Canadian transport giant Bombardier has won hundreds of millions in international contracts to supply transit systems across the world. But a year-long Globe and Mail investigation spanning four continents reveals a pattern of middlemen, ‘success fee’ payments — and allegations of corruption.
The Canadian newspaper said the Bombardier logo is almost everywhere you look in Malaysia’s transportation sector. The driverless lightrail cars that run along the capital city’s Kelana Jaya line are produced by Bombardier and its local partner, a company called Hartasuma, said the paper.
It also said Kuala Lumpur’s second airport, SkyPark Subang, is the regional hub for the Switzerland=based Vistajet and its fleet of Bombardier-made private jets.
“Bombardier’s long track record of winning deals in Malaysia dates back to when the company won the bidding to bid a light-rail line in Kuala Lumpur ahead of the 1998 Commonwealth Games.”
And the relationship continued in March of 2017 when the company won yet another lucrative contract – that is to deliver 27 new rail cars to the same LRT system, said the report dated December 30, 2017. The report is not accessible to non-subscribers but it is widely available online if one does the proper search on Mr Google.
The paper said there has been no investigation into how Bombardier won the contracts in Malaysia, unlike in South Korea and South Africa but there was a brief public outcry around 2011 on the way the government reportedly considered awarding the contract to Bombardier over the advice of its own experts.
Analysts told The Globe and Mail that the key to the success of Bombardier in Malaysia is its partnership with Hartasuma and the company’s political connected executive director, a Tan Sri Datuk who is a leading figure in the ethnic Indian community.
The person is also the founder of Skypark group. The same group that is the hub for Vistajet. Vistajet has a fleet of only-Bombardier-made-private jets.
The Canadian newspaper then make references to the political links with the Malaysian PM and Hartasuma as well as links to another minister in the cabinet.
We will leave the names out, but they can be viewed on the web.
Answering the newspaper on the accusations of kickbacks and ‘success fees’ paid to Malaysians to win the contract in the country, Bombardier said the usual: All is done in perfect order and in accordance to requirements and through the rigorous review of contracts etc.
Then it quoted PKR MP Rafizi Ramli who said the business circle was close to a former PM and that he believed it would be impossible for a foreign company to win a large infrastructure contract in Malaysia without paying into the country’s system of corruption and patronage and cited the 1MDB scandal as evidence of his statement.
The paper said a former official of Prasarana who was responsible for ditching out the contract said all were done according to transparency but “whatever goes on behind the scenes, we’re (he and his team) not party to it and would not be aware of,” adding that he did not know whether Bombardier had to grease some hands to win the contracts.
The paper then adds that the Bombardier-Hartasuma relationship is consumed at a factory in an industrial park on Pulau Indah, a small Island off of Malaysia’s west coast. “Near-complete Bombardier trains arrive by sea, and Hartasuma employees – the majority of whom appear to be migrant workers from Bangladesh – install plastic seats and other finishing touches before the trains are put into service.”
When The Globe and Mail reporters met with some Hartasuma executives, they were asked “Why in Canada would they care about how a contract is awarded in Malaysia?”.
“You are touching a very sensitive topic,” said one executive to the reporters.
But a Canadian diplomat said if Bombardier were to stop making “success-fee” payments, it would only further open the field for Chinese companies who are already ascendant in the industry and have no qualms about doing whatever it takes to win projects.
While Bombardier calls these monies “success-fees”, in Malaysia they call it ‘gifts’ or ‘commissions’ and they are normal in business. If the Canadian newspaper is calling it ‘corruption’, here it is not the case as a foreign company is probably expected to ditch out cash after winning contracts.
Bombardier would believe that these hand-outs are paid to middlemen to win lucrative contracts overseas. But in Canada, it seems, it is a crime.
An insider told the newspaper that such ‘fees’ were even paid to a sister of Tunisia’s then-president Zine el-Abidine Ben Ali (the amount is US$700,000) for the sale of jets to an arm of the national flag carrier, Tunisair.