3C Orion LRMP from Butterworth to conduct maritime surveillance in the Indian Ocean and South China, and share information with the Royal Malaysian Air Force. Also, Malaysia’s MMEA will also acquire coastal surveillance systems, long-range cameras and unmanned airborne sensors to enhance surveillance. Did intelligence information from those flights by the P-3C Orion LRMP woefully ignored by the Prime Minister’s Department?

Those purchases are apparently under wraps with Insitu Pacific and Composites Technology Research Malaysia (CTRM) signing a contract for Insitu Pacific to deliver its ScanEagle unmanned aircraft systems to CTRM. Those UAVs will be operated by a CTRM subsidiary. CTRM already produces the Malaysian made UAVs: Eagle ARV and ALUDRA Mk 1 to the RMAF yet, local UAVs are not used in the maritime security of Sabah. What is used instead is the ScanEagle unmanned aircraft systems (the same UAV used by the Americans in Iraq). Malaysia under CTRM also has other UAV capabilities, namely the SR-01, Aludra MKII, Yabhon Aludra MALE UAV and Aludra SR-08, rotary wing Intisar 100 and 300.[32]

It seems that Malaysia already has a small fleet of UAVs and yet, considering the porousness of the East Malaysian borders such as in Sabah and the northern border of Peninsular Malaysia, these UAVs seem to not be in use. This brings about the question of the strength of Malaysian borders. It also begs the question of the competency of the Prime Minister’s Department prior to the Lahad Datu incursion. As well the quality of intelligence information gathered prior to the incursion. If the Aludra MK 1 was already in use in Semporna, Sabah, why was it not extended to Lahad Datu considering the short distance between Lahad Datu and the Philippines as well as the short distance between Lahad Datu and Semporna itself?

It took the incursion of Sabah for the Najib’s administration to realize the importance of upgrading the security of the Malaysian- Thailand border. This comes after the failure of Najib’s administration to learn anything from the Sipadan Island a few years back. Post Sipadan Island, Ops Pasir[33] is currently underway, protecting 1,577km of coastline since September 2000. Its headquarters in Tawau is responsible for the operation. In other words, Najib knew the maritime security in Sabah was porous and yet, his priorities were acting on the offensive against Pakatan Rakyat instead of protecting Malaysian borders.

It took the Semporna incident for Ops Pasir to be commissioned. It also took the Lahad Datu incursion for ESSCOM to be commissioned. Does it also need to take an Indonesian incursion into borders of Sarawak to be tightened? Does having a reactive administration serve the purpose of ensuring the peace and safety of Malaysians living close to the Malaysian borders? Where have the billions channeled to the Defense Ministry in terms of securing the borders of Malaysia, particularly the porous borders of not only Sabah but also Sarawak? Najib as a Prime Minister and former Defense Minister went on notorious shopping sprees but are any of these goodies sought after by Najib even involve technology to secure these borders? The level of trafficking and smuggling should raised red flags in the Prime Minister’s Department prior to the Lahad Datu incursion and yet, it did not.

 

Epilogue

Najib’s reformation of the repealing of the Internal Security Act, amendments to the University and University Colleges Act and the Printing Presses and Publications Act may prove to only be a rhetoric in which Malaysian are no longer taking the bait. It may signal democratic changes within Najib’s administration but the absence of structural change within Najib’s administration to enforce transparent administration signals the insincerity of Najib to actually be a transparent administration. Hence, sincerity in Najib’s implementation of just and transparent laws and enforcements are mere rhetorical stances.

The mismatch of politics and national security is a bane of Malaysia’s defense strategy. Where billions are channeled to the Defense Ministry, vital maritime borders were helmed by the careless Prime Ministers Department. Instead of taking responsibility over their dereliction of duty, they shake it off by hurriedly handing it off to the Defense Ministry. Billions are channeled and yet Malaysia, a relatively safe nation from militants and terrorist activities such as the likes in the Middle East, is instead a hotbed for trafficking and smuggling. Najib cuts the allocation for national defense to focus on trampling on the the opposition party.

Recent events have signals the lack of respect by Najib and his administration on matters of national security. Instead of protecting the borders of Malaysia, money have been spent of spying on local citizens and the opposition party. Engine jets stolen, controversial submarines, barely functioning patrol boats, million ringgit worth of consulting contracts, ballooning defense acquisition agreements, unprotected borders are all threats to national security.

The walls of Malaysian defense contracts remain hidden behind the government veil. If the country does not know how money are spent on Malaysian national security, particularly border security, attacks such as the Lahad Datu will not be an isolated event. If Najib’s administration could spend millions and billions on spying on Malaysian citizens and substandard military assets, then it should instead invest in a proactive and effective border security instead of blaming the opposition leaders for every situation gone wrong in Malaysia.


[1] Foreign Policy in Focus, U.S. and Malaysia Now Best Friends in War on Terrorism, 10 Mei 2002,

http://pgoh13.com/global.html

[3] MI, Zahid Hamidi Must Be Fired!, 23 September 2012,

http://www.themalaysianinsider.com/opinion/article/zahid-hamidi-must-be-fired

[4] ibid

[5] Demilitarize, Report: Questioning Arms Spending in Malaysia, 22 Februari 2011,

http://demilitarize.org/news-and-opinion/report-questioning-arms-spending-malaysia/

[6] Wikileaks, Malaysian Government Procurement In The Fta, 6 Jun 2006,

http://www.cablegatesearch.net/cable.php?id=06KUALALUMPUR1034

[7] ibid

[8] FMT, RM11m Wasteful Defence ‘Consultancy’ Fees, 23 Disember 2011,

http://www.freemalaysiatoday.com/category/nation/2011/12/23/rm11m-wasteful-defence-consultantcy-fees/

[9] World Bank, Military expenditure (% of GDP),

http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS

[11] MMail, Alarm Over Ivory Smuggling On Malaysia-Thai Border, 5 Februari 2013,

http://www.mmail.com.my/story/alarm-over-ivory-smuggling-malaysia-thai-border-46613

[12] ibid

[13] AIN Online, Malaysia Set To Restore Military Aviation Spending After Pre-Election Budget Cuts, 15 Februari 2012, http://www.ainonline.com/aviation-news/singapore-air-show/2012-02-15/malaysia-set-restore-military-aviation-spending-after-pre-election-budget-cuts

[14] Ibid.

[15] Veterns Today, U.S. Department of Defense Contract Awards for Nov. 28, 2011,

http://www.veteranstoday.com/2011/11/28/u-s-department-of-defense-contract-awards-63/

[16] Govevernment Defence Index, Government Defence Anti Corruption Index,

http://government.defenceindex.org/

[18] AsiaOne, M’sian Govt Under Pressure Over Missing Jet Engines, 23 Disember 2009,

http://www.asiaone.com/News/AsiaOne+News/Malaysia/Story/A1Story20091223-187713.html

[19] The Star, Missing Jet Engines: Action Against High Ranking Officers (Update), 22 Disember 2009,

http://thestar.com.my/news/story.asp?file=/2009/12/22/nation/20091222132320&sec=nation

[20] MI, RMN Says Bought Scorpenes To Avoid Repeat Of 1511 Portuguese Invasion, 2 November 2012,

http://www.themalaysianinsider.com/malaysia/article/rmn-says-bought-scorpenes-to-avoid-repeat-of-1511-portuguese-invasion

[21] Naval Technology, SSK Scorpene Class Attack Submarine, France,

http://www.naval-technology.com/projects/scorpene/

[22] Huffington Post, Malaise in Malaysia: Corruption in High Places, 27 Disember 2012,

http://www.huffingtonpost.com/azeem-ibrahim/malaise-in-malaysia-corruption_b_2304185.html

[23] MySinChew, Chronology Of Lahad Datu Intrusion, 6 Mac 2013,

http://www.mysinchew.com/node/83734

[24] ABN News, Lahad Datu: F18 And Hawk Jets Bomb Kampung Tanduo, 5 Mac 2013,

http://news.abnxcess.com/2013/03/lahad-datu-f18-and-hawk-jets-bomb-kampung-tanduo/

[27] Asia One, Sabah Stand-Off: Mum, Kids Killed In Shootout, 25 Mac 2013,

http://news.asiaone.com/News/AsiaOne%2BNews/Malaysia/Story/A1Story20130325-411035.html

[28] Global Nation, Tension Still High In Sabah, Southern Philippines, 19 Mac 2013,

http://globalnation.inquirer.net/69579/tension-still-high-in-sabah-southern-philippines

[29] MMail, One Terrorist Shot Dead, Woman Detained In Ops Daulat, 21 Mac 2013,

http://www.mmail.com.my/story/one-terrorist-shot-dead-woman-detained-ops-daulat-51204

[30] The Star, Lahad Datu: Defence Ministry Takes Over Sabah’s Eastern Coastline From JPM, 14 Mac 2013,

http://thestar.com.my/news/story.asp?file=/2013/3/14/nation/20130314151639&sec=nation

[31] The Star, A Look At Maritime Security In Malaysia, 6 Mac 2013,

http://thestar.com.my/news/story.asp?file=/2013/3/6/nation/12797818&sec=nation

[32] Defence Review Asia, Asian Region Uav Capability On The Rise, 20 Disember 2012,

http://www.defencereviewasia.com/articles/195/Asian-region-UAV-capability-on-the-rise

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