KUALA LUMPUR – A graft watchdog has called for the Attorney-General’s Chambers (AGC) to review all contracts related to the littoral combat ship (LCS) project, after findings were published by Parliament’s Public Accounts Committee (PAC).
Malaysia Corruption Watch (MCW) president Jais Abdul Karim said the decision to not seek the approval of the AGC for the SA6 supplemental agreement needs to be re-examined and given serious attention.
He also urged the government and the Defence Ministry to emphasise transparency and accountability in the management of the LCS project, such as easily accessible information on its cost and progress.
“MCW also urges rigorous monitoring and evaluation to ensure that the project is completed in due time with lower costs. The delay in completing the detailed design and implementation of the contract needs to be scrutinised.
“All contracts must be adhered to and full supervision must be tightened from time to time to ensure the performance of the contractors.”
Jais added that the acquisition of Boustead Naval Shipyard Sdn Bhd (BNS) by special purpose vehicle Ocean Sunshine Bhd should be transparent to restore the trust of shareholders, banks and suppliers in the LCS project.
According to the PAC report, a Sixth Supplemental Agreement (SA6) for the project was signed between the Defence Ministry and BNS on May 26 this year.
“The SA6 did not get the AGC’s consent, which said the Defence Ministry was informed that further actions are needed for the agreement draft and should have been resubmitted to the AGC before it was signed.
“The Defence Ministry’s decision to go behind the AGC by signing the SA6 is an improper action that should not have been done as it can lead to legal implications to the government. This sort of decision cannot be repeated,” read the report, which can be found on Parliament’s official website.
Later, Defence Minister Datuk Seri Mohamad Hasan refuted PAC findings, saying AGC representatives were always present during the negotiation process leading up to the signing of the agreement.
In August, Boustead Heavy Industries Corporation Bhd (BHIC) transferred its 20% ownership stake in BNS to Ocean Sunshine for a symbolic RM1.
BNS, known for its participation in naval ship construction, repair, and maintenance, faced substantial losses of RM150.12 million and carried net liabilities of RM848.45 million for the fiscal year ending December 31, 2022.
The government also forked out an extra RM2 billion in funds and ordered a reduction in ships from six to five. – October 11, 2023