Redacted in the name of ‘national security’, some 40 pages were kept hidden out of the 150 page Boustead auditor’s report of 2018 that was released by government ministers last week.
The release was in response to growing public pressure over the LCS (Littoral Combat Ships) mega-defence contract scandal. However, the public version is only 110 pages long compared to the original and it is peppered with further redactions blanking out charts and diagrams as well as text.
Sarawak Report has gained information on the full document, however, and together with the French media outlet Intelligence Online we can expose what exactly the newly returned UMNO government has been trying to hide about this deal driven by senior figures in their ranks, including then prime minister Najib Razak and former defence ministers Zahid Hamidi and Hishamuddin Hussein.
What is clear is that the vast bulk of the redactions relate not to defence secrets at all but to a so far hidden agenda behind the vast LCS upfront payments to secretly supplement the entirely separate Scorpene submarine project that had been commissioned by Najib as defence minister several years earlier, amidst equally scandalous delays and evidence of kickbacks.
Based on this stunning evidence, Intelligence Online has followed German news organisations in challenging the role of France’s own arms manufacturers over the RM9 billion project supposed to provide Malaysia with six new combat ships (LSC) that were never built.
According to the Boustead audit, the French companies knowingly collaborated in this conspiracy to plug the holes in the Scorpene project that had lost so much money to graft payments which included the €114 million kickback to the company Perimekar Sdn Bhd, over which France’s major contractor Naval Group (formerly DCNS) has been convicted in the French courts for using to bribe Najib?
Naval Group is still appealing that conviction, according to Intelligence Online which today reported on its joint investigation with Sarawak Report. The findings, prized from what appears to have been an attempted cover-up, look set to land both DCNS and a company it closely worked with on the LCS deal back in hot water over Malaysia where the French group is apparently trying to sell yet two more of its submarines just as its original contact, Najib Razak, is sent to jail.
Intelligence Online reports how the redacted segments of the report lend discovery to “an apparent secret component to the LCS contract” which involved misdirecting money provided for the purchase of the six navy combat ships towards completing the submarine project for the two Scorpenes in terms of further parts and supplies.
This was the so-called SMISS (Submarine In-Service Support) programme to cover the fact the previous project was unfinished despite going over budget:
“All the censored parts and the hidden appendices [in the redacted report] concern another programme, known as SMISS and worth €50m, which concerns the purchase of parts for the two submarines that the Malaysian navy acquired in 2002 from DCN, the forerunner of Naval Group (which became DCNS and then Naval Group).
Fake companies and real profits:
It was around the secret SMISS programme that a number of real and fake companies connected to a firm called Alizes Marine were created”
details Intelligence Online.
The discovery goes a long way to explain some of the issues highlighted by earlier enquiries into the matter, including that of the parliamentary Public Accounts Committee and of the Auditor General.
These include why it was that having been awarded the contract by Najib’s government this industrial subsidiary of the armed forces fund went against the wishes of the Malaysian navy and commissioned DCNS’s Gowind model of ship as opposed to the original Dutch design that had been identified as the best contender.
In the same way that one large chunk of the missing investment has been identified as having been detoured into meeting Boustead’s existing debts, it is evident that there were residual aspects of the previous submarine contracts that needed funding. Indeed a joint company had been incorporated in 2009 by Boustead and DCNS, named BDNC, which was to receive a letter of award from the Government of Malaysia in 2010 for providing In-Service Support for two units of Submarines.
Extremely telling in the eyes of the auditors behind the report (Alliance FIA Malaysia) was the fact that related quotes and agreements had been obtained by Boustead’s BNS from these French concerns well in advance of the LCS contract even having been awarded to BNS by the government in the first place, which didn’t happen until December 2011.
Indeed, quotes from Alizes Marine were obtained in early 2011 and quotes from DCNS itself a year even before that in December 2010:
“It is unusual to have a DCNS quotation dated 23rd December 2010 even before the Letter of Award was signed by BNS with the Government of Malaysia/Ministry of Defence.
This indicated that the deal was pre-determined between the vendor and certain vested persons at BHIC/BNS who were at the helm of the decision-making process. The history of DCNS and its unethical practices to bribe Malaysians during the deal is well documented which were filed in the Court by the investigative agencies of French after conducting searches at DCNS & Thales office”
the Boustead Heavy Industries Corporation audit report damningly observes.
In a later segment entitled “Suspicious role of DCNS in the LCS Programme” the report points out that the official Letter of Award (LOA) was not made to DCNS to provide its version of the ships in place of the model desired by the navy until 20th March 2012: “the commercial team were not privy to DCNS’s commercial offer made in December 2010″ nor were they “given any opportunity to thoroughly understand the offer” in the context of a management structure where checks and balances designed to control the spending and management of the project were steamrollered by the top down approach.
Middle management, who were squeezed out of the process and prevented from performing their proper roles according to the report, found DCNS “arrogant” and “not transparent in terms of their scope of work, technical specifications, various components and deliverables.”
Fake Companies To Siphon Cash
Having pre-determined the contracts would go to the French company in a manner that showed “clear intent”, the audit report identifies a number of companies that it believes were set up to siphon out money through the purported supply contracts. Again the auditors do not mince words in pointing fingers:
“A special internal audit report finding signified serious irregularities, deceptive practices and personal gains at the expense of BHIC.
The vendors for providing consultancy services were shortlisted without following the guidelines of SOPP on tender bidding and selections. The payments were also not approved by the Procurement team and BOD of BNS”
It was in this context that the French supply operation was set up utilising unnecessary middlemen companies, much in the same way that the German subsidiary Contraves Malaysia was employed to siphon a billion ringgit from procurement on the main equipment side of the contract.
However, in this case DCNS/ Naval Group did not directly become involved in the service and supply side of the contract dealing with the submarines. Journalists from Intelligence Online have surmised that having been involved in the original contract that failed to complete DCNS chose to ‘arms length’ the work through a recommended intermediary, namely the French defence supplier Ameris, whose directors had set up a subsidiary named Alizes Marine in France:
“Rather than dealing directly with [manufacturers] BPS (Boustead Penang Shipyard) selected an intermediary, Alizes Marine in France based on an alleged recommendation by DCNS, for the supply of spare parts for the Scorpene Submarine project. [The] Ex-Chief Financial Officer raised various concerns on the selection of Alizes Marine, however, the management failed to take corrective actions.
Based on the letter from DCNS, Alizes Marine never possessed a global export licence despite the assertion by [the key procurement officer] in front of the Board that Alizes Marine was selected because they had a license…
There was more. Under a segment entitled Dubious Facts Involving Alizes Marine the audit records that the French company itself was only incorporated on 13th July 2011 which was some months after two bogus same name subsidiaries had already been incorporated under an entirely different (Malaysian) ownership in Malta (April) and Labuan/Singapore in February.
Only too predictably, payments for orders placed with the French company started to be sent to the identically named off-shore companies, in the same manner as the looting had taken place from 1MDB.
“Although it appeared that the spare parts were procured by Alizes Marine France, the way payments were diverted to Alizes Marine in Singapore created serious doubts.”
The Boustead auditors devastatingly concluded that:
“DCNS used Alizes Marine as a front to benefit from the supply of spare parts on the arrangement carved in Malaysia.
Prima facie, it appeared that DCNS and Ameris group France were also part of the scheme through which Alizes Marine Ltd siphoned out monies violating the provisions of the Anti-Money Laundering Act (AMLA) in Malaysia.”
“[BHIC audit – capitals added]
The above damning conclusions by the auditors explain why, the report says, although BPS paid €43.69 million to Alizes Marine France between 2011 to 2015 the actual company in France reported a revenue of only €3.53 during that period.
The President of Ameris France is one Thierry Barrier who, according to the audit report, referred always to himself as President of Ameris France. However, he nevertheless also used an email address “giving an impression that he is the official of Alizes Marine France” say the auditors.
They add that documents at Boustead referred to to company as “Ameris France / Alizes Marine” indicating a clear conflation of the two entities in the understanding of the Malaysians.
Tale of Two Wives?
The nub of the deception involving Alizes was that invoices sent by BPS (Boustead Penang Shipyard) to Alizes Marine in France were in fact being paid to the Labuan namesake’s bank account in Singapore through an Alizes Marine Limited in the same way that Jho Low siphoned billions out of the 1MDB bond issues through bogus off-shore subsidiaries of the UAE sovereign fund Aabar.
Despite the lack of guarantees and in a contradiction of good process that was questioned by the Boustead internal auditor but ignored, 50% fees were paid up front by BPS for these contracts, many of which simply were not fulfilled a year later.
“BHIC Board minutes dated 22nd November 2012, the group internal auditor raised serious concerns on the payment of 50% advance money to Alizes Marine, however, no corrective steps were taken by the management….
It was unusual to note that four purchase orders amounting to approximately Eur12 million for procurement of spares were issued by BPS even before the registration of Alizes Marine in France as a company. These invoices did not contain any details as to the material to be supplied by Alize Marine… This reflected the intention of certain officers to siphon out the money in the name of procurement”
Indeed, it was only later that blanks in the forms were made up with items to attempt to account for the multi-million payments made to the SMISS programme. Far from being top secret defence purchases worthy of redaction the auditors list items you would not expect from defence procurement:
“Global purchase orders (PO) issued to Alizes Marine contained certain items which did not belong to Depot level spare parts (repairs and maintenance) such as mineral water, cotton bud packs, cleaning cloth, fans etc. This signified the level of discrepancy and deception in the process of procurement” (2.6.20)
!
So, who was behind these structures? The shareholder of the bogus off-shore Alizes Marine companies was identified by the auditors as a Malaysian lady named Zainab Mohd Salleh, which happens to be the name of the second wife (now believed divorced) of Abdul Latiff Ahmad, Malaysia’s deputy defence minister from 2008 to 2013 and now a minister in Prime Minister Ismail Sabri Yaakob’s office.
So far, the minister has yet to make a clear statement to confirm whether or not this lady was married to him as the audit says she was at the time. Latiff’s UMNO allies have instead challenged the PKR deputy opposition leader, Rafizi Ramli, who broke the story, to “steal” the marriage papers to prove it!
Zainab also appears as a shareholder in several other firms that have invoiced BNS/BPS, for orders, including Sousmarin Armada Sdn Bhd, IntraLogistics Ltd, Prestigio International, Azimuth Shipping Corporation and (significantly) Mega P Sdn Bhd.
Mega P is also the name of yet another of the French subsidiaries of the Ameris Group in France.
Whilst DCNS/Naval Group in France, has sheepishly declined to answer any questions at all on this murky matter so far, Ameris France came out with flat rebuttals when questioned by Intelligence Online. In a statement to the portal it declared:
“Ameris Group has never had a subsidiary in Malaysia, does not own and has never owned a bank account in Singapore. The Ameris Group has no capital ties to any of the companies mentioned in the report.”
“This is clearly a case of usurpation of the names of our companies and identities, of embezzlement, with which the Ameris Group companies, Ameris France and Alizes Marine France have no involvement”.
Except, the audit report points out, there are ties in that the President of Ameris, Thierry Barrier, acted as a shareholder and director of Mega P Sdn Bhd Malaysia alongside Zainab and Abdul Latiff Ahmad, from its incorporation on 23 October 2015 to July 2017.
“It is noted that And Latiff is the spouse of Zainab” the auditors observe (3.16.13 .2).
“Therefore, Thierry and his company would not be able to deny their role in this conspiracy of Ameris group and Zainab”(report 3.16.13.4).
Just as accusingly the auditor adds that Boustead would have been far better to have ordered from Ameris directly as an established supplier than to have created this alleged subsidiary as a deliberate ‘layer’ between transactions.
“After viewing the transactions related to Alizes Marine Ltd Labuan, it appeared the primary aim of using the Labuan company was to create a layer rather than actual business and a conspiracy to inflict financial damages to BPS, BHIC and LTAT at large (report 16.12.4)
Various documents used during the supply of spare parts to BPS has confirmed that he name of Alizes Marine and Alizes Marine Limited have been used interchangeably to create confusion and to reflect that both the companies were the same…..BPS should have directly engaged Ameris Group rather than going through intermediaries to secure spare parts. This resulted in an apparent loss and lack of control which provided an opportunity to siphon out the money”
Ameris has responded to Intelligence Online that President Theirry Barrier’s presence as a director and shareholder together with the Malaysian defence minister and his purported wife on the board of this apparent Malaysian subsidiary of his company was “only to ensure contractual consistency“.
On 13 April 2016, Mega P Asia Sdn Bhd was indeed awarded a service contract by BDNC – the joint venture between Boustead Heavy Industries Corporation Berhad (BHIC) and Naval Group – for the supply of technicians, some of them Chileans, to carry out the modernisation of the submarines. Ameris had previously worked as a subcontractor on DCNS’s Chilean submarine construction project.
However, there is another matter. Sarawak Report has noted that further redactions sought to conceal another apparent family connection in this mix of multi-million ringgit companies and games of smoke and mirrors.
Charts produced by the auditors to illustrate the money flows state that invoices raised by Alizes Marine France were accompanied by “a request to pay at a different Alizes Marine in Singapore, managed by Zainab binti Mohd Salleh.” (2.6.21)
Intriguingly, the CEO behind those instructions by Alizes Marine in France was one Viktoria Barrier, whose unusual name would suggest a family tie with Thierry Barrier the President of Ameris France who claims he and his company have had nothing to do with the “usurpers” at Alizes Marine in Malta, Labuan or Singapore.
Perhaps Ameris could provide some further explanations in order to disentangle this messy matter involving the President and a Slovak lady of the same name who would appear to be his wife? After all, Mdm Barrier is also the President of Ameris Slovakia having taken over that position from Theirry Barrier.
Likewise, if the former deputy defence minister is unwilling to state whether or not the mysterious binti Zainab was his wife also, perhaps Abdul Latif could explain how he came to be her fellow shareholder and director at Mega P Sdn Bhd together with Ameris President Theirry Barrier and, therefore, who she is?
After all, Mega P was in turn receiving contracts from LCS – a public company for which he was responsible.
It seems the scandal of the multi-billion euro LCS procurement disaster threatens to end up being remembered for being the Tale of Two Wives – much as the scandal of the original Scorpene submarines is remembered for the death of Altantuya.