Monday 27 May 2024
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KUALA LUMPUR (Oct 4): Two contractors of the controversial littoral combat ship (LCS) project whose contracts were terminated have sued Boustead Naval Shipyard Sdn Bhd for outstanding payments and a declaration that the contracts are not void.

The lawsuits were filed by Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED), both of which are 51:49 joint ventures between Boustead Heavy Industries Corp Bhd (BHIC) and Germany's Rheinmetall Group.

CAD and CED are both the recipients of 12 letters of awards (LOAs) from BNS for the procurement, engineering, integration and supply of equipment and weaponry for the six LCS. The LOAs were terminated in August 2022.

The suit is seeking an order for BNS to pay CAD alleged outstanding amounts of RM880,068.21, €39.87 million (RM182.96 million), £3.78 million (RM19.95 million) and 55.94 million Swedish krona (RM23.8 million).

Furthermore, BNS also has to pay an alleged outstanding amount of RM216.65 million to CED.

This amounted to RM444.24 million worth of claims by the companies combined, back of the envelope calculations showed.

The Edge reported last month that BNS had terminated CAD and CED as intermediaries of the project, as this termination allowed BNS to negotiate directly with the relevant original equipment manufacturer (OEMs).

The terminations came amid allegations of misconduct, illegality and fraudulent dealings in relation to the LOAs issued to the contractors, in the wake of the Public Accounts Committee (PAC) report on the LCS project delays and cost overrun.

According to BHIC’s filing with Bursa Malaysia, other defendants named in the suit by CAD and CED are BHIC and its wholly owned subsidiary BHIC Defence Technologies Sdn Bhd (BHICDT).

The suit further named two BHICDT directors Dr Salihin Abang and Vice Admiral Datuk Syed Zahiruddin Putra Syed Osman as defendants. Salihin is a nominee director in CAD and CED, while Syed Zahiruddin is a nominee director in CAD.

Among the 17 items under the claim is a declaration that the 12 LOAs from BNS are not void and remain valid and subsisting.

Further, the suit alleged that Salihin and Syed Zahiruddin had breached their fiduciary duties, common law or statutory duties under the provisions of the Companies Act 2016.

It alleged the duo had conspired to injure or defraud CAD and CED, as well as wrongfully interfered with the actions of the plaintiffs' OEMs in relation to their contracts.

BHIC, however, has denied the allegations made by CAD and CED, adding the allegations are baseless, frivolous, vexatious and unjustifiable.

“The boards of BHIC, BHICDT and BNS believe that the plaintiffs’ claims are untenable and are therefore positive that the companies will prevail in this litigation,” said BHIC.

BHIC said it is currently assessing any financial and operational impact of the claim to the group.

The case management for the claim has been fixed for Oct 11.

BHIC shares closed up 1.5 sen to 38 sen on Tuesday, giving the group a market capitalisation of RM94.41 million.

Edited ByAdam Aziz
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