KINIGUIDE | Who is helicopter maker in controversial RM16b deal?
Summary
Leonardo SPA, an Italian helicopter manufacturer, has been embroiled in several controversies in India, Indonesia, and the UK.
Malaysia recently signed a 15-year leasing agreement with Weststar Aviation for Leonardo helicopters to be used by military and government agencies.
Recently the Defence Ministry dismissed allegations that the rumoured changes to the armed forces’ top brass were linked to a RM16 billion helicopter deal.
KINIGUIDE | Recently, speculation arose over the lineup of the Malaysian Armed Forces’ top brass. More so with the replacements said to be coming not from the normal ranks of the three branches of the military.
The rumoured shake-up was speculated to be linked to the country’s recent RM16 billion lease of European-made helicopters that went viral on social media despite the government’s swift denial.
But who is the European manufacturer, Leonardo SPA, and why is the firm controversial?
This KiniGuide explores.
Who is Leonardo SPA?
Leonardo is a global industrial group that creates multi-domain technological capabilities in the aerospace, defence, and security sectors.
It was formerly known as Leonardo-Finmeccanica and originally Finmeccanica, headquartered in Rome, Italy. It is partially owned by the Italian government.
Its subsidiaries include Agusta Westland, Alenia Aermacchi, DRS Technologies, Selex ES, OTO Melara, and Wass. The company is organised into five divisions - helicopters, aircraft, aerostructures, electronics, and cybersecurity.
They are the makers of the AW139 helicopters which the government is procuring through a RM16 billion leasing deal with Weststar Aviation.
What is the deal?
On Dec 23, 2024, the government signed a 15-year leasing agreement with Weststar Aviation for helicopters to be used by military and government agencies.
The deal, which includes Leonardo helicopters suited for various tasks, was awarded after a request for proposal process, with the option to purchase the helicopters for RM15 million each once the lease expires.
Under the deal, Weststar will provide the helicopters for the army and air force, as well as for the police, Fire and Rescue Department, Malaysian Maritime Enforcement Agency, and one for the Prime Minister’s Department.
Why was Weststar Aviation selected?
Prime Minister Anwar Ibrahim on Nov 28 last year told Parliament that the government put out a request for proposals and only four firms that submitted proposals had met the government’s criteria in terms of capital and licences, among others.
Of these four companies, Anwar said Weststar was chosen, partly due to the company’s relationship with Italian helicopter manufacturer Leonardo.
Who is Weststar Aviation?
Weststar Aviation Services Sdn Bhd is a company owned by 65-year-old tycoon Syed Azman Syed Ibrahim via his privately owned Weststar Group, with a portfolio including offshore helicopter services, car dealerships, and F&B outlets.
According to a Forbes report in 2023, Syed Azman’s lofty goal was to turn Weststar Aviation, his company’s crown jewel, into “the largest helicopter operator in the world” by 2033.
At the time, Weststar Aviation had 34 helicopters, making it the second-largest offshore services operator in the Asia-Pacific region according to India-based market research firm Imarc Group, Forbes reported.
In 2023, Forbes listed him as 24th of Malaysia’s 50 richest after Weststar Aviation bought back global private equity firm KKR & Co Inc’s 21 percent stake, putting his worth at US$825 million (RM3.7 billion), up 27 percent from a year before.
According to The Edge, Weststar Aviation previously supplied four Leonardo (formerly known as AgustaWestland) AW139 medium-lift helicopters to the Royal Malaysian Air Force (RMAF), under a government-operated, contractor-owned, and maintained (Gocom) contract.
Under the Gocom contract, the government only pays an annual lease to the contractor, which is responsible for procuring, supplying, and maintaining the helicopters.
The helicopter used by Anwar to campaign for Pakatan Harapan in the lead-up to the 2022 general election was also provided by Weststar Aviation.
Malaysiakini has contacted Weststar Aviation for comment.
Why did the govt choose Leonardo helicopters?
Leonardo was chosen because the company picked Malaysia as its maintenance and repair hub for Southeast Asia and the Far East.
Under the leasing deal, the government will get Leonardo helicopters that are suited for the specific use case for each department such as putting out fires.
The leasing deal will also see maintenance and repair costs be borne entirely by the provider, thus saving the government billions each year.
This follows the same leasing model used by Singapore, Indonesia, and the Philippines.
How is this linked to the changing of armed forces generals?
Earlier this month, there was speculation that the Yang di-Pertuan Agong was unhappy with the selection and in turn, ordered the generals to be replaced.
On Jan 14, Malaysiakini reported that the armed forces chief Mohammad Ab Rahman is likely to be replaced, according to inside sources.
Defence Minister Mohamed Khaled Nordin when contacted said an announcement would be made soon.
He also denied the change was related to the RM16 billion Leonardo helicopter deal.
Is Leonardo SPA involved in any other scandals?
Yes, the company has been embroiled in several other controversies in the region over defence procurement.
In 2015, Indonesia’s Corruption Eradication Commission (KPK) investigated the purchase of an AW101 helicopter from AgustaWestland, now part of Leonardo SPA.
The price of the helicopter was allegedly inflated so that air force officers could benefit financially from it.
Among those named in the KPK investigation were Indonesian Air Force General Agus Supriatna and Lorenzo Pariani, who at the time was the head of Leonardo’s Agusta Westland helicopter division for Southeast Asia. However, neither were charged.
Businessperson Irfan Kurnia Saleh, who acted as if he had a contract with the Italian company, was sentenced for corruption to 10 years in prison. He was the only defendant in the trial.
The helicopter in this case was an old model which Leonardo, then called Finmeccanica, tried to sell to India a few years back.
However, the Indian deal failed due to corruption involving representatives of the Italian company and several Indian generals.
What happened in the India deal?
The case was dubbed the “VVIP Chopper Scam” because it involved the purchase of helicopters to carry the president, prime minister, and other important dignitaries.
It relates to an agreement signed between the Indian National Congress-led United Progressive Alliance government and the Anglo-Italian helicopter manufacturer in 2007.
In 2014, India cancelled the US$770 million (RM3.5 billion) deal to buy 12 AW101 helicopters after the arrest of then-chairperson of Finmeccanica Giuseppe Orsi and CEO of Agusta Westland, Bruno Spagnolini, for allegedly paying bribes to secure the deal.
Finmeccanica, Augusta Westland’s parent company, later changed its name to Leonardo.
Following the arrests, Augusta Westland and Leonardo were banned for 10 years from participating in any defence contracts.
The ban was lifted in 2021 because the Anglo-Italian company withdrew its claims against the Indian government, having supplied three of the 12 helicopters without getting paid.
Why else has Leonardo caught the limelight?
In January this year, the family of Thai billionaire businessperson Vichai Srivaddhanaprabha, who died in a helicopter crash in 2018, sued Leonardo for £2.15 billion (RM11.8 billion) in a London court.
The suit, which seeks compensation for loss of earnings and other damages, is the largest fatal accident claim in English history, the family said.
Vichai, 60, was the owner of Leicester City football club after he bought the English Premier League side in 2010. Leicester shocked the football world by winning the Premier League title in 2016.
Vichai, who made his fortune building the King Power duty-free business in Thailand, was one of five people who died shortly after takeoff on Augusta AW169 outside King Power Stadium in Leicester following a football match on Oct 27, 2018.
The case is ongoing.
Which other defence force uses Leonardo helicopters?
As of Oct 16, 2024, Leonardo said more than 1,200 AW139 helicopters are already in service and over four million flight hours logged to date with more than 300 operators worldwide in over 90 countries.
Among others, Leonardo also supplies Aermacchi M-346 aircraft and components for its Apache attack helicopters to the Israeli Defence Force (IDF).
How have activists reacted to its relationship with the IDF?
In 2023 and 2024, the Palestine Action Solidarity group staged blockades, cut internet wires, spraypainted protest slogans, and occupied the roof of Leonardo UK’s factory in Edinburgh, accusing the company of complicity in the brutalisation of Palestinians.
The activists said the company was complicit with Israel’s war crimes by applying for 26 arms licences from Israel between 2008 and 2021.
The Edinburgh site in particular is touted by Leonardo as a specialist in “high-energy military lasers” used in the targeting systems of F-35 fighter jets, which Israel has regularly used for deliberate attacks on civilian targets.
The activists said the F-35 is produced by US company Lockheed Martin, which sells the jets to Israel after fitting them with Leonardo lasers and targeting systems, and used against Gaza civilians.
In response, Leonardo UK in a statement to local media said: “Leonardo UK is subject to UK government export controls and does not supply equipment directly to Israel.”
In December 2023, the student council of Luton Sixth Form College (LSFC) in the UK sent an open letter to college management, demanding it cut its partnership with Leonardo immediately.
Following pressure from the students, the college suspended all activities with the defence firm over its involvement in the Israel-Palestine conflict.
The move was thought to be the first of its kind by a college in England in response to the humanitarian crisis in the occupied territory of Gaza.
The college said its relationship with Leonardo extends to the company’s attendance at careers and jobs fairs and providing work experience for science, technology, engineering, and mathematics students.
In its 2023 annual report, Leonardo acknowledged that the Israel-Palestine conflict is one of its major business risks.
What is the govt’s justification for dealing with companies accused of complicity with Israeli war crimes?
Anwar has not directly addressed the issue of Leonardo’s alleged complicity in Israeli war crimes.
He also sidestepped the issue when responding to protests against the participation of defence companies which supply weapons to Israel in a defence trade fair in Kuala Lumpur last year.
At the time, Bersatu international bureau chief Saifuddin Abdullah urged the government to ban Lockheed Martin and BAE Systems from participating in and sponsoring the National Security (Natsec) Asia 2024 exhibition in the capital city.
This is because Lockheed Martin’s F-35 fighter jets and equipment supplied by BAE were being used by the IDF to attack Palestinians.
Responding to this when asked by reporters, Anwar skirted the issue and said his government does not deal with Israeli companies.
“There are no Israeli companies registered in the country. We will not allow it,” he said.
Separately, Khaled in a statement said Malaysia does not interfere in the business affairs of any global company.
