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O 102331Z JAN 10
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3667
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RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 03 KUALA LUMPUR 000012 
 
SIPDIS 
 
FOR EAP/MTS AND INR 
 
E.O. 12958: DECL: 01/07/2020 
TAGS: PM PGOV MY
SUBJECT: MALAYSIA: UPDATE ON F-5 ENGINE SCANDAL 
 
REF: A. 09 KL 1016 -- F-5 FOLLOW UP 
     ¶B. 09 KL 1013 -- MALAYSIAN F-5 ENGINES CASE 
 
Classified By: Political Counselor Brian D. McFeeters for reasons 1.4 b 
 and d. 
 
Summary and Comment 
------------------- 
 
¶1. (C) Malaysian government officials continue to communicate 
little information directly to Post regarding the missing F-5 
engines (reftels).  Most of the information on the scandal to 
date has come thru the local media, which reported on January 
6 that police arrested and charged one Air Force sergeant and 
a business owner with the theft and illegal sale of the 
engines.  The Attorney General and Defense Minister both were 
quoted in the press as saying that they were satisfied with 
these results.  They gave no indication that investigations 
would continue into possible broader complicity in the 
thefts, nor what remedial actions are being taken by the GOM 
to assure that such security  and procurement breaches would 
not occur again. A chorus of commentary in online media has 
expressed incredulity at the Government's position that the 
thefts were carried out solely by two relatively low-level 
individuals and that higher-ups in the military and elsewhere 
were not involved.  On January 6, the Embassy's Office of 
Development Cooperation received a letter from the RMAF which 
provided a brief update on the missing engines case and 
indicated a willingness to respond to additional inquiries 
from the USG once the GOM investigation is completed (see 
para 7). 
 
¶2. (C) Comment:  We share some of the incredulity expressed 
in the blogosphere about the Government's case and 
explanation of who was behind the engine thefts. In 
coordination with Washington, Post is continuing to push for 
a complete accounting of how the thefts occurred and the 
ultimate disposition of the engines, and to remind the GOM of 
the seriousness of the issue and need for remedial actions. 
We look forward to a readout of next week's meeting on this 
issue between PM's PDAS and Malaysian Ambassador.  The 
Ambassador and DCM have pending meeting requests with senior 
MFA officials.  End Summary and Comment. 
 
What the Media has Been Reporting 
--------------------------------- 
 
¶3. (SBU) Government-influenced media reports continue to 
provide evolving, if changing and conflicting facts 
pertaining to the disappearance of the two F-5 engines. 
 
-- The most recent reports (January 7)indicate that the 
engines were stolen separately -- one on December 20, 2007 
and the other on January 1, 2008 and that the discovery of 
the theft occurred on May 22, 2008. 
 
-- Media reports say the RMAF filed a police report on August 
4, 2008 after they conducted their own investigation. 
 
-- The destination of the engines has been cited as both 
Argentina and Uruguay, although early accounts by the police 
reported in the press also indicated the engines went through 
or to the Middle East, and specifically Iran. 
 
-- Some independent online news portals claimed that the 
engines ended up in Iran.  At a press conference, the 
Attorney General reportedly became defensive when asked about 
the Iran connection, and all references placing the engines 
in the Middle East or Iran have since been removed from the 
state-run media. 
 
-- Specific details regarding the May 2008 RMAF investigation 
and the August 2008 police investigation have not been 
released, although both the Attorney General and Defense 
Minister have implied that no one was held accountable as a 
result of those investigations. 
 
-- As to where the engines currently are, Attorney General 
Gani Patail attracted attention with a January 5 comment 
quoted in the Star newspaper that, "I really do not know what 
is being done to it now, whether the engines are used as 
scrap metal or as sinker for fishing." 
 
-- The press reported that Police arrested RMAF Sergeant N. 
Tharmendran and company director Rajandran Prasad on January 
6 in connection with the two missing F-5 engines. 
Tharmendran was charged with conspiring to steal the engines, 
while Rajandran was charged with intentionally disposing of 
items that he knew to be stolen. 
 
-- Attorney General Gani had previously said on January 4 
that "many people" were involved, but did not indicate that 
the investigation into the perpetrators would continue. 
According to Gani, "what is important is recovering the 
engines."  No information has been released regarding the 
identities of the buyer and/or any middlemen. 
 
-- Defense Minister Ahmad Zahid Hamidi was quoted by the 
Malaysian Insider on January 6 as saying at a public event 
that no further investigation or special inquiries were 
necessary, stating after the arrests that he was "satisfied 
with the Attorney-General's action and investigations into 
the case."  Zahid also downplayed the severity of the theft, 
stating on January 7 that "The contract to purchase was made 
in 1972.  At that time, the engine's price, including the 
afterburner, was $121,428 each," basing this on the exchange 
rate at that time. (Note: the original value of the missing 
engines given by the newspapers was listed as $15 million 
each. End note.) 
 
-- Public condemnation of the results has been muted by the 
state-run media, but the online blogosphere has been swift, 
one-sided, and damning of the GOM's arrests and conclusion 
that Tharmendran and Rajandran were the only ones involved. 
¶4. (C) The Ministry of Foreign Affairs has kept itself at 
arms length from the scandal.  Ambassador and DCM have not 
yet been able to secure meetings with senior MFA officials to 
discuss this issue (among other bilateral issues).  MFA 
Principal Assistant Secretary (Americas Division) Mohamad 
Radzi Jamaluddin told Poloff January 6 that the Defense 
Ministry has the lead and described that Ministry as being 
"elusive" in its handling of the case.  Radzi opined that the 
newspapers were publishing a lot of misinformation, and that 
they were often factually incorrect.  He suggested that press 
reports that the GOM has reached out to the USG for 
assistance in the investigation were false, because any such 
request would have been routed through the MFA.  (Note: Post 
has no record of any request for assistance on this case from 
the GOM.  End Note.) 
 
Letter from the RMAF 
-------------------- 
 
¶5. (SBU) Following ref A discussion between Office of Defense 
Cooperation chief Lieutenant Colonel Steve Ma and Brigadier 
General Azizan bin Shaari, Director of Materiel with Royal 
Malaysia Air Force (RMAF), ODC chief received an official 
letter from the RMAF on January 6. 
 
Begin text: 
 
05 January 2010 
 
OFFICIAL NOTIFICATION ON THE MISSING F5E GE J85-21 ENGINES 
 
Ref: 
 
¶A. FMS Case MF-D-SAJ 
¶B. FMS Case MF-D-SBE 
¶C. FMS Case MF-D-SBK 
¶D. FMS Case MF-D-SCA 
¶E. Malaysian Government Contract No: PERB/K&B/107/84. 
¶F. The discussion between Assistant Chief of Staff Material / 
LTC Stephen C. Ma on 28 Dec 2009 at the Ministry of Defense, 
Malaysia. 
 
  ¶1. The Royal Malaysian Air Force (RMAF) presents its 
compliments to the Office of Defense Cooperation and the 
United States Embassy Kuala Lumpur. 
 
  ¶2. In pursuant to the discussion vide reference F, the RMAF 
regrets to inform that there are two (02) F5E GE J85-21 
engines found missing from the inventory believed to be 
stolen on the 26th May 2008.  The serial numbers of the 
engines are as follows: 
 
    a. E227718 
    b. E227856 
 
  ¶3. The RMAF had conducted an internal investigation where 
procedures with regards to handling and transportation were 
re-examined and tightened.  A report had been lodged with the 
Royal Malaysian police on the 4th of August 2008 to continue 
with the investigations and to pursue with criminal 
prosecution against individuals linked to the theft. 
 
  ¶4. The RMAF fully understood the requirements of the United 
States government on Foreign Military Sales (FMS) policy in 
relation to this incident but unable to notify earlier 
pending completion of investigations by the Royal Malaysian 
Police.  We believed that the investigation is nearing its 
conclusion and will follow with prosecution by the Attorney 
General's Chamber.  We will endeavor to notify the progress 
on this matter to the United States Government through your 
office as soon as we have more information. 
 
  ¶5. Thank you. 
 
(signed) 
 
DATO' SRI RODZALI BIN DAUD 
Gen RMAF 
Chief of Air Force 
 
End Text 
KEITH