PARIS • France has dropped a charge against an associate of former Malaysian prime minister Najib Razak over alleged kickbacks paid in a major submarine deal, judicial sources said on Monday.
Najib himself is embroiled in a massive corruption scandal involving state fund 1Malaysia Development Berhad (1MDB), where he has also been questioned on the submarine case.
Between 2000 and 2008, when Najib was defence minister, his associate Abdul Razak Baginda had advised him on a €1 billion deal to buy two Scorpene-class submarines and one Agosta-class submarine from the French naval dockyards unit DCNI, which is linked to French defence group Thales.
An investigation into the deal launched in 2010 revealed that Terasasi, a company whose main shareholder was Abdul Razak, had received an equivalent sum for what was billed as consultancy work.
Investigators believe it was really a front for kickbacks. Abdul Razak was charged in France in July 2017 with "active and passive complicity in corruption" and "misappropriation of corporate assets".
Judicial sources said the Paris appeal court has dropped the charge of "passive corruption", while retaining the remainder of the charge sheet.
Abdul Razak's lawyer Caroline Toby indicated she would appeal.
Four French defence industry executives have already been charged in the case.
They are two former chairmen of DCNI, Philippe Japiot and Dominique Castellan, and two former heads of Thales International Asia, Bernard Baiocco and Jean-Paul Perrier.
All four men deny the charges and say they did not have direct contact with Abdul Razak.
French investigators are also looking into allegations that €114 million had been paid to a purported Malaysia-based shell company, Perimekar, as part of the deal. That company was controlled at the time by Abdul Razak's wife.
However, that payment is likely to ultimately fall outside French jurisdiction as it was not made to a French company.