Transparency International again demands govt explain LCS issues

Transparency International again demands govt explain LCS issues

This follows formation of special purpose vehicle to take over project’s main contractor

KUALA LUMPUR – The government has to clarify issues surrounding the troubled littoral combat ships (LCS) project, reiterated Transparency International Malaysia (TI-M), following the Finance Ministry’s decision to set up a special purpose vehicle to take over the project’s main contractor.

In a statement today, the anti-graft watchdog said questions on the project’s governance and transparency have gone unaddressed since TI-M first voiced its concerns in August last year.

Aside from questions over awarding the LCS project to Boustead Naval Shipyard Sdn Bhd (BNS) through direct negotiations in 2011, TI-M also demanded answers on whether there were “suspected kickbacks” relating to the contract negotiations and the final contract price.

“Were red flags raised when BNS first indicated its inability to deliver the LCS within (the agreed) budget? What action had been taken to address these red flags?” the organisation asked.

“Who was responsible for approving changes to the design specification from the Royal Malaysian Navy’s preferred LCS?”

Urging the government to be transparent with the projects’ details, TI-M added that the project cost has been increased to RM11.2 billion, with the navy only receiving five ships instead of the promised six.

The announcement was made by Boustead Heavy Industries Corp Bhd – BNS’ parent company – last Friday.

The new figure aligns with findings detailed in a declassified report by the governance, procurement, and finance investigation committee, which stated that BNS had claimed in a letter on July 16, 2019 that it would need an additional RM1.416 billion to complete all six ships.

The government, through the Defence Ministry, had originally settled on an RM9-billion contract with BNS after rounds of negotiations. “The government should not hide behind the Official Secrets Act 1972 or ‘national security’ if corruption and abuse of power is detected,” said TI-M.

“(Prime Minister) Datuk Seri Anwar Ibrahim has repeatedly stated his firm commitment to fighting corruption, improving governance, and practising integrity in the public sector. “(While) ensuring the LCS project is not abandoned is important, holding accountable those responsible for this problematic project is (also) vital.”

Last Saturday, Anwar had said Putrajaya had no other option but to complete the LCS project as it had used too much capital to be discontinued.

He said this when questioned by reporters on the Finance Ministry’s new special purpose vehicle to take over BNS, a decision which was announced by Defence Minister Datuk Seri Mohamad Hasan.

Troubles in the LCS project became known after the Public Accounts Committee disclosed that not a single ship had been completed, although the government had paid RM6.083 billion to BNS. According to Mohamad later, the LCS project will be monitored by the Project Monitoring Committee, jointly chaired by the secretaries-general of the Defence Ministry and Treasury.

– The Vibes, May 29, 2023

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