Monday, February 29, 2016

WSJ story suggests Singapore did a deal with Nabjib to "return" money to 1 MDB :Unfortunately, Mr Yak has rained on the party.....

by Ganesh Sahathevan


The Wall Street Journal reported on 1 March 2016:

The attorney general (of Malaysia) said $681 million deposited to Prime Minister Najib Razak's account—identified by The Wall Street Journal last year—was a legal donation from a member of Saudi Arabia's royal family, and most was returned. The attorney general said there was nothing improper and it was time to stop scrutinizing the deposits, a notion echoed by Mr. Najib.

Investigators in two other countries, while agreeing most of the $681 million ultimately was returned, believe the money originated with a Malaysian state development fund called 1MDB that the prime minister founded, according to people familiar with the probes.

The investigators believe the money moved through a complex web of transactions in several countries and with the help of two former officials of Abu Dhabi, a Persian Gulf emirate with which 1MDB has deep ties.

The investigators are focusing on an entity they believe was a crucial conduit: a firm with a name almost identical to that of a state-owned Abu Dhabi company called Aabar Investments PJS.

It has been previously reported on this blog that Najib Razak made a number of secret lightning visits to Singapore over the Chinese New Year period this year.These clandestine visits, coming as they did after the AG declared Najib merely accepted a "donation" suggests that the trip had something to do with that "returned" money.That foreign investigators also accept that at least some of the money was "returned" suggests that this has become the new narrative; that really , this scandal was nothing more than  the Malaysian Prime Minister who is also chairman of 1 MDB inadvertently mixing up his own money with that of 1 MDB, an error which he speedily rectified by returning the money from where it came ie 1 MDB's BSI Bank accounts in Singapore. This narrative would allow the Singapore Government to unfreeze the accounts frozen as part of its investigation into 1 MDB, and ensure that the best Malaysian Prime Minister Singapore has ever had remains in power. 

Unfortunately, the court room revelations by their personal banker, Yak Yew Chee, has exposed that narrative to be nothing more than a bedtime story that even a child would find hard to believe.And then there is the matter of Arul Kanda Kandasamy........

END 



Yak Won't Take The Rap

Yak Won't Take The Rap

6 FEB 2016

THIS POST IS ALSO AVAILABLE IN: MALAYIBAN
The world learnt about the sort of salary that your friendly Singapore bank manager can hope to earn, when Mr Yak Yew Chee deposited his court papers yesterday.
No less than SNG$27 million in salary and, more importantly, bonuses in just four short years roared the news headlines.
Wow!
$1 million salary and $10.4 million bonus in 2014 - for what?
$1 million salary and $10.4 million bonus in 2014 – for what?
Another revelation that came out from the highly informative dossier, dumped by Mr Yak before the courts was that, despite him being on what was repeatedly described as “unpaid leave” since April 2015, the bank had nevertheless been sending him monthly salary cheques of $83,000.
The cheques, instead of normal bank transfers, were a handy concession by the bank, because he could cash them abroad, where his accounts were not frozen like they are in Singapore.
Yak provided the court with copies of the cheques to show just how generous his BSI employers were (above).  The documents also showed that to begin with Yak had signed an agreement to take this so-called “unpaid leave” in May and to cooperate with the bank.
Agreement that was to turn sour
Agreement that was to turn sour
However, friction had already broken out between his legal advisors and the bank, with Yak making plain in April that his understanding that the measures being taken were to prepare the bank in case of an allegation being made against it and to protect him were not being upheld.
Yak's legal team claimed he was being let down by his superiors
Yak’s legal team claimed he was being let down by his superiors who were anticipating action against BSI
Yak was apparently being kept on the payroll in order to ensure his continued cooperation with the bank.  However, the email trail makes clear he was suspicious of his employers motives in case they pinned the blame on him.
Was this the real reason he took his case public?

Jho Low links to 1MDB confirmed by his bank manager

Yak’s now public court papers have certainly thrown a great deal more light onto how the various Singapore private banks were handling Jho Low and his related accounts and in the process have scotched for ever the on-going lie that the businessman had nothing to do with 1MDB after 2009, as has been doggedly maintained by CEO Arul Kanda and Low himself.
Indeed, the proposed statutory declaration, which was being negotiated between Yak and his BSI employers in order to present the bank’s position to the investigating authorities, included the following damning points:
“I have not at any time entered into any arrangement to give of cause to be given any Gratification …relating to the accounts held with the BSI group by Brazen Sky Ltd, Low Tak Jho, 1Malaysia Development Berhad, Aabar Investments PJSC and/or their respective affiliates….
We would clarify that the additional parties named are closely linked in the matrix of business relationships involving 1MDB/Brazen and Low, and we trust your client would agree that Gratification could conceivably have involved them and would be willing to negate any such suspicion.”
In other words BSI Bank were confirming that the affairs of 1MDB, Brazen Sky and Jho Low were inextricably intertwined… along with the bogus Aabar subsidiary Aabar Investments PJS Limited, which Yak also mentions in his statement (below).
What the bank negotiated with Yak to say in his statement
What the bank negotiated with Yak to say in his statement – If Yak cooperated, then on top of his monthly pay they would release his “agreed bonus” as well. So much for “unpaid leave”.
Yet, over the bridge in Malaysia, the Prime Minister and his diminishing coterie of die hard supporters continues to ban this website and bully other online commentators using ‘anti-terrorism’ laws, on the grounds that we are promoting “falsehoods”.
To the contrary, according to 1MDB’s own bank, what we have said on this matter (as on several others) is now confirmed to be true.  This may be why the PM’s tame AG has turned today to threatening life imprisonment for leaking ‘state secrets’ instead.

Yak’s “fantastic business success”

Yak made his tell-all application to the court, purportedly to unfreeze his accounts, in order to pay bills in Singapore.  However, the Singapore Commercial Affairs Department countered with an aggressive rebuttal.
Responding to his application, the CAD pointed out that Yak had “squirrelled” over $5 million out into foreign banks before they had managed to freeze his accounts and that they had only some $7.91 million of his admitted $27 million in earnings under lock and key.
That left a “staggering S$9 million unaccounted for” raged the authority, which therefore argued that Yak could quite easily pay his bills by repatriating some of the millions he had parked abroad.
CAD confirms that BSI's claim about unpaid leave was untrue
CAD confirms that BSI’s claim about unpaid leave was untrue
In the event, the authority reached an accommodation with Yak at the last minute on Friday, agreeing that the banker could bring money back from abroad to pay his bills, without measures being taken to freeze it.
It left the judge wondering why all this court time had been wasted… and the world’s media at liberty to examine all Yak’s dossier of insider documents laid before the court in the process.
It seems that Yak’s real reason, therefore, may have been to counter what he plainly suspected were manoeuvres by the bank to make him the scapegoat for what he insists were decisions that went right up to the top of BSI.  Certainly, the dossier proves that by January this suspended relationship manager for Jho Low and 1MDB was at loggerheads with his bosses.
At issue were repeated demands by his line manager Hanspeter Brunner, CEO Asia, that Yak agree to attend the bank for questioning about a charge that he withheld information from his superiors about a ‘notice of security relating to one of the bank’s clients’.
HansPeter Brunner and his legal team parried for months with Yak, trying to get him to cooperate in informal talks at the bank
HansPeter Brunner and his legal team parried for months with Yak, trying to get him to cooperate in informal talks at the bank
Other papers make it perfectly plain that this ‘notice of security’ referred to none other than the massive loan made by Deutsche Bank of nearly US$1 billion to 1MDB, to finance its debt repayments in late 2014.
That loan was secured on the apparent US$1.03 billion alleged to be in 1MDB’s subsidiary account named Brazen Sky at BSI in Singapore, which Yak also managed.
After Sarawak Report revealed in May that the Singapore authorities had found that Brazen Sky actually had no cash in that account, Deutsche Bank pulled the loan.
In his correspondence with BSI, Yak himself claimed that he had done nothing without the approval of his bosses and that he had not referenced the said notice, because the client had told him not to proceed.
Yak explains his position on why he did not tell his bosses about the 'security check', which was plainly the security Deutsche Bank obtained on the Brazen Sky account for its billion dollar loan to 1MDB
I would have sought management approval if the client (1MDB) had confirmed they wished the arrangement to proceed …..Yak explains why he did not tell his bosses about the ‘security check’ which Deutsche Bank requested on the Brazen Sky account for its billion dollar loan to 1MDB
In all the correspondence, in fact, Yak repeatedly claimed that his superiors at the bank were fully aware of all his transactions with these mega clients of the bank.
Hanspeter Brunner CEO Asia, BSI
Hanspeter Brunner CEO Asia, BSI
Much of the increasingly hostile dialogue surrounded Yak’s plain reluctance to be called in for oral questioning about these matters by the bank and to sign their ‘notes’ on the proceedings without proper legal protection, full recordings and written questions in advance of any interrogation.
Saying he “had experience” of the bank’s record in such matters, Yak made clear he was fearful that his bosses would use anything he said in the informal and unrecorded meetings to pin all the blame on him.
In response, his superiors, whom we now know were still paying him and further offering a potential bonus payment if he cooperated with their wishes, expressed a growing anger and frustration over Yak’s refusal to cooperate, except on his own terms of written questions in advance and a full recording of the discussion being made.
Tough words from BSI accusing Yak of "insubordination" while on his 'unpaid leave'
Tough words from BSI’s Hanspeter Brunner accusing Yak of “insubordination” while on his ‘unpaid leave’
But, Yak was adamant that he did not trust his employers to make a fair record of the interview.  If BSI had continued to pay him and discuss his bonus during this “unpaid leave” it wasn’t producing the desired cooperation.

Thank you for your immense contribution

Yak’s court deposition carefully contains ample evidence to back his point that far from being a rogue banker, he had been BSI’s star employee right till the moment when the regulators began investigating Jho Low’s accounts at the bank.
Indeed, the documents show, he was praised from the very top for his “fantastic success” in bringing in business by none other than Dr Alfredo Gysi, the Swiss boss of the BSI group, who sent him a personal letter of congratulation at the end of 2011.
Incidentally, it was shortly after Yak joined in September 2009 that Jho Low had opened his ADKMIC account and several other personal and business accounts at BSI and started transferring half a billion dollars from his RBS Coutts Zurich Good Star account to BSI.
Was this the reason for the plaudits?
Jho Low company accounts brought to BSI in 2011, along with an $11 million personal account
CAD records recording the Jho Low company accounts brought to BSI in 2011, along with an $11 million personal account
“Hanspeter told me about the fantastic business success you achieved in the last few weeks…. He also told me this was done in close teamwork.. thank you for your immense contribution not only to the growth of our new Asia business but to BSI Group as well” gushed CEO, Dr Gysi.
Personal accolade from the ultimate boss of BSI in Switzerland Christmas 2011
Personal accolade from the ultimate boss of BSI in Switzerland Christmas 2011

Yak’s bonus incentives

It should be remembered that Yak transferred to BSI from Coutts Singapore, from where he had earlier managed Jho Low’s accounts and it can be surmised that one of the reasons he was engaged on a handsome starter salary of $500,000 a year was for the very reason that he was bringing a very wealthy set of clients.
You shall be a Senior Relationship Manager - starter salary $500,000
You shall be a Senior Relationship Manager – starter salary $500,000
One can also only conclude that the extraordinarily rapid salary increases that Yak subsequently achieved at BSI and his enormous bonus payments were likewise owing to the immense amount of business his clients, by now not only Low, but Low’s related 1MDB, Aabar and SRC accounts were bringing in too.
His declaration, devised in collaboration with his bosses at the bank, that he did not receive any ‘Gratification’ from these clients as an incentive for handling these accounts would therefore seem to be entirely plausible.  After all, Yak was receiving plenty of gratification from his own employers for managing these transactions, so what further incentive did he need?

Don’t make me a scapegoat

Sarawak Report therefore suspects that the reason why Yak Yew Chee has chosen to place all this material in the courts and before the public eye is to attempt to protect himself from being singled out by BSI Bank and the prosecutors as a lone ‘rogue banker’ in this affair.
His misdeeds, if there were misdeeds, in handling suspect transactions by politically connected individuals linked to public funds were known about and ultimately approved by the hierarchies of both BSI and earlier Coutts bank, according to Yak
Don't make me the scapegoat - senior management knew everything says Yak!
Don’t make me the scapegoat – senior management knew everything says Yak!
Certainly, records show that neither Coutts nor BSI initiated proceedings to investigate the multi-million dollar suspicious transactions managed by Yak until the regulators moved.  They rewarded Yak handsomely instead.


by Ganesh Sahathevan

The following are extracts from the Sarawak Report investigative news site.



An extract from a letter sent by Swiss bank BSI to its employee, Yak Yew Chee:



HansPeter Brunner and his legal team parried for months with Yak, trying to get him to cooperate in informal talks at the bank


An extract of  Yak Yew Chee 's response to his employer:

Yak explains his position on why he did not tell his bosses about the 'security check', which was plainly the security Deutsche Bank obtained on the Brazen Sky account for its billion dollar loan to 1MDB
The context,and note references to "November accounts" while the above letter refers to a Notice Of Security received in September 2014:




1MDB ‘gave false bank statements on subsidiary’s accounts’
1MDB CEO Arul Kanda supplied documents to various authorities to show how a sum of S$1.455 billion has been redeemed in cash from 1MDB subsidiary Brazen Sky’s offshore fund in the Cayman Islands and stored in US currency in BSI. PHOTO: REUTERS

AGENCIES

Sunday, February 28, 2016

Broadspectrum/Transfield share buyback backed by university,TAFE and NSW LAHC contracts that may also be plagued by workforce issues.

by Ganesh Sahathevan 


Broadspecturm announced a share buyback in early February, ostensibly justified by what it described as  strong cashflows:


Broadspectrum says it opted for a buyback of up to $51 million worth of shares rather than an interim dividend at the request of its shareholders. It points to the company's strong cashflow generation as the factor driving a capital buyback.

However, as Michael Smith of the AFR noted:
It has been a long time between drinks for Broadspectrum shareholders. The detention centre contractor, formerly known as Transfield, has been focused on de-gearing and generating cash since chief executive Graeme Hunt was brought in three years ago to clean up the mess.
So, the company's decision on Monday to buy back up to 10 per cent of the company's stock is a significant turning point in the previous policy of using surplus cash to pay down debt. The last share buyback was in October 2011, but two years later the company was focused on refinancing its debt pile.


Given the likely loss of the detention center contracts and the downturn in the oil and gas sector (so bad that recovery is likely to see the  service providers such as Transfield cutting fees to remain competitive) ,Transfield is likely to be more reliant on what it describes as"
non-discretionary, essential services for blue-chip clients." Like the detention centers, these clients are often government.

In June last year Transfield (now known as Broadspecturm) announced :


Transfield Services has signed a five year $88 million integrated facilities management and property services contract with the University of Newcastle, delivering on its strategy to enter new growth markets.
This agreement follows recent contract extensions in the housing and health sectors including those with the NSW Land and Housing Corporation (LAHC)  worth $45 million over the next five months and the Gold Coast University Hospital worth $12 million over nine months. 

Transfield say the  NSW LAHC contracts in total  could be worth up to $1.6 billion:

Broadspectrum has signed a new five year integrated facilities management and property services contract with the NSW Land and Housing Corporation. The contract could be worth up to $950 million and will nearly double the annual revenue Broadspectrum received under its previous contract. The agreement also includes an option for NSW Land and Housing Corporation to extend the term for a further two plus two years, which could see the contract worth up to $1.6 billion.
Broadspectrum’s Managing Director and CEO, Graeme Hunt, said the new contract confirmed the underlying strength of Broadspectrum’s business, and reinforced the success of the Company’s strategy in targeting non-discretionary, essential services for blue-chip clients. “This agreement extends a 13 year relationship with the NSW Land and Housing Corporation, and significantly strengthens our work in hand,” Mr Hunt said. 

However,  cashflow generation  from these contracts is highly dependent on labor.These are labor intensive businesses, and  Transfield has demonstrated a propensity to expose itself to risky labor contract arrangements. As Seven 11 Australia has recently discovered, that risk is large enough to potentially  destroy a company.  
Transfield appears overly confident in financing  a share buyback on the basis of these cashflows , on the assumption that they are stable and long-term. That over-confidence does not appear to be in the best interest of shareholders.
END 







Saturday, February 27, 2016


Federal and NSW Liberal Governments creating a contract work force for Transfield out of long term unemployed: Centrelink recipients forced to work for Transfield like contractors 

by Ganesh Sahathevan

The Turnbull Government, working via the Department Of Human Services , is forcing Centrelink benefit recipients  into quasi-contract   work as  school cleaners for  Transfield Ltd (now known as Broadspectrum).The terms and conditions of work are in effect those of contract cleaners, with workers expected to use their own vehicles to get to multiple sites and over split shifts.

Transfield has been awarded the contract to clean and maintain schools in New South Wales 
Transfield boasts that it has  "successfully placed 70% candidates in cleaning positions on the Transfield Services School contract. All (sic) of whom are job seekers with disabilities, homelessness, long term unemployment and other employment barrier".

However,what is not said in its promotional material, but which it states clearly at its cleaner interview and information sessions is this:
You will commence  your employment on a casual basis and maybe 
asked to do multiple sites and shifts in the first instance. 
Performing employees will be presented with opportunities to go 
permanent either on a part-time  or full-time basis. 

Candidates are told that ownership of a vehicle is "desirable" and nothing is said about
reimbursement of costs for the use of one's own vehicle. 

Transfield works with a number of Job Active service providers ,who are in turn delegates for the
Secretary ,Department Of Social Services.  Job Active network clients who refuse to consider the  Transfield "offer" are threatened with a suspension of benefit payments. By Transffield's own admission, its workers in these school cleaning roles are job seekers with " disabilities, homelessness, long term unemployment and other employment barrier".
Under changes introduced by the Abbott Government Job Active service providers are paid a fee for placing workers in even part-time work, so they too have every incentive to collaborate in this scheme. 
END

Saturday, February 27, 2016

Transfield :Defending and growing unsustainable cashflow in search of a better takeover offer :What is Transfield worth without NSW Schools, detention center contracts?

by Ganesh Sahathevan

While one can get hugely impressed with corporate valuation models, this writer has always been obsessed with simple  cashflow. Perhaps analyzing and writing about  highly valued South East Asian  companies that vanished during the Asian Crisis of 97 has something to do with it, but I digress.

Readers may be aware that Transfield Services (now known as Broadspectrum) is the subject of a takeover offer from Spain's Ferrovial  Readers will also be aware that Transfield has already rejected Ferrovial once before,but is happy to consider another approach, if the suitor offers a bigger dowry.

Meanwhile, Transfield's CEO Graeme Hunt is under pressure to improve cashflows
He has made no secret of the fact that he is reliant on the Australian Government's  detention center contracts.However he is finding out even now that  those cashflows are not only highly vulnerable (for example ,due to changes in government asylums seeker policy, which has proven to be erratic) they  have also proven to be detrimental to shareholder sentiment.

Under the circumstances, it is no wonder that Hunt is in the hunt for other similar government funded cashflows, but which are largely out of the public  eye. Unfortunately , as Hunt is discovering even now, keeping things quiet these days is an exercise in futility,as the story below demonstrates.
Trying to squeeze out a positive cashflow by employing disabled and other long term unemployed as quasi-contractors was always going to be an exercise fraught with danger.

END





Saturday, February 27, 2016

Federal and NSW Liberal Governments creating a contract work force for Transfield out of long term unemployed: Centrelink recipients forced to work for Transfield like contractors 

by Ganesh Sahathevan

The Turnbull Government, working via the Department Of Human Services , is forcing Centrelink benefit recipients  into quasi-contract   work as  school cleaners for  Transfield Ltd (now known as Broadspectrum).The terms and conditions of work are in effect those of contract cleaners, with workers expected to use their own vehicles to get to multiple sites and over split shifts.

Transfield has been awarded the contract to clean and maintain schools in New South Wales 
Transfield boasts that it has  "successfully placed 70% candidates in cleaning positions on the Transfield Services School contract. All (sic) of whom are job seekers with disabilities, homelessness, long term unemployment and other employment barrier".

However,what is not said in its promotional material, but which it states clearly at its cleaner interview and information sessions is this:
You will commence  your employment on a casual basis and maybe 
asked to do multiple sites and shifts in the first instance. 
Performing employees will be presented with opportunities to go 
permanent either on a part-time  or full-time basis. 

Candidates are told that ownership of a vehicle is "desirable" and nothing is said about
reimbursement of costs for the use of one's own vehicle. 

Transfield works with a number of Job Active service providers ,who are in turn delegates for the
Secretary ,Department Of Social Services.  Job Active network clients who refuse to consider the  Transfield "offer" are threatened with a suspension of benefit payments. By Transffield's own admission, its workers in these school cleaning roles are job seekers with " disabilities, homelessness, long term unemployment and other employment barrier".
Under changes introduced by the Abbott Government Job Active service providers are paid a fee for placing workers in even part-time work, so they too have every incentive to collaborate in this scheme. 
END







Federal and NSW Liberal Governments creating a contract work force for Transfield out of long term unemployed: Centrelink recipients forced to work for Transfield under contract like conditions

by Ganesh Sahathevan

The Turnbull Government, working via the Department Of Human Services , is forcing Centrelink benefit recipients  into quasi-contract   work as  school cleaners for  Transfield Ltd (now known as Broadspectrum).The terms and conditions of work are in effect those of contract cleaners, with workers expected to use their own vehicles to get to multiple sites and over split shifts.

Transfield has been awarded the contract to clean and maintain schools in New South Wales 
Transfield boasts that it has  "successfully placed 70% candidates in cleaning positions on the Transfield Services School contract. All (sic) of whom are job seekers with disabilities, homelessness, long term unemployment and other employment barrier".

However,what is not said in its promotional material, but which it states clearly at its cleaner interview and information sessions is this:
You will commence  your employment on a casual basis and maybe 
asked to do multiple sites and shifts in the first instance. 
Performing employees will be presented with opportunities to go 
permanent either on a part-time  or full-time basis. 

Candidates are told that ownership of a vehicle is "desirable" and nothing is said about
reimbursement of costs for the use of one's own vehicle. 

Transfield works with a number of Job Active service providers ,who are in turn delegates for the
Secretary ,Department Of Social Services.  Job Active network clients who refuse to consider the  Transfield "offer" are threatened with a suspension of benefit payments. By Transffield's own admission, its workers in these school cleaning roles are job seekers with " disabilities, homelessness, long term unemployment and other employment barrier".
Under changes introduced by the Abbott Government Job Active service providers are paid a fee for placing workers in even part-time work, so they too have every incentive to collaborate in this scheme. 
END

Monday, February 22, 2016

China building radar array aimed at US incoming -Acquisition of Port of Darwin as a strategic PLA asset becoming more apparent

A straight line can be drawn from The Spratlys to Lombok suggesting that the placement of Chinese radar on these sites is intended to create an array aimed at incoming US assets 
  Copyright Ganesh Sahathevan 2016




by Ganesh Sahathevan
The Wall Street Journal has just reported that China Appears to Have Built Radar Facilities on Disputed South China Sea Islands(see story below)
In 2012  IHS reported that China had offered to build Indonesia a radar network " that will have sites in Lombok, the Sunda Strait, western Borneo and the south-west coast of Sulawesi."
As the illustrated on the Google Earth map above , one can draw s straight line from The Spratlys to Lombok. western Borneo and the south-west coast of Sulawesi lie in between.
It does seem as is China intends or has already in place  a radar array,clearly aimed at  American military and civilian  assets. 

This image shows why the Port of Darwin is an important part of that network.














China Appears to Have Built Radar Facilities on Disputed South China Sea Islands

Satellite images suggest Beijing has been building new facilities on the South China Sea’s Spratlys


This satellite image shows Cuarteron Reef, where a U.S.-based think tank says China appears to be building radar facilities in disputed South China Sea waters.
This satellite image shows Cuarteron Reef, where a U.S.-based think tank says China appears to be building radar facilities in disputed South China Sea waters. PHOTO: CSIS ASIA MARITIME TRANSPARENCY INITIATIVE/DIGITALGLOBE
By
CHUN HAN WONGUpdated Feb. 22, 2016 10:49 p.m. ET
8 COMMENTS

BEIJING—Fresh satellite imagery suggests that China has been building radar facilities on some of the artificial islands it built in the South China Sea, in a move that would improve its military power in the region, a U.S.-based think tank said Tuesday.

The report by the Center for Strategic and International Studies on the radar installations in the Spratly Islands comes days after U.S. and Taiwanese officials said Beijing had placed surface-to-air missiles on the Paracels chain, north of the Spratlys. The deployment prompted comments from Washington that China appears to be militarizing a region already racked by territorial tensions.

The report also coincided with the start of Chinese Foreign Minister Wang Yi’s three-day visit to the U.S., where he is expected to discuss the South China Sea disputes and North Korea’s nuclear program, among other issues.

In its report, Washington-based CSIS said China’s new radar installations in the Spratlys “could significantly change the operational landscape in the South China Sea.”

Citing satellite imagery dated between late January and mid-February, CSIS said China appeared to have installed radar towers on four artificial islands in the Spratlys that Beijing steadily expanded over the last two years through land reclamation.
The South China Sea Dispute


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Most of the radar facilities appear to have been built in “the latter half of 2015, and a few are still under construction,” said Greg Poling, director of CSIS’s Asia Maritime Transparency Initiative. It wasn’t clear if any of the facilities are in operation, he added.

The radar facilities would “significantly bolster China’s ability to monitor surface and air traffic across the southern portion of the South China Sea,” CSIS said. Along with Beijing’s construction of new runways and air-defense capabilities in the area, they “speak to a long-term anti-access strategy by China—one that would see it establish effective control over the sea and airspace throughout the South China Sea,” the think tank said.

Neither China’s foreign and defense ministries nor the U.S. Embassy in Beijing immediately responded to requests for comment.

China’s construction work on the Spratlys has been at the center of an escalating spat between Beijing and Washington since last year. U.S. officials say Beijing is militarizing the region as a way to bolster its maritime claims, while China has defended its work as defensive and legitimate acts.

In comments made before the CSIS report’s publication, Chinese Foreign Ministry spokeswoman Hua Chunying said China “conducts construction on relevant islands and reefs mainly for civilian purposes.”

China’s “deployment of limited defense facilities on its own territory is an exercise of rights to self-defense that a sovereign state is entitled to under international law,” Ms. Hua said Monday at a regular news briefing. “The issue of the South China Sea is not and should not become an issue between China and the U.S.”

The two sides exchanged familiar barbs over the past week over the Chinese missile deployment on Woody Island, a part of the Paracels and home to a large airfield that has hosted drills by Chinese fighter jets.

U.S. officials said the Chinese appeared to be going back on President Xi Jinping’s pledge, made while visiting the White House last year, to refrain from militarizing man-made islands in the South China Sea.

Chinese officials countered by saying the U.S. were responsible for militarizing the region when it started testing China’s posture late last year with military patrols near islands controlled by Beijing.

Analysts say the missiles by themselves pose little threat to the balance of power in the South China Sea, where six governments have overlapping territorial claims. China, Taiwan, the Philippines, Vietnam and Malaysia have for decades stationed military hardware and personnel on the islands and reefs they control. U.S. warships and surveillance aircraft also pass through the area regularly.