The PAF Kickbacks
Scandal Revealed by Mistake
Special
SAT Report
ISLAMABAD:
Strong evidence has surfaced of Musharraf regime's first major
defense kickbacks scandal involving the Pakistan Air Force (PAF)
last year when Pakistan purchased four CASA Transport aircraft
from an Indonesian company for $50 million.
Amusingly
the scandal broke when a senior PAF officer mixed up the look-alike
names of the commission agents and called in the wrong guy to
contact the suppliers and submit the offer.
All
signs are that the kickbacks of four to five million dollars,
were offered to the PAF high ups, and the role of the PAF Chief
himself was so dubious many believe he could have been the ultimate
beneficiary. Evidence, however, firmly establishes that his Dubai-based
close friend was.
This
is the first major defense purchase scandal of the Musharraf government
though it may appear to be not so big compared to the one billion
dollar submarines purchase or the purchase of several hundred
million dollars worth of Ukranian Tanks, both highly controversial
deals involving kickbacks. In the submarines case Admiral Mansoor
ul Haq, the former Navy Chief, was arrested and tried but let
off the hook after he paid some 7 million dollars. No one was
touched for the Ukranian Tanks deal.
The
evidence now available about the CASA CN-35 aircraft scandal reveals
that the Indonesian supplier offered a 3 per cent normal commission
and 5 per cent extra commission for "defence and finance
personnel" on purchase of the 4 Transport Aircraft. The total
cost was $49 million with commissions and kickbacks totaling four
million dollars.
The
man in the center of the deal has now come out on record after
failing to evoke a response from the PAF authorities, which refused
to acknowledge or reply even to a legal notice served by him through
his attorneys to the Chief of Air Staff, Air Marshal Mushaf Ali
Mir.
The
original story of the CASA aircraft purchase was reported in a
section of the Pakistani Press earlier this year but the dubious
side of the deal was not highlighted and PAF spokesmen tried to
bury it under strong denials and unofficial use of pressure to
stop the story from catching wings.
The
episode which could go down as a major blot on the Musharraf regime,
started in December of 2000 when instead of Khalid Kashmiri, a
PAF official based in Dubai and said to be a close friend of PAF
Chief, Air Marshal Mushaf Ali Mir, officials contacted another
ex-PAF officer, Khalid Khawaja, also in the same defense supplies
business. The mix-up probably occurred because both had Khalid
as their first name and all Khawajas are known to be of Kashmiri
origin.
"I
was approached by the PAF to get them the offer, whereas they
could have directly approached the company. We got the offer and
when I went to Deputy Chief of Air Staff (Operations) Air Marshal
Kaleem Saadat, along with Air Vice Marshal (retd) Khudadad, to
submit it, I asked AM Kaleem why after all had I been approached
in particular," Khalid Khawaja said in an EMail interview
to the SA Tribune.
"He
laughed and said in fact the Air Chief had asked him to approach
another retired officer, Khalid Kashmiri, who happens to be the
Chief's friend, " Khalid Khawaja said.
“In
the first place, Air Marshal Kaleem never contacted me directly.
He had asked Air Commodore Ateeb, ACAS (Operations), to contact
Khalid Kashmiri and Ateeb mistook it as Khalid Khawaja. Ateeb
asked Group Captain Rizwan, Director Air Transport, to contact
me and it was Rizwan who contacted me desperately. Later Rizwan
and Ateeb followed it up and asked me to do them this "national
favor".
“I
met Air Marshal Kaleem first time when I handed him over the offer
in presence of Air Vice Marshal Khudadad who was Director General
of National Accountability Bureau. Later Khudadad was the one
who met the Air Chief as well as AM Kaleem to resolve the issue,”
Khawaja said, adding: "I do not find any reason to believe
that AM Kaleem had any vested interest in the deal as he got me
the Letter of Intent (LOI) and was very co-operative without any
underhand understanding."
"I
was conveyed by the Indonesian company, through my contacts in
Indonesia, that they will give us 3 per cent commission as our
processing fee and 5 per cent (kickbacks) for PAF authorities,"
Khawaja said.
As
evidence Khawaja sent a scanned copy of an Email sent by Prima
Niaga (ptpns@indosat.net.id), sent by one Vice President (Sales)
Suryana Padma Abdurrehman which stated clearly that "They
(PAF) have given us a confirmation about commission fee (off the
record) - Agency Fee=3%, Pakistan Finance and Defense Department=5%.”
The Email also asked Khawaja to "prepare the Technoman Company
Profile completely which will (be) appointed as IAe (Indonesian
Aerospace) Agency." Click to View E-Mail
copy Technoman is the name of Khawaja’s company.
"The
point here is that this was the offer which came from the suppliers,
without any demand from our side. I could have bargained more
by saying that people are demanding more, as I knew that there
was enough margin in the price. Instead I called Air Marshal Kaleem
and told him that they must get a good bargain and the extra 5
per should be deposited in the Government/PAF treasury,"
Khawaja said.
"A
few days after that we were told that the suppliers had chosen
Mr. Khalid Kashmiri as their agent, as required by the top authority
of the Air Force. In between we were told that if we let this
one go to Khalid Kashmiri we can be entertained in some other
deal, but I refused as I was already fed up with the past experience,"
Khawaja said.
"Air
Marshal Kaleem told me one day that it was not the PAF but the
Indonesian company which had changed its agent but why would they
do so, when I was doing a fine job. Why did the PAF want the deal
to go through a friend of the Air Chief," Khawaja asked.
"When
authorities in Indonesia were contacted they said that they could
not afford to lose the business and if the PAF gave me a letter
again they will be happy to deal with me."
As
Khawaja was frustrated in the deal, he decided to take legal action
and sent a notice to the PAF Chief. Air Marshal Mushaf Mir, stating
these facts. Click here for Legal Notice
The Notice also stated that the supplier was prepared to pay 3%
to the agency and 5% to defence and finance personnel but "Our
Client immediately conveyed this, (offer) inter alia, to Air Marshal
Kaleem Saadat, DCAS (Ops) and informed him that as Our Client
did not intend to indulge in any unethical business practices,
therefore, the 5% would be taken from the Supplier and paid into
the Government Treasury."
"It
appears that Our Client's honesty and high moral standards were
not appreciated and the Supplier was informed that the PAF would
deal with the Supplier through a nominee of the highest authority.
Consequently, the Supplier acting in flagrant violation of its
obligations towards Our Client appointed an agent of your choice,"
the notice said.
When
asked why he did not pursue the legal notice with a formal case,
Khawaja said: "In fact some indirect communication started
after the notice and the PAF Chief was too arrogant and confident
that nothing can go against him. But somehow Air Marshal Khudadad
after meeting the Chief and AM Kaleem could prevail upon my associates
that pursuing the case will not benefit us. Rather we shall earn
the wrath of the Chief and it will only damage our various business
interests therefore the other directors of the company were of
the opinion not to pursue the case any further."
There
was no immediate response to the notice from the PAF authorities
but
PAF media managers, however, went into overdrive to control any
damage in the media and when some persistent newsmen tried to
ask questions, the full force and authority of a military government
was used to keep them at bay. One journalist was told to give
the questions in advance, in writing, and when a very strong questionnaire
was handed over, there was no response. No Pakistani newspaper
touched the story again.
