The gomen's logic of paying more for less............

Another scandal appears to be hovering over the Defence Ministry and this time it concerns the purchase of helicopters to replace the armed forces' aging and accident-prone fleet of Nuri aircraft. The issue was highlighted in two letters last week - dated Oct 7 and 9 respectively - addressed to former defence minister Najib Abdul Razak, who is also deputy prime minister and finance minister.

In a five-page letter obtained by Malaysiakini, Mentari Services Sdn Bhd chairperson Capt (rtd) Zahar Hashim outlined several discrepancies and questioned the legitimacy of the deal to buy a dozen of choppers from German-French firm Eurocopter. Among others, he stated in another letter on Oct 9 - which bore corrections to the prices stated in the first letter - that the government could have purchased same number of helicopters and save almost RM1.5 billion.

"(With) the price offered by Eurocopter for 12 units of Cougar EC-725 worth (an estimated of) RM2.3I7 billion, the government could purchase 30 Kazan-M172 (from Kelowna Flightcraft Ltd) which fulfills almost all the specifications required by the armed forces," he said.

He said the offer from Kelowna for a dozen of similar choppers was RM898 million.

"The difference in the price offered by Eurocopter and the price offered by Kelowna Flightcraft Ltd is RM1.419 billion."

Zahar's Mentari Services is believed to be representing Canadian-based Kelowna Flightcraft - one of the three companies which had unsuccessfully bid for the multi-billion ringgit contract. The other two companies which lost out to Eurocopter in clinching the contract were British-Italian's AgustaWestland and American-owned Sikorsky, the manufacturer of the famous Black Hawk copters.

In the first letter, Zahar had quoted the statements made by Prime Minister Abdullah Ahmad Badawi, who took over the defence portfolio on Sept 17, regarding this matter. Among others, the premier was quoted by the New Straits Times as saying: "We have signed the Letter of Intent (LOI) with Eurocopter. Mindef (Defence Ministry) has taken into consideration its needs and Eurocopter presented the best option among all the bidders."

Meanwhile, the Star quoted Abdullah as stating that the ministry had considered all the necessary specifications in the helicopters before making the decision. The deal was signed two days before Najib swapped portfolios with Abdullah.

Najib gave PM 'inaccurate report'

However, Zahar said these statements did not reflect the reality of the situation based on the information his company and other bidders had received from ministry sources.

"We believe that you (Najib) had provided Abdullah with an inaccurate report," he wrote.

"We have been made to understand that the evaluation process had not been completed but suddenly an order was given by a certain quarter for the LOI to be issued to Eurocopter.

"The LOI was signed by a mid-ranking official in the ministry and was dated Sept 15 - two days before you moved from the Defence Ministry to the Finance Ministry," he added.

Zahar questioned the manner the deal was hastily sealed.

He said, according to his sources, only the evaluation of the tender documents submitted by the respective bidders had been completed.

"Physical evaluations such as inspecting the premises and factories of the bidders and conducting test flights were not carried out because permission from the upper echelon of the defence and finance ministries have not been obtained.

"Physical evaluation is more important than documentary evaluation and the personnel involved are surprised to find out that the LOI was issued without any physical evaluation," he added.

In the letter, Zahar also mentioned that a former chief secretary of the Defence Ministry and a former deputy chief secretary of the Finance Ministry found the issuance of the LOI to be 'rather extraordinary'.

"According to them, normally a LOI is issued upon the completion of an overall evaluation and after a committee comprising representatives from the two ministries reach a consensus that the product is the best under the allocated budget.

"They also found it 'amazing' that a government servant with the status of division secretary and not someone who was at least a deputy chief secretary had inked the LOI for a contract worth more than RM2 billion," decried Zahar.

What was more 'extraordinary', Zahar claimed, was the 'quick' decision by Najib, with or without the knowledge of the prime minister, to have the contract documents prepared immediately so that the government could sign it.

Based on the information received, he said the four suppliers including Eurocopter had offered aircraft that 'fully or almost fully' met the specifications stipulated by the ministry.

Not interested in test flights

"We do not know if representatives from (bidders) Eurocopter and AgustaWestland were called in by the evaluation team for negotiations and to provide further explanations regarding their offers, but the representatives of Kelowna and Sikorsky were never contacted at all.

"The offer to you (Najib) from our company to prepare a Kazan MI-172 to be used and tested by the armed forces for six months for free did not attract you. The offer by Sikorsky for a test flight of their S-92 helicopter was also not entertained," he said.

"The manner in which the Cougar EC-725 (right) was chosen creates doubt if the ministry, under your stewardship, was truly serious, clean and trustworthy in its move to evaluate all the offers from the bidders or is there a possibility that the evaluation process was merely a gimmick while (you) had already planned from the onset to purchase the Cougar EC-725 for specific reasons.

"If looked at logically, it does not make sense for the ministry to decide to purchase a helicopter worth almost RM200 million per unit without meeting the sales representatives and conducting test flights.

"Even a person who intends to buy a car worth RM1 million would ask the salesman many questions and do a test drive of two or three different brands before choosing the one which is most suitable," he noted.

Zahar also said that under the prevailing economic conditions and with the government calling on the people to be careful with their spending, it was ironic that the government opted to purchase an expensive helicopter when there were cheaper alternatives available.

"How many development projects beneficial to the people would have to be sacrificed because of this wastage?" he asked.

Zahar also pointed out that it would be costlier to maintain the Eurocopter aircraft as opposed to the Russian-made Kazan MI-172 (left).

"As far as we know only the French armed forces own Cougar EC-725 (14 units) and this is not surprising because France has an interest in EADS, the parent company of Eurocopter," he said, adding that the European nation could afford such expensive aircraft in its arsenal.

On the other hand, he said 12,000 Kazan MI-172 of various versions have been sold and are used by 60 countries while two of the older units have been used by the Malaysian Fire and Rescue Department since 1988.


'Penny wise, pound foolish'

The retired army captain also urged government leaders to be prudent when spending the taxpayers' money.

"In the issue of purchasing cars, the federal government had been very calculative. Apparently, Proton Perdana was sufficient for cabinet ministers and state executive councillors so there was no need to buy Mercedes Benz (as what happened in Terengganu recently).

"The manner and attitude of the government in spending public money could be described by the adage, 'penny wise, pound foolish'," he said.

Apart from this, Zahar also revealed that his company was made to understand that the Connecticut-based Sikorsky had voiced its disappointment to the United States ambassador in Malaysia over the manner in which the government handled the tender process.

"The foreign and local business communities have the perception that the political situation in our country is in chaos and the awarding of projects and contracts are not done in a transparent or clean manner.

"After having personally witnessed how the contract to replace the Nuri helicopters was handled, it is hard not to believe the allegations that the hundreds of millions in acquisition for the ministry under your leadership are questionable. Let not the disease spread to the Finance Ministry (now under Najib) and cause a financial tsunami for the nation," he said.

In the last paragraph of his hard-hitting letter, Zahar posed a question to the deputy premier: "If the tender evaluation process was only a comparison of brochures and tender documents, why was there a need to make it compulsory for the bidders to deposit a bank draft worth RM1 million to the government?"

Najib had called off a press conference scheduled last night and did not meet with journalists in Parliament this morning. However, Najib told journalists later that he would providing an explanation on the matter in Parliament.

Zahar also sent copies of his letters to Abdullah and the Anti-Corruption Agency.

source and graphics : malaysiakini

Read the said letter here,here,here,here and here.

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Lets wait and see how fast will ACA react and whether ACA got the balls to initiate an investigation on the new PM to be..................

cheers.