News reports this week said the stolen Northrop F-5E jet engines had been sold on the black market by military officers to a South American company. They had been taken from a military airbase, apparently last year.

Armed forces chief Azizan Ariffin said the theft was only the "tip of the iceberg" after a newly completed audit revealed equipment worth millions was also missing, the New Straits Times reported Tuesday.

Police have reportedly arrested four individuals, including the buyer of the engines, the seller and air force personnel who assisted in the theft. Besides the engines, military equipment including parts of the jet fighter were stolen.

"The government should declare it has failed in the fight against corruption. The country is heading in the direction of a failed state like Zimbabwe," prominent opposition lawmaker Tian Chua told AFP.

"The theft could not have happened without the sanction of top officials," he said.

Government officials could not be reached for comment Wednesday.

Prime Minister Najib Razak has vowed a full and open investigation. But Tian said that under Najib's leadership, national wealth was being plundered and that "defence expenditure is used for kickbacks to government cronies".

"In return, they provide political funding to the ruling politicians to remain in power," the outspoken lawmaker added.

Malaysia's opposition claims that an illegal commission of 540 million ringgit (157 million dollars) was paid to a close associate of Najib to help broker the purchase of two French-made submarines.

The prime minister has denied there was any wrongdoing in the deal, which was signed in 2002 when he was defence minister.

Khalid Samad, a lawmaker with the opposition Pan-Malaysia Islamic Party, said the latest scandal showed it was "business as usual" for Najib.

"So many parties must be involved in getting the engines out of the country. It is scary," he said.

Armed forces chief Azizan said those found guilty of stealing and selling the engines should be charged with treason.

The end buyer of the stolen kit was not immediately clear. A number of countries subject to US arms embargoes, including Iran, Sudan and Venezuela, have F-5 fighters that use the antiquated engines.

The jet first flew in 1963 and Northrop ended production in 1989.

Critics are sceptical of promises made by Najib to battle corruption after he came to power in April.

Ramon Navaratnam, former president of Transparency International Malaysia, told AFP that graft was "deeply entrenched".

"We need a strong political will to wipe it out. The government must catch some big fish to send a signal that it will not tolerate graft. Otherwise we will be seen as pussy-footing," he said.

Berlin-based watchdog Transparency International said last month that Malaysia had fallen to 56, from 47 last year, on a league table of 180 countries surveyed around the world and that graft had hit "alarming" levels.

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