Prime Minister Malcolm Turnbull

Bribery allegations against Australia’s $50 billion submarine contract winner

Australia has just awarded a $50 billion defence project to build Submarines and even before the ink is dry on the contract hundreds of thousands of dollars if not millions of dollars have landed in the pockets of Liberal Party crony and former staffer Sean Costello. To make matters worse the French company DCNS which has won the $50 billion contract is currently under investigation by a French court for bribing Malaysian officials to win their submarine contract in 2002.

DCNS is alleged to have bribed officials linked to Malaysian Prime Minister Najib Razak and the corruption also involves allegations of murder. This is on top of other previous allegations of bribery against DCNS.

Another suspicious element of the Australian tender is that DCNS employed former Liberal staffer Sean Costello as its CEO for the bid. Mr Costello was chief-of-staff for former Defence Minister David Johnston who was sacked from his position in 2014.

The contract is said to be the biggest defence contract in this nation’s history. The contract itself really has to be re-evaluated in light of the French court proceedings and Sean Costello’s appointment as CEO of the winning tender. There should at the very least be a Senate Inquiry. It looks like another reason why we need a federal Independent Commission Against Corruption (ICAC).

The video above is Sean Costello on the Lateline show 26/4/16 and raises many questions. (Click here to watch the full story)

DCNS, Malaysia bribes, murder and the French court case

It has been reported in the media since January 2016 that the French are investigating DCNS for bribing Malaysian officials including the Prime Minister Najib Razak. The SMH reported:

A case involving allegations of high-level bribery, blackmail, betrayal and the murder of a glamorous Mongolian socialite in Malaysia has resurfaced in France, only days after Malaysia’s prime minister Najib Razak was cleared of corruption charges at home.

French prosecutors have charged a French businessman involved in Malaysia’s $US2 billion ($2.8 billion) purchase of two French-Spanish built submarines with paying illegal kickbacks to a Malaysian official linked to Mr Najib, according to the French newsagency AFP. (Click here to read more)

In March this year the ABC’s Four Corners screened an episode on Malaysian Prime Minister Najib Razak called “State of Fear” which covered the many corruption scandals surrounding the Prime Minister. It also covered the Submarine bribery scandal and said this:

LINTON BESSER: Accusations against prime minister Najib date back almost a decade.

The first scandal was in 2002, when Najib Razak was defence minister overseeing a $1 billion submarine deal between Malaysia and France. It embroiled some of Najib’s closest confidants in allegations of kickbacks, cover-ups and another murder.

French authorities have indicted the former head of French arms firm Thales. They acted after an investigation by Malaysian anti-corruption campaigner Cynthia Gabriel into a US$108 million commission paid to a Malaysian company.

CYNTHIA GABRIEL, ANTI-CORRUPTION CAMPAIGNER: It wasn’t just this payment that was of question: ah, it was a couple of other payments as well that were made that seemed murky and seemed very shady; that did not have very clear, um, ah, reasons for why, ah, the payments were made.

LINTON BESSER: The middleman in the submarines deal was a senior adviser and friend to the prime minister. His name is Razak Baginda.

CYNTHIA GABRIEL: We don’t know who he is, apart from him being a close associate and friend of, ah, Najib.

Ah, so I think today we are not certain if he was actually on a formal contract with the Defence Ministry, or whether he was just negotiating a very large multi-million dollar contract, only because he was the friend of Najib Razak.

TERENCE GOMEZ: The allegation is that kickbacks were given to the middle-men who negotiated the deal in France. That is the allegation. That allegation now has to be investigated properly.

LINTON BESSER: What thrust the corruption scandal into the global spotlight was another murder. This time, the victim was a 28-year-old model from Mongolia named Altantuya Shaariibuu. She worked as a translator.

It’s also been alleged she was having an affair with Najib, something he’s always denied.

But his adviser, Razak Baginda, was sleeping with her.

CYNTHIA GABRIEL: He did admit that they were having a romantic relationship for a while. And then the events that led to her death suggested that he was trying to get rid of her.

LINTON BESSER: The model, Altantuya, wanted a cut of the money from the submarine deal. (Click here to read more or watch the show)

The French arms firm, Thales, mentioned above owns 35% of DCNS and was allegedly involved in the bribery.

DCNS’s involvement in bribery and scandals has long been known as their Wikipedia profile shows:

The DCN / DCNS plays a major role in “one of France’s biggest political and financial scandals of the last generation [that left] a trail of eight unexplained deaths, nearly half a billion dollars in missing cash and troubling allegations of government complicity” connected to a sale of warships to Taiwan in the 1990s. 

Apart from the issues surrounding the sale of ships to Taiwan mentioned above, French prosecutors started investigating a wide range of corruption charges in 2010 involving different submarine sales, with possible bribery and kickbacks to top officials in France. In particular interest by the prosecutors are sales of Scorpène submarines to countries like India and Malaysia. 

The investigation in Malaysia has been prompted by human rights group Suaram as it involved current Prime Minister Najib Tun Razak when he was defence minister and his friend Abdul Razak Baginda whose company Primekar was alleged to be paid a huge commission during the purchase of two Scorpène submarines. French investigators are interested in the fact that Perimekar was formed only a few months before the contract was signed with the Malaysian government and DCNS and that Primekar had no track record in servicing submarines and did not have the financial capability to support the contract.

Investigations have also revealed that a Hong Kong-based company called Terasasi Ltd in which the directors are Razak Baginda and his father, sold classified Malaysian navy defence documents to DCNS. (Click here to read more)

DCNS did not employ Sean Costello for no reason and given their past of buying “classified Malaysian navy defence documents” it is highly likely they wanted first hand knowledge of Australian Defence documents. The type of documents that Sean Costello had access to when he was chief-of-staff for former Defence Minister David Johnston.

I wonder if Sean Costello gave the parliamentary photocopy machine a major workout before he left his chief-of-staff position and started with DCNS.

The questions for Australia are:

  1. Who in the Liberal Party and/or government said it would be OK for Sean Costello to leave his Liberal Party/government position and become CEO of DCNS in Australia?
  2. When did Sean Costello leave his government position and when did he start with DCNS.
  3. What background checks did the Liberal Party do in relation to DCNS? From what I can tell no one bothered to even do an internet search, is that correct?
  4. Was the Federal Government aware of the Malaysian Submarine bribery scandal involving DCNS before awarding the $50 billion Australian submarine contract? It so what did the government do?
  5. Was the Federal Government aware of the other past bribery scandals involving DCNS? It so what did the government do?
  6. Has Mr Costello donated to the Liberal Party and if so how much?
  7. Has DCNS donated to the Liberal Party or any of its slush funds?
  8. How much is Sean Costello being paid?
  9. Was he paid a bonus for winning the Australian Submarine contract?
  10. Were there any other people paid bonuses for winning the Australian Submarine contract? If there were, who and how much?

I have emailed Prime Minister Turnbull the above questions and will update this post or do another post when I receive a response. (Click here to read the email)

As the French investigation into bribery by DCNS progresses it will likely become more and more embarrassing for the Australian government as to why they awarded the tender to DCNS with such serious allegations hanging over their head. It will become not only an embarrassment for the government in Australia but also globally.

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28 replies »

  1. Sounds like yet another act of Treason to me . But as usual unless we demand something more it will get swept under the carpet and be forgotten by many , but that lump under the carpet wont be forgotten , an hopefully will lead to the downfall of those involved with any sleazy deals and kickbacks .

    50billion to spend on subs that in reality we don’t need , but no money for hospitals ? no money for schools ,and we… have to tighten our belts ? You have to be kidding .

    The Criminal Organisation known as the Liberal Party is a Total disgrace to this country , personally I’d like to see the whole lot in a special Liberal party Prison ,which would be adjoined by the Labor Party prison. What a Bloody disgrace their actions are .

    • Treason it is, of course. Not by our rubbery politicians, by the media in Australia for not reporting THIS on their front pages.

      What a cabal! What poisonous deception!

      They are slowly stealing our freedom to know what’s happening.
      Their owners are GUILTY of this deception.
      Bring out the pillory…….guillotine may be an interesting option 😃😃😃

    • In regards to our obsession with submarines.

      Large scale projects that are let to foreign companies facilitate corruption because it is much more difficult to hide corruption between local entities.

      • I forgot to mention. It must be a lot cheaper to build drone type submarines as the most expensive component of a submarine is the provision for human habitat. I do not understand why our government is investing in a technology that is expensive and outdated so as to protect the nation.

        May as well paint the things yellow for easy detection so as to ensure they never go to sea for safety reasons.

      • Submarine drones don’t work as depth: the whole point of submarines is to provide stealth capabilities in an environment where land based detection is eazy-peazy. Radio waves have a hard time getting through water. And subs are not outdated – control of strategic sea lanes is where most of defence competition happens in our region. Indonesia are building three, China and India are modernizing their fleets and so on.

  2. These types of underhanded deals, brainless, incompetent dictator-style politicians, domineering, lying media would not happen if 95% of the polulation were 100% loyal and smart Australians.
    The, “She’ll be right, mate” attitude of trust is dead.

  3. The fact these Submarines will be more than twice the cost of the other Tenders submitted and the Gov Minsters accepting such a bid, can only mean there are Bribes and Fraud involved. No other plausible scenario would make sense?

    We the people expect that no committee of elected Ministers who we expect to govern on our behalf with morals, integrity and financial acumen would have accepted a bid at more than twice the cost of the other bids given our countries current economic and debt situation.

    To accept such a high bid is financially irresponsible for starters. One can only sensibly conclude that their is massive conflicts of interest involved in the decision to award the contract to the French company and unlawful financial criminal activity by possibly all those involved in accepting the French bid.

    There no doubt will be $millions in bribe money “tax payers money” filtered left right and centre by the French company into off shore accounts via off shore holding companies for these corrupt Ministers.

  4. It is a forlorn hope that one day we may be governed by an honest bunch that will do things in the interest of the nation,that was original idea wasn’t it? “Democracy” meaning social equality for the people, When you consider that Turnbull is a millionaire and has lived in the rich domain for many years, I suppose he got rich on the pokies or in some other lucrative business. The government as it stands is about as far removed from “democracy” as it could be. Money talks in all languages be it French English or whatever. Bribery did not start with the Roman Empire and will not finish with the Australian administration,it may finish when perpetrators are properly dealt with unlike the present system “steal millions and run all the way to the bank” Let us put the crooks in jail not in parliament.The submarine contract that has been orchestrated by fair means or foul is of little consequence when you consider the result is inevitable these Subs will be obsolete by the time they are delivered, drones will be blowing them out of the water like goldfish. Anybody heard of progress in technology. Why not order some airships from Germany.

  5. What are they thinking……1100 jobs in South Australia……..4000 jobs in France. DCNS just happens to be in the French Minister of Defense’s electorate……….German Subs 50% cheaper……….Jap Subs likely to be cheaper still

    It’s as though Turnbull wants to launch a larger and more disastrous project than the NBN.

    And the kicker, ‘poodles’ Pyne tells us it’s a wee bit more expensive because they are able to be retrofitted to Nuclear. Also if they are retrofitted to Nuclear it can’t be at ASC.

    Whoa…hold the phone, when was Australia committed to a Nuclear future without consultation with the voters? I’ve always thought that Nuclear is a sensible option for Australia, but it needs to be a democratic voter driven decision, not a thought bubble.

    Of course if Nuclear is the direction then why didn’t we just buy 1/2 dozen subs off the US and be done with it.

    I’ve no doubt that bribery occurred, and will continue throughout the project. Sean Costello is no doubt a Patsy or Stooge – too right we need a Federal ICAC.

    I hope we hear a lot more about this right up to the heads will roll, are rolling, contract is canceled stage.

  6. And didn’t France recently refuse to deliver the billion dollar Mistral ships to Russia who had already advanced billions to them for the construction/delivery of the boats.

    Who in their right mind would deal with this French Government again—- they unilaterally defaulted on their international contract!

    The Australian government is setting itself up for trouble with this order. Can someone please ask the NSA what’s going on here?? I’m sure “they” know.

  7. I don’t think the liberal party can make an honest deal. They seem to enjoy having something dodgy as a part of any of their schemes or transactions.

  8. Remember the purchase of the German ships when even the German navy did not want them.

    Nor did the Australian navy.

    Who benefited?

  9. This is why Australia is in such a mess. I found out the politicians call bribes, “commission” after a politician announced on 60 minutes about introducing gas seam mining & him receiving a commission. It sounds innocent enough. If our politicians didn’t accept commissions on behalf of all Australian taxpayers all of us would be living comfortably not just the politicians & a few other professions. Water & fresh air wouldn’t be a rare commodity. I would like to see our Australian ATO go through all the ex-positions & prime ministesr, even off shore & take any ill-gotten “commissions” from them & lock them up in jail to send a new message to existing & up coming politicians that excepting bribes/commission isn’t acceptable. I wonder if the nuclear & toxic waist facilities were inspired by a commission. Between mining & dumping waist, Australia is going to worse than “THE QUARRY ON THE BEACH”.

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