Defense News
10/30/08
Malaysian Helo Deal Falls Apart
By Wendell Minnick
Taipei - Malaysia has canceled the procurement of 12 Eurocopter EC725 Cougar medium-lift transport helicopters to replace its aging Sikorsky S-61A4 Nuri helicopters.
Malaysia's Air Force has been struggling to replace its remaining 30 Nuris, which were procured during the 1960s and '70s. Plans called for phasing out the Nuri by 2012.
On Sept. 26, Prime Minister Abdullah Ahmad Badawi, also the countyr's defense minister, announced that a letter of intent had been signed with Eurocopter Malaysia to buy 12 EC725 helicopters for $650 million.
The EC725 beat the AgustaWestland EH101, Boeing CH-47F, Kazan Mil Mi-17 and Sikorsky H-92 in a tender issued during the Langkawi International Maritime and Air Show (LIMA) last December.
Abdullah announced the cancellation of the Eurocopter deal Oct. 28, citing the growing economic crisis and lost oil revenues.
"We had decided during the National Economic Council meeting on Oct. 13 not to purchase the helicopters at the moment because we need the allocation for other projects, and saving is very important for us now to face an economic situation caused by the world economic crisis," Abdullah said in a news release.
Political opposition leaders have attacked the Eurocopter deal as lacking transparency and protections. The Public Accounts Committee (PAC) and Anti-Corruption Agency are investigating allegations of corruption in the deal.
"Most of the current controversy was due to the lack of public relations," a Malaysian defense analyst said. "They [MINDEF] could have avoided the bad press if they had done their homework. They could have explained better the decision behind the selection of the Cougar.
"Furthermore, defense procurement policies inherited from the previous administration lacked transparency and checks, which will allow endless speculation and conspiracy theories," he said. "With the current political hangover, anything and everything will be politicized of which the current government yet again failed to appreciate. In the end, the services suffer."
The analyst noted that there were also calls to shelve the deal in view of the current global economic crisis.
Not everyone is convinced the deal is dead. One defense industry source in Malaysia said the "deal is still on" and the Malaysian "government is just going through a process of getting the ACA and PAC to issue reports saying all was fair and no corruption involved.
"These reports will be issued soon, allowing the government to quash all the speculation and allowing the contract to be signed," he said.
