KUALA LUMPUR (Jan 5): The Ministry of Defence (Mindef) has assured that the government will realise the RM9.13 billion project to build four, if not six, units of littoral combat ship (LCS) for the Royal Malaysian Navy (RMN) to strengthen the defence of national waters.
However, newly-minted Defence Minister Datuk Seri Mohamad Hasan seemed to imply that the government was not placing priority on pursuing further legal action on the matter, in his new year message on Thursday (Jan 5).
“We are not interested in suing anybody or putting someone behind bars. What I’m interested in is to see the ships in our waters by July 2024,” Mohamad was quoted as saying by Bernama.
Mohamad highlighted that the ministry’s mission was to “complete the ships” by 2024, according to the report on Thursday.
The mega combat ship project caused public outcry when the Public Accounts Committee (PAC) last year revealed that despite the government disbursing RM6.05 billion for the project, Boustead Naval Shipyard Sdn Bhd (BNS), which was granted the multi-billion contract in December 2011, had failed to deliver even a single ship to RMN.
BNS is a 68.85%-owned subsidiary of Boustead Holdings Bhd, in which Lembaga Tabung Angkatan Tentera (LTAT) controls a 59.4% stake. Meanwhile, LTAT also holds a 10.38% stake in BNS, while Boustead Heavy Industries Corp Bhd owns the remaining 20.77% stake.
Under the contract, the first ship was supposed to be sent in April 2019 and the last ship delivered by June this year.
During the media visit to BNS’s shipyard in August last year, the company’s CEO Captain Azhar Jumaat disclosed that the RM6.05 billion disbursement was spent on equipment worth RM3.5 billion, some of which were facing obsolescence, while RM2.5 billion went towards overhead, project management, financing costs, insurance, electricity and infrastructure.
The PAC proceedings found that the remaining RM3.05 billion may not be enough for BSN to complete its job; estimates in the PAC report indicated that the amount will allow BNS to complete just two ships.
“We will base our consideration purely on commercial consideration,” Mohamad said on Thursday. “We want to make sure that the ships are completed. If it is not all six, four would be enough, so long as they are completed during my tenure at Mindef.”
“I will continue the efforts implemented by Mindef, the Malaysian Armed Forces (MAF), as well as various other agencies, and the Ministry of Finance (MOF), Ministry of Economy, as well as the Armed Forces Fund Board (LTAT), in realising the completion of the LCS,” the minister was quoted as saying by Bernama.
The findings of the investigations conducted on the LCS project showed that there were financial mismanagement, cash flow issues, irregularities and lack of proper governance.
The Special Investigation Committee on Public Governance, Procurement and Finance revealed in a report declassified in August last year that Mindef then entered into a lopsided contract with BNS, and the government’s interest was not protected.
The committee pointed out that Mindef failed to conduct a comprehensive due diligence on BNS to realise the Boustead unit’s weaknesses in management, as well as critical financial constraints to complete the project.
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