Prime Minister Malcolm Turnbull after announcing the winning bid for for the new submarine DCNS in Adelaide in April French prosecutors now allege that DCNS engaged in "active bribery of foreign public officials" to win a $US2 billion contract in 2002 to build two Scorpene-class submarines for Malaysia. The long-running legal case took a major step forward in March after prosecutors in Paris began a formal investigation of Dominique Castellan, a former president of the international arm of DCNS. Mr Castellan was earlier implicated in another corruption scandal involving DCNS in Pakistan. The target of the bribes in the Malaysian case is said to be Najib Razak, then the country's defence minister, now the prime minister.

Mongolian fashion model and translator Altantuya Shaariibuu was murdered in Malaysia in 2006. Credit:Asia Sentinel According to a French media report this month, prosecutors are investigating payments for "technical assistance" of €30 million ($A47 million) to a close associate of Mr Najib. Le Monde newspaper reported that DCNS had described the commissions as "reasonable". However, the company had made the payments through a series of shell companies, some based in Hong Kong, to avoid scrutiny, the investigation found. Industry Minister Christopher Pyne has banked his political fortunes on building submarines in South Australia with South Australian steel. Credit:David Mariuz Other media reports said additional suspect payments of more than €114 million appear likely to escape scrutiny because of the lack of available evidence in France.

The scandal has also entangled Thales, another defence industry giant with deep ties to the Australian military. French prosecutors began an investigation against Bernard Baiocco, former president of Thales operations in Asia, in December. French submarine, Shortfin Barracuda, designed by the DCNS group Thales owns a 35 per cent stake in DCNS' ​Prime Minister Malcolm Turnbull announced in October that Thales would build a $1.3 billion fleet of armoured four-wheel-drives in Victoria, in addition to the Australian army's "Bushmaster" vehicles. But it is the aftermath of the alleged bribes that has been truly extraordinary.

In 2006, Altantuya Shaariibuu, a beautiful 28-year-old jet-setting Mongolian translator, was dragged from a car in patch of jungle on the outskirts of Kuala Lumpur and shot twice in the head as she begged for the life of her unborn child, according to court testimony. Two former police bodyguards of Mr Najib wrapped her body in C4 explosives obtained from the military and blew her up, ensuring the foetus was destroyed along with any chance of identifying the father. Ms Shaariibuu worked as a translator for the Malaysian side in the final stages of the DCNS deal. She admitted in a letter shortly before her death that she had been demanding $500,000 in return for her silence about millions of dollars in alleged corrupt payments. Mr Najib denies ever meeting Ms Shaariibuu or having any link with her, and his government denies any wrongdoing in the submarine purchases. But the scandal has dogged Mr Najib since he was installed as prime minister in 2009.

Sirul Azhar Umar, one of the bodyguards who was convicted of the murder, fled to Australia in 2014. He claimed last year he was ordered to kill Ms Shaariibuu and that "important people with motive are still free". However, Sirul retracted the claim in a video that emerged early this year. Fairfax Media revealed that video was made at a time he was attempting to blackmail Malaysia's government to remain silent over the murder. It is unclear what effect, if any, the French investigation of corrupt payments by DCNS in Malaysia had on Australia's decision to award the right to build the submarine fleet. Fairfax Media asked the Department of Defence whether the Minister, Marise Payne, was made aware of the case, and whether assessments had been made of the reputational risk to Australia in awarding the rights to build the submarines to a company with bribery allegations outstanding.

The department said it was "not appropriate" to comment on allegations in relation to DCNS and the commercial arrangements proposed by each of the participants had been assessed during the competitive evaluation. DCNS also declined to comment. Thales Australia said the company had no comment on matters outside the Australian jurisdiction. Asked if it had sought to retain the trust of the Defence department, a spokesman said the company had a long and successful track record supplying strategic capability to the Australian Defence Force, including the Hawkei and Bushmaster vehicles, and sonar systems for the Collins class submarines. .