Cablegate: Malaysia: Update On F-5 Engine Scandal

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FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3667
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C O N F I D E N T I A L SECTION 01 OF 03 KUALA LUMPUR 000012

SIPDIS

FOR EAP/MTS AND INR

E.O. 12958: DECL: 01/07/2020
TAGS: PM PGOV MY
SUBJECT: MALAYSIA: UPDATE ON F-5 ENGINE SCANDAL

REF: A. 09 KL 1016 -- F-5 FOLLOW UP
B. 09 KL 1013 -- MALAYSIAN F-5 ENGINES CASE

Classified By: Political Counselor Brian D. McFeeters for reasons 1.4 b
and d.

Summary and Comment
-------------------

1. (C) Malaysian government officials continue to communicate
little information directly to Post regarding the missing F-5
engines (reftels). Most of the information on the scandal to
date has come thru the local media, which reported on January
6 that police arrested and charged one Air Force sergeant and
a business owner with the theft and illegal sale of the
engines. The Attorney General and Defense Minister both were
quoted in the press as saying that they were satisfied with
these results. They gave no indication that investigations
would continue into possible broader complicity in the
thefts, nor what remedial actions are being taken by the GOM
to assure that such security and procurement breaches would
not occur again. A chorus of commentary in online media has
expressed incredulity at the Government's position that the
thefts were carried out solely by two relatively low-level
individuals and that higher-ups in the military and elsewhere
were not involved. On January 6, the Embassy's Office of
Development Cooperation received a letter from the RMAF which
provided a brief update on the missing engines case and
indicated a willingness to respond to additional inquiries
from the USG once the GOM investigation is completed (see
para 7).

2. (C) Comment: We share some of the incredulity expressed
in the blogosphere about the Government's case and
explanation of who was behind the engine thefts. In
coordination with Washington, Post is continuing to push for
a complete accounting of how the thefts occurred and the
ultimate disposition of the engines, and to remind the GOM of
the seriousness of the issue and need for remedial actions.
We look forward to a readout of next week's meeting on this
issue between PM's PDAS and Malaysian Ambassador. The
Ambassador and DCM have pending meeting requests with senior
MFA officials. End Summary and Comment.

What the Media has Been Reporting
---------------------------------

3. (SBU) Government-influenced media reports continue to
provide evolving, if changing and conflicting facts
pertaining to the disappearance of the two F-5 engines.

-- The most recent reports (January 7)indicate that the
engines were stolen separately -- one on December 20, 2007
and the other on January 1, 2008 and that the discovery of
the theft occurred on May 22, 2008.

-- Media reports say the RMAF filed a police report on August
4, 2008 after they conducted their own investigation.

-- The destination of the engines has been cited as both
Argentina and Uruguay, although early accounts by the police
reported in the press also indicated the engines went through
or to the Middle East, and specifically Iran.

-- Some independent online news portals claimed that the
engines ended up in Iran. At a press conference, the
Attorney General reportedly became defensive when asked about
the Iran connection, and all references placing the engines
in the Middle East or Iran have since been removed from the
state-run media.

-- Specific details regarding the May 2008 RMAF investigation
and the August 2008 police investigation have not been
released, although both the Attorney General and Defense
Minister have implied that no one was held accountable as a
result of those investigations.

-- As to where the engines currently are, Attorney General
Gani Patail attracted attention with a January 5 comment
quoted in the Star newspaper that, "I really do not know what
is being done to it now, whether the engines are used as
scrap metal or as sinker for fishing."

-- The press reported that Police arrested RMAF Sergeant N.
Tharmendran and company director Rajandran Prasad on January
6 in connection with the two missing F-5 engines.
Tharmendran was charged with conspiring to steal the engines,

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while Rajandran was charged with intentionally disposing of
items that he knew to be stolen.

-- Attorney General Gani had previously said on January 4
that "many people" were involved, but did not indicate that
the investigation into the perpetrators would continue.
According to Gani, "what is important is recovering the
engines." No information has been released regarding the
identities of the buyer and/or any middlemen.

-- Defense Minister Ahmad Zahid Hamidi was quoted by the
Malaysian Insider on January 6 as saying at a public event
that no further investigation or special inquiries were
necessary, stating after the arrests that he was "satisfied
with the Attorney-General's action and investigations into
the case." Zahid also downplayed the severity of the theft,
stating on January 7 that "The contract to purchase was made
in 1972. At that time, the engine's price, including the
afterburner, was $121,428 each," basing this on the exchange
rate at that time. (Note: the original value of the missing
engines given by the newspapers was listed as $15 million
each. End note.)

-- Public condemnation of the results has been muted by the
state-run media, but the online blogosphere has been swift,
one-sided, and damning of the GOM's arrests and conclusion
that Tharmendran and Rajandran were the only ones involved.
4. (C) The Ministry of Foreign Affairs has kept itself at
arms length from the scandal. Ambassador and DCM have not
yet been able to secure meetings with senior MFA officials to
discuss this issue (among other bilateral issues). MFA
Principal Assistant Secretary (Americas Division) Mohamad
Radzi Jamaluddin told Poloff January 6 that the Defense
Ministry has the lead and described that Ministry as being
"elusive" in its handling of the case. Radzi opined that the
newspapers were publishing a lot of misinformation, and that
they were often factually incorrect. He suggested that press
reports that the GOM has reached out to the USG for
assistance in the investigation were false, because any such
request would have been routed through the MFA. (Note: Post
has no record of any request for assistance on this case from
the GOM. End Note.)

Letter from the RMAF
--------------------

5. (SBU) Following ref A discussion between Office of Defense
Cooperation chief Lieutenant Colonel Steve Ma and Brigadier
General Azizan bin Shaari, Director of Materiel with Royal
Malaysia Air Force (RMAF), ODC chief received an official
letter from the RMAF on January 6.

Begin text:

05 January 2010

OFFICIAL NOTIFICATION ON THE MISSING F5E GE J85-21 ENGINES

Ref:

A. FMS Case MF-D-SAJ
B. FMS Case MF-D-SBE
C. FMS Case MF-D-SBK
D. FMS Case MF-D-SCA
E. Malaysian Government Contract No: PERB/K&B/107/84.
F. The discussion between Assistant Chief of Staff Material /
LTC Stephen C. Ma on 28 Dec 2009 at the Ministry of Defense,
Malaysia.

1. The Royal Malaysian Air Force (RMAF) presents its
compliments to the Office of Defense Cooperation and the
United States Embassy Kuala Lumpur.

2. In pursuant to the discussion vide reference F, the RMAF
regrets to inform that there are two (02) F5E GE J85-21
engines found missing from the inventory believed to be
stolen on the 26th May 2008. The serial numbers of the
engines are as follows:

a. E227718
b. E227856

3. The RMAF had conducted an internal investigation where
procedures with regards to handling and transportation were
re-examined and tightened. A report had been lodged with the
Royal Malaysian police on the 4th of August 2008 to continue
with the investigations and to pursue with criminal

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prosecution against individuals linked to the theft.

4. The RMAF fully understood the requirements of the United
States government on Foreign Military Sales (FMS) policy in
relation to this incident but unable to notify earlier
pending completion of investigations by the Royal Malaysian
Police. We believed that the investigation is nearing its
conclusion and will follow with prosecution by the Attorney
General's Chamber. We will endeavor to notify the progress
on this matter to the United States Government through your
office as soon as we have more information.

5. Thank you.

(signed)

DATO' SRI RODZALI BIN DAUD
Gen RMAF
Chief of Air Force

End Text
KEITH

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