| KUALA LUMPUR, June 27
KUALA LUMPUR, June 27 Malaysia's government has
denied allegations of corruption in its $1.25 billion purchase
of two submarines as it responded for the first time to a French
investigation into alleged bribery payments in the deal.
Fresh allegations emerging from the French case have been
leapt upon by Malaysia's political opposition and are
threatening to tarnish Prime Minister Najib Razak ahead of a
general election he must call within the next nine months.
Defence Minister Zahid Hamidi told parliament around
midnight local time on Tuesday that his ministry had not paid
any commissions in the purchase and had followed "established
guidelines" to acquire the French Scorpene-class submarines. The
government had no knowledge of the alleged sale of classified
defence documents, he said.
"The (defence) ministry has never paid any commission either
directly or indirectly to any company in the acquisition of
Scorpene submarines," he said.
The allegations have emerged in a French investigative case
examining whether French shipbuilding giant DCNS paid bribes to
Malaysian human rights group SUARAM and its French lawyers
have alleged that DCNS bought classified Malaysian defence
ministry documents to help its bid for the 1 billion euro ($1.25
billion) contract it won in 2002. They say investigation
documents show that about 36 million euros ($44.90 million) were
paid by Thales International, a subsidiary of DCNS, to a company
called Terasasi, controlled by a former associate of Najib.
"The defence ministry doesn't have any information on the
alleged sale of secret documents by Terasasi to Thint Asia
(Thales International) for the alleged sum of 36 million euros,"
Najib, who was defence minister at the time, has for years
denied allegations of wrongdoing in the purchase of the
submarines. There has been no evidence linking him directly to
corruption in the deal, and his supporters say his political
rivals are behind efforts to revive the issue just ahead of the
election, which he must call by March 2013.
His government is under mounting pressure to give a fuller
explanation of the transaction after documents in the French
case were leaked and run by Malaysia's lively online media.
The documents, including records seized by French
prosecutors in a raid on DCNS's offices, detail payments made to
two companies set up by former political analyst Razak Baginda,
a former associate of Najib who worked on the submarine deal.
Many of the documents were published this week by online
news site Asia Sentinel. A French lawyer representing SUARAM in
the French case told Reuters the leaked documents were genuine.
Government supporters say that civil prosecutions, such as
that brought by SUARAM, are common in France and are no
indication that a crime has been committed.
Malaysia's government has acknowledged that a second firm,
Perimekar, received 115 million euros for its support services
in the deal, but it had not previously commented on the role of
Hong Kong-based Terasasi.
The allegations emerging from the French case have helped
galvanise Malaysia's opposition as it seeks to topple the ruling
coalition for the first time in the upcoming elections. The
opposition made shock gains in 2008 that shook the BN's
half-century grip on power, although most analysts expect it to
fall short of winning a parliamentary majority in the next