France Probes Possible Bribes in 2002 Malaysia Submarine Sale

  • Ex-Thales official under probe, prosecutor spokesman says
  • Malaysian official says prime minister committed no wrongdoing

French financial prosecutors said they have started a formal probe into whether bribes were paid by Thales SA officials to secure the sale in 2002 of two submarines to Malaysia for more than $1.2 billion.

Prosecutors placed former Thales International Asia President Bernard Baiocco under investigation for "active corruption of foreign governmental officials" and are seeking to determine if “kickbacks” were used to win the contract, a spokesman for the French national prosecutor’s office said Friday, asking to remain anonymous in line with office policy.

Malaysian Prime Minister Najib Razak, who was defense minister in 2002, is a suspect in the case, a French official said, asking not to be named because of the sensitivity of the investigation. The Financial Times reported earlier that Najib is suspected of receiving one of the bribes, along with his associate Abdul Razak Baginda.

Najib’s office said the allegations were “baseless smears for political gain.”

“The reality is that there was absolutely no wrongdoing on the prime minister’s part in the government’s purchase of the submarines,” a spokesman for Najib said Friday in an e-mail. “Absolutely no payments ever benefited him.”

Neither Baiocco nor his lawyer, Jean-Yves Le Borgne, could be immediately reached to comment. Thales’s head of communications, Matt Pothecary, said the company didn’t comment on legal cases. Abdul Razak Baginda couldn’t immediately be reached.

Najib has faced a series of scandals for more than seven months. Malaysia’s attorney general last week cleared Najib of wrongdoing in receiving a $681 million personal donation from the Saudi Arabian royal family in 2013, as well as money from a company linked to debt-ridden government investment fund 1Malaysia Development Bhd., or 1MDB. Of the Saudi funds, $620 million was later returned.

Last month the Swiss Attorney General’s office said a probe of 1MDB revealed "serious indications" that about $4 billion may have been misappropriated from state companies in the Southeast Asian nation, and some former public officials had funds transferred to Swiss accounts. Najib is “not one of the public officials under accusation,” it said.

Singapore said Monday, in response to queries on 1MDB, that it had seized a "large number” of bank accounts in connection with possible money-laundering carried out in the country.

Najib’s office said Friday that similar French probes were conducted into defense contracts with Taiwan and India, adding the premier has never been contacted by the French judges leading the investigation.

The French formal probe follows a complaint made in 2009 by the Malaysian human rights NGO Suaram, according to the organization’s website.