UK firms 'put pounds 1.5m into yacht project': Malaysia jets deal followed cash aid

BRITISH Aerospace and GEC contributed more than pounds 1.5m towards the cost of a training vessel for the Malaysian navy shortly before being awarded a pounds 400m contract to supply Tornado fighter-bombers to the Malaysian air force.

Sources close to the deal said last night that the pounds 3.5m brigantine was paid for jointly by the two companies and the Malaysian government. Buckingham Palace said it was presented to the Malaysians by the Queen 'on behalf of the British government', despite Foreign Office denials that the Government was involved.

The 105ft twin-masted Tunas Samudera was built in Lowestoft, Suffolk, by Brooke Yachts International during the nine months to October 1989, when it was given to the Malaysians at the Commonwealth Heads of Government Conference in Kuala Lumpur.

Three months later, sources within GEC and BAe were telling defence analysts that contracts had been signed to provide 12 Tornado aircraft built by British Aerospace, coupled with Martello ground-based radar manufactured by GEC's subsidiary, Marconi Command and Control, and ground-to-air and Rapier airborne missiles.

The deal was understood to have formed the first part of a pounds 1.5bn memorandum of understanding on trade signed by Margaret Thatcher and the Malaysian Prime Minister, Dr Mahathir Mohamad, in 1988. In May 1990, the Malaysians pulled out of the Tornado deal, a joint Anglo-German-Italian venture, but later announced another pounds 400m order for 28 Hawk fighters.

A source close to the brigantine deal said: 'GEC was the prime mover and met just under pounds 1m of the cost. The Malaysians paid half plus a bit extra for additions to the vessel, and the balance was met by British Aerospace. British Aerospace stayed very much in the background. A short while later, they landed the Tornado deal.' GEC refused to comment. A BAE spokesman said: 'I have no knowledge of the deal.' The Malaysian High Commission also refused to comment.

Tim Stovold, a former director of Brooke Yachts, which is now in receivership, confirmed that GEC was involved, but he refused to discuss BAe's role. Peter Hansford, Brooke's planning manager, said: 'GEC were definitely behind it. Everyone knew that. At the time, we were told it would be a very important job and that it was very important for trade and business with Malaysia.'

GEC has won a pounds 1bn contract to build a power station in India, it was announced yesterday as the British and Indian premiers, meeting in London, put trade links on a firmer footing.

John Major and the Indian Prime Minister, Narasimha Rao, on his first state visit to Britain, also agreed to extend the Indo-British Partnership Initiative, designed to promote trade links, for a second year.