This article first appeared in The Edge Malaysia Weekly on December 26, 2022 - January 1, 2023

Former managing director of Boustead Naval Shipyard Sdn Bhd

In mid-August, after much public outcry, former Boustead Naval Shipyard Sdn Bhd (BNS) managing director Tan Sri Ahmad Ramli Mohd Nor was charged with three counts of criminal breach of trust amounting to RM21.08 million over the construction of six littoral combat ships (LCS) for the Royal Malaysian Navy (RMN).

The charges against the former chief of the RMN raised more eyebrows as the contract for the six LCS was valued at RM9.13 billion and the RM21.08 million accounts for 0.23% of the contract value. As at end-August, one ship was 44% completed, four others were between 16% and 35% completed while no work had been undertaken on another. The government had already forked out RM6.08 billion, or 66.59% of the total costs, with nothing to show for it.

The contract was awarded in 2011, with the first vessel to be delivered by April 2019 and the other five to be ready over six-month intervals until 2023. BNS now needs more capital — a few billion ringgit — to complete the vessels.

The charges against Ahmad Ramli, 79, came about after the Public Accounts Committee (PAC) produced a report highlighting the discrepancies in the LCS contract and construction.

BNS is a 20.77% unit of Boustead Heavy Industries Corp Bhd (BHIC), with Boustead Holdings Bhd (BHB) controlling 68.85% in BNS and armed forces fund Lembaga Tabung Angkatan Tentera (LTAT) holding 10.38%. LTAT has a 59.42% stake in BHB, which in turn has a 65% interest in BHIC.

Interestingly, Ahmad Ramli — who pleaded not guilty to the charges against him — was not called in nor interviewed by the PAC.

Did he have any political masters, or are there other culprits in the LCS fiasco who are lying low, waiting for the dust to settle?

Former LCS programme director of Boustead Naval Shipyard Sdn Bhd

Another name that frequently crops up in connection with the LCS debacle is Anuar Murad, who was LCS programme director of the project’s main contractor Boustead Naval Shipyard Sdn Bhd (BNS). His name kept surfacing after news reports in January of the Malaysian Anti-Corruption Commission detaining two chief executives in relation to the LCS project, but since former BNS managing director Tan Sri Ahmad Ramli Mohd Nor was charged with three counts of criminal breach of trust in mid-August this year with regard to the LCS, everything has gone quiet.

While little is known about Anuar, sources familiar with BNS say he is a veteran of more than 20 years in the Royal Malaysian Navy and has a Master’s in shipbuilding and production.

He is understood to have led the development of the LCS project and the littoral mission ship project, which involved the construction of four vessels built with China Shipbuilding and Offshore International Co Ltd known as Keris-class vessels, but issues have only cropped up with the LCS.

It seems the LCS Steering Committee evaluation team was also appointed by Anuar, which makes its independence questionable, and he is said to have vetoed the committee’s decisions from time to time.

The Public Accounts Committee (PAC) report on the LCS cites the forensic audit report by Alliance IFA, and highlights that there was no review of the many technical, financial and legal aspects of the LCS project. It also mentions how there had been many complaints against Anuar.

Questions also arose as to why contracts were seemingly dished out to Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED) by Anuar, without any approval by the LCS Steering Committee.

BHIC held the majority 51% stake in both CAD and CED, while Germany’s Rheinmetall AG held the remaining 49%. BHIC acted merely as an investor, conceding decision-making and management control to the minority partner.

Questions are being asked as to why BHIC even needed the joint venture in the first place.

In early September, BHIC announced that its letters of award to CAD and CED for the procurement, engineering, integration and supply of combat management system, fire control, communication system, ammunition, radars, torpedoes and missiles for the LCS were void. CAD and CED, in turn, have sought legal redress against BNS seeking RM444.24 million.

While the close ties between BNS, CAD and CED are unravelling, with Anuar said to be behind many of the issues, why was he not questioned by the PAC?

Former deputy chairman and managing director of Boustead Holdings Bhd

Former deputy chairman and group managing director of Boustead Holdings Bhd Tan Sri Che Lodin Wok Kamaruddin makes the list of newsmakers of 2022 in an odd manner as he is not implicated in the RM9.13 billion LCS saga.

Lodin stepped down as managing director of Boustead Holdings Bhd (BHB) in November 2018 at the age of 69, in an early (by one month) mutual termination of his service agreement with the company.

His stint as BHB managing director was a long one, spanning 27 years (1991 to 2018), and came about as he was CEO of the armed forces fund Lembaga Tabung Angkatan Tentera (LTAT) from 1985 to September 2018. LTAT has a controlling 59.42% stake in BHB.

In fact, from 2010 until his departure from BHB, he was not only managing director but also the deputy chairman. Hence, Lodin was very much in control of BHB when Boustead Naval Shipyard Sdn Bhd (BNS) was awarded a RM9.13 billion contract to build six LCS in 2011.

How Lodin has managed to stay clear of the flak surrounding the LCS issue is anyone’s guess.

The government had given BNS RM6.08 billion or 66.59% of the total costs as at end-August last year with nothing to show for it, as none of the vessels are ready. The first of six ships was to be delivered by April 2019, with the remaining five to be delivered over six-month intervals until 2023.

In September, anti-corruption non-governmental organisation Center to Combat Corruption and Cronyism (C4) questioned why Lodin, as one of the key figures in the LCS scandal, has not come under scrutiny. Will things take a turn and will he be hauled up?

Former deputy defence minister (2008-2013)

The former Mersing Member of Parliament was dragged into the RM9.13 billion LCS debacle because he served as deputy defence minister from 2008 to 2013, under then-defence minister Datuk Seri Ahmad Zahid Hamidi (now deputy prime minister).

Until the recent general election, Abdul Latiff was minister in the Prime Minister’s Department (special functions) and his involvement in the LCS project was highlighted by Rafizi Ramli, PKR deputy president and newly minted Minister of Economy.

In August, Rafizi alleged that Abdul Latiff was involved in the controversial LCS project via his second wife Zainab Mohd Salleh, who owned a French company Alizes Marine Ltd, into which funds siphoned from the LCS contract were funnelled. Rafizi’s claims were based on an audit report by Alliance IFA. Rafizi further claimed that Latiff controlled private company Mega P Asia Sdn Bhd, which was also involved in the LCS project and profited from the mega project.

Abdul Latiff has rubbished all of Rafizi’s claims, vehemently denying that he had a wife by that name and saying that he had no involvement in the LCS. He challenged Rafizi to produce evidence that Zainab was his spouse.

Abdul Latiff sought to clarify the forensic report prepared by Alliance IFA (the auditor appointed by Boustead Heavy Industries Corp Bhd) that Rafizi had relied on was an unsigned draft copy, and that the contents of the report were unverifiable.

The whole issue with the government sinking RM6.08 billion into the RM9.13 billion LCS project — the largest procurement project in the history of the Ministry of Defence — was brought up by the Public Accounts Committee, then headed by Wong Kah Woh (now the MP for Taiping) under a Pakatan Harapan ticket.

Recently appointed Defence Minister Datuk Seri Mohamad Hasan sought to assure the public the scandal is being looked into by the new government, saying, “We will ensure that the ships are built; no point talking about history. That is important because it (LCS) is a strategic asset of the Armed Forces.”

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