Defence tycoon accused of graft, police report lodged








Yoon Szu-Mae
9:23pm Thu Jun 5th, 2003

A police report was lodged against the top gun of an aircraft maintenance company which holds major contracts with the Royal Malaysian Air Force for alleged corruption today.

The report against Airod president Ahmad Johan (photo) was lodged by PRM vice-president R Sivarasa with the Bukit Aman federal police headquarters in Kuala Lumpur.

Speaking to reporters, PRM president Dr Syed Husin Ali said they possess evidence of "highly questionable payments" of up to RM5.7 million from Airod to Quality Ranch - a company set up by Ahmad and his son Edron Hayata.

The payments were made for ‘consultancy work’ involving extensions on two C130 aircraft owned by the RMAF and contracted out to Airod - of which Second Finance Minister Jamaludin Jarjis is a director and believed to be the largest individual shareholder.

The Defence Ministry signed the deal - worth RM 102.3 million - with Airod in June 2001.

According to Syed Husin, the actual consultancy work was carried out by United States-based Lockheed Martin.

He added that however the consultancy contract was given to Quality Ranch although the company did not have any experience in the field of aviation.

‘Siphoning funds’

Three invoices from Quality Ranch to Airod - both of which are under Ahmad’s control - for the payments starting from Dec 4, 2001 to Aug 1 last year were also distributed to the press.

However, no details of the consultancy work were included in the invoices for the payments of RM3 million, RM1.2 million and RM1.5 million respectively.

"We believe that no actual business activities actually took place between Quality Ranch and Airod... It appears that Quality Ranch is being used to siphon funds from Airod and this needs full investigation," said the police report, a copy of which was also made available.

As of August 2001, Ahmad and his son were no longer directors of Quality Ranch and were replaced by two secretaries-cum-personal assistants, Ajibah Hossein and Firdaus Saripin.

According to the police report, Airod is controlled by Aerospace Industries Malaysia (AIM), a private company chaired by Ahmad.

AIM is parent to a number of subsidiary companies dealing with the defence industry such as ATSC, which services the Russian-made MiG-26 aircraft, and SMEI which also owns a number of subsidiaries producing rifles, weapons, hand grenades and aircraft components.

The Finance Ministry owns 10 percent of AIM shares through the bailout vehicle Khazanah Nasional while the other 90 percent is owned by PJS Industries - of which Ahmad is also a director.

All three companies - Quality Ranch, PJS Industries and Airod - share the same registered address in Taman Setiawangsa, Kuala Lumpur.

Defence monopoly

Meanwhile, the report also contained a second allegation against Ahmad, involving another one of his companies Fabel (UK) Ltd, which supplies spares to Airod for its aircraft repair and maintenance work.

The report said prior to Ahmad becoming president of Airod, spares were obtained from the original manufacturers but now since the spares come from Fabel, the cost of obtaining them is higher.

"At the end of the day, spares have to be paid for at a higher price by Airod and RMAF. The people end up having to pay more," said Syed Husin.

He also expressed concern over the implications of the concentration ownership of key defence industry companies in the hands of one man.

"It is certainly very dangerous to have a single person controlling so much of the aerospace industry, especially when there are so many allegations of corruption against him,

"How is it that the government can allow him to have such enormous control over the production of materials that can directly affect national security?"asked the PRM president.

Personal payments

Another allegation levelled against Ahmad, was that he authorised payments to himself amounting to RM3.4 million in the form of personal cheques.

Syed Hussin said the business tycoon’s practice in issuing 34 separate cheques of RM100,000 may be indicative of a need to hide such information.

"We believe that RM100,000 is the maximum he is authorised to make without reference to the board of directors," he added.

The complainants also submitted documentary evidence involving the transactions.

Bukit Aman public relations chief Supt Jamshah Mustafa received the report at the entrance of the police headquarters together with copies of company registrations, invoices and balance sheets of companies allegedly involved in corrupt practises.

"What we have here is only the tip of the iceberg as this is what we know. Which is why we are asking the police to investigate immediately," said Syed Husin.


Meanwhile, a joint statement distributed to the press signed by the PRM president and his Keadilan counterpart Dr Wan Azizah Ismail, also alleged that companies owned by Ahmad were involved in unfair union-busting.

They claimed Airod unfairly dismissed five leaders of its workers’ union, while SME Aviation, another company which Ahmad is a director of, had closed down its workers’ union.

They added that these actions were believed to be taken because the companies wanted, among others, to intimidate workers for questioning activities within these entities.

Also present were PRM secretary-general Sanusi Osman, Youth chief Faizal Sanusi and. Keadilan vice-president Dr Xavier Jeyakumar.

Despite numerous attempts, Ahmad could not be reached for comment.



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