Billion-ringgit chopper deal 'put off'
Prime Minister Abdullah Ahmad Badawi today announced that the controversial multi-billion ringgit deal to buy a fleet of military helicopters has been put on hold until the economy improves.
Prime Minister Abdullah Ahmad Badawi today announced that the controversial multi-billion ringgit deal to buy a fleet of military helicopters has been put on hold until the economy improves.
“We have decided not to purchase the helicopters. We need the allocation for other projects and the saving is very important for us,” he told a press conference after attending the Defence Ministry’s Hari Raya gathering in Kuala Lumpur this afternoon.
The outgoing premier, who is also defence minister, said that the purchase has been frozen “indefinitely” until the economy is in better shape.
Abdullah's decision to scrap the deal awarded to Franco-German company Eurocopter is one of the government's first major cost-cutting move as it re-prioritises its budget to cope with the worsening global financial crisis.
However, Abdullah said the government is still committed to replacing the country’s ageing fleet of 28 Nuri military helicopters by 2011 following a series of crashes in recent years.
“We may buy them earlier depending on the situation, if we have some money. We may buy less than what we required - a smaller number,” he replied to a question on whether the government would revive the deal in three years’ time.
Abdullah added that the government has yet to decide whether it would call for a new tender or stick to its decision to purchase the aircrafts from Eurocopter should it proceeds with the plan later.
The US-made Sikorsky S-61 Nuri helicopter has been in use since 1968 and 28 of them remain in the Malaysian air force - its main transportation vehicle.
Ministries told to slash spending
At the press conference, Abdullah also revealed that the purchase price for the 12 Cougar EC725 helicopters was RM1.7 billion, and not RM2.3 billion as reported earlier.
However, in an Oct 17 statement, the ministry’s secretary-general Abu Bakar Abdullah (far right in photo) - who was also present at the press conference this afternoon - said the price offered by Eurocopter was tagged at around RM1.1 billion.
Elaborating on the decision to shelve the deal, the prime minister said it was made by the National Economic Council’s executive committee on Oct 13 “because of the financial crisis”.
“We need to have money, we just can’t borrow every time. If we feel that some of the projects need to be postponed, then we will decide accordingly,” he explained, adding that the priority is given to projects that will directly benefit the rakyat. 
At that meeting, the council also decided to ask all ministries to cut their spending and list the projects that can be deferred, added Abdullah.
The government has planned its 2009 Budget using US$125-a-barrel-oil to estimate the revenue it assumed it would earn.
However, global oil prices have since dropped by half and this will adversely affect the government’s revenue as over 40 percent of the federal budget comes from state-owned oil company Petronas.
To a question, the premier said the government has yet to inform Eurocopter on its decision.
He said the matter of compensation did not arise although the letter of intent has been issued to the firm.
‘I don’t believe there is any irregularity’
Meanwhile, he said the public accounts committee (PAC), a powerful parliamentary committee tasked to scrutinise public funds, can go ahead with its two-day inquiry from tomorrow to probe the controversy.
“I don’t believe there is any irregularity. However, it has been decided that PAC will scrutinise (the deal) and I am sure they will do a good job. It’s also good to see what they are going to say,” he noted.
Abdullah defended the high price tag in the Eurocopter deal when asked why Brazil had bought the same helicopters at a much lower price.
“The helicopter (in Brazil) is not upgraded to the level we required. If it is only for transport (purpose), it will cost much lesser,” he said.
The prime minister said the Eurocopter helicopters could be used for search and rescue operations and combat as well as transport.
Eurocopter Group is a wholly-owned division of European Aeronautic Defence and Space (EADS). The group's products account for 30 percent of the total world helicopter fleet.
Eurocopter Malaysia has a regional maintenance facility near Port Klang.
Oct 7 letter to DPM
The Eurocopter controversy was first highlighted in a letter dated Oct 7 addressed to Najib Abdul Razak, who is deputy prime minister and finance minister.
In the five-page letter, Mentari Services Sdn Bhd chairperson Kapt (rtd) Zahar Hashim suggested that the tender process, initiated during Najib’s tenure as defence minister, could have been a “gimmick” since the ministry appeared to favour one company.
Zahar also accused Najib (left) of providing Prime Minister Abdullah Ahmad Badawi, who took over the defence portfolio on Sept 17, with an “inaccurate” report pertaining to the contract.
The government had decided to purchase the new aircraft to replace the ageing Nuri aircraft following a series of crashes in recent years.
The opposition has lodged a complaint with the Anti-Corruption Agency calling for a probe into Najib’s alleged involvement in the deal.
