Cablegate: Malaysian F-5 Engines Case and Action Request

DE RUEHKL #1013/01 3570902
O 230902Z DEC 09



E.O. 12958: DECL: 10/19/2019

Classified By: POLCOUNS Brian McFeeters for reasons 1.4 (b, d).

the Malaysian press reported the 2007 theft of a J-85
aircraft engine (for the F-5 aircraft). Subsequent reports
indicated that, in fact, two engines had been stolen and sold
to an international company in South America. The story has
been front-page news in Malaysia's government-influenced
press and uncensored blogosphere since then. In recent days,
Post has queried Malaysian interlocutors on the current
location of the engines. They either do not know the
location or have been instructed to withhold information
while a police investigation continues. Malaysian
interlocutors also have not provided adequate explanation as
to why, after two years, this incident has just now become

2.(C) Comment: We do not yet have sufficient command of the
facts to determine whether this story will have significant
domestic repercussions. The Prime Minister will have a
personal stake, given his past role as Defense Minister, and
that could explain in part his prominence in the media
coverage of this issue thus far. More important, however,
from the perspective of U.S. interests, is how this case can
be used to advance our call for a more effective export
control regime in Malaysia. Our strongest leverage, it
appears, is the need for Malaysia to persuade us that
military transfers subject to the Arms Export Control Act can
be carried out with confidence in the Malaysians ability and
will to comply with our law and regulation.

3.(C) Action Request: Post requests (a) clarification as to
whether Section 3 of the Arms Export Control Act has been
violated, (b) talking points for use with GOM interlocutors
(see suggestions para 10)and (c) press guidance on this issue
(see suggestion para 11). END SUMMARY AND ACTION REQUEST.

Disclosure Brings Extraordinary Attention

4. (SBU) The missing engine first became public knowledge
when Defense Minister Ahmad Zahid Hamidi disclosed the
information to the New Straits Times, a government-influenced
newspaper, on December 19. (Comment: this was the same day
that the opposition coalition Pakatan Rakyat (PR) held its
first-ever convention--an event likely to overshadow the
DefMin's announcement. End Comment.) Other media outlets,
both government-influenced and independent online media,
quickly picked up on the story and began intense coverage,
and as of December 23 the story was being reported in
regional and international publications, including the
Singapore Business Times and the UK's Financial Times. Some
news reports indicate that the engine was detected missing as
early as 2007, but according to Hamidi the engine was
detected missing in May 2008, though no decision was made to
report the incident to the police for investigation until
August 2008. (Note: PM Najib was the Defense Minister at the
time the engine disappeared. End Note.) Attorney General
Gani Patail stated that his office only received the
investigation papers from the police in November 2009, and
that since then his office has sent the investigation back to
the police with further directives. Hamidi initially
disclosed that a single F5 fighter jet engine worth 50
million Malaysian Ringgit (approximately $15 million USD) had
been sold to an international company based in South America.
Since then the missing inventory has expanded to include a
second engine worth another 50 million Ringgit, additional
support parts (no details available), and indications that
the 'international company' is an arms dealer. The Utusan,
the party newspaper of the ruling United Malays National
Organization (UMNO) party, reported on December 23 that the
company involved in the purchasing of the engines was a
Malaysian company based in another (unspecified) country.
Armed Forces chief General Azizan Ariffan, who was then the
Air Force chief, sought to justify the news blackout by
stating that although they "reported the loss of the jet
engine last year...investigations are still being carried out
by the police."

5. (C) The Prime Minister commented on the incident, calling
for complete transparency and vowing to punish those
involved. Najib praised the leadership of the Defense
Ministry and the Royal Malaysian Air Force (RMAF) for their
actions to date, stating "to the credit of the RMAF and
MinDef, there was no intention of covering up (the theft) at
all. I was the minister in charge at the time and I decided
it should be reported to the police." Perhaps even more
telling than the PM's statement, the government-influenced
media took the unprecedented step of publicly condemning the
military, openly calling the armed forces "arms dealers,"
though they refrained from criticizing then-Defense Minister

KUALA LUMP 00001013 002 OF 003


6. (SBU) Public criticism continues to boil since news of the
missing engine became public. Opposition politicians
immediately capitalized on the incident, with Democratic
Action Party leader Lim Kit Siang calling the Prime
Minister's response "a frightening picture of a government of
thieves." Islamic Party of Malaysia (PAS) spokesman Idris
Ahmad said that the sale could have only occurred through
"powerful people," and added that "we don't want only the
anchovies to be arrested while the sharks are allowed to swim
freely." Armed Forces Chief Azizan said "their act
jeopardizes national security. They are traitors and should
be punished for treason." Opposition Member of Parliament
(MP) Liew Chin Tong expressed deep concern, because "no one
knows how many other military assets are stolen in this
manner," suggesting that the engine or other military assets
could have been transferred to undesirable parties to include
Iran. The Singapore Business Times, quoting the New Straits
Times, said the engines were shipped to a Middle Eastern
country that "was the subject of U.S. sanctions." (Note: post
could not find this quotation in the New Straits Times. End
Note.) Editorials in government-influenced newspapers have
also questioned why the police were the only ones involved
with the investigation, who is powerful enough to steal/sell
$30 million in jet engines, why the Air Force chief was
promoted to Armed Forces chief, and the extent of other
military munitions that may have been sold illegally.
According to independent online Malaysiakini's December 23
editorial, "if two tons of jet engine can go missing, how
many grenades, M16s, bullets, etc have gone missing? Is this
why the West thinks we support Muslim militants?"

Action Request

7. (C) Post understands that aircraft engines are classified
as defense articles on the United States Munitions List, the
unauthorized transfer of which is a violation of Section 3 of
the Arms Export Control Act. Post requests clarification
whether the J-85 aircraft engines reported as missing in
Malaysia indeed fall under this category.

Lack of GOM Reporting

8. (C) Within the last year, Post has identified at least
three opportunities in which the Malaysian Air Force or
Defence Ministry should have notified the U.S. of the missing

-- In January 2009, in accordance with USAF regulations, the
Malaysian Air Force submitted an inventory recertification
listing of J-85 engines to the USAF J-85 engine program
manager. There were no discrepancies identified to Post in
this inventory.

-- In March 2009, the Malaysian Air Force advised Post they
had sent a J-85 engine to Orenda Company in Canada in 2006
for repair. Subsequently, the engine developed faults and
the Malaysian Air Force was attempting to ship the engine
back to Canada for warranty work. During this period, the
Department of State Office of Regional Security and Arms
Transfers (PM/RSAT) advised that such a transfer, even if for
repair, required a formal application from Malaysia and USG
approval. Malaysia completed this application in April and
State PM/RSAT approved the temporary transfer to Orenda in
July 2009(see letter dated 06 July 2009, RE: PM/RSAT 3PT Case

-- In May 2009 the USAF and Malaysian Air Force conducted a
routine bilateral J85 engine review conference. No issues of
missing engines were raised to Post during this conference.

9. (C) The Malaysian Air Force should have been acutely aware
of the requirement to advise the U.S. immediately of missing
engines, especially after the formal notification process
undertaken in March-July period mentioned above.

Suggested Talking Points

10. (C) Assuming that the Arms Export Control Act is thought
to be violated, Post requests approval of the following
talking points for use with GOM officials as appropriate in
following up on reports of missing/stolen F-5 aircraft
engines, and possibly of other U.S.-supplied materials:

-- After extensive recent media reporting on missing F-5
aircraft engines, it is important for the U.S. Embassy to
receive a briefing from the GOM on this case.

KUALA LUMP 00001013 003 OF 003

-- In addition, given the engines require USG authority to
transfer under the Arms Export Control Act, the USG requests
a thorough written investigative report on this issue as soon
as possible.

-- The GOM's promptness and thoroughness in replying to these
requests for information will have a bearing on the ability
of the USG to continue supplying such military equipment to
the GOM.

-- In addition, when the investigation of this case is
complete, it will be important for the GOM to provide to the
USG an explanation of measures in effect to prevent future
theft and/or diversion of U.S. military equipment supplied to
the GOM.

Suggested Press Guidance

11. (SBU) Post requests approval of the following press
guidance for use with Malaysian and international journalists
as appropriate, noting that the Embassy has already received
several requests for comment:

-- We have seen recent media reports that U.S.-supplied F-5
aircraft engines were stolen.

-- The USG has requested that the GOM provide a comprehensive
report on the ongoing investigation.

--We will continue our ongoing discussions with the Malaysian

© Scoop Media

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