KUALA LUMPUR, May 29 — Anti-graft watchdog Transparency International Malaysia (TI-M) has today called on Datuk Seri Anwar Ibrahim’s administration to hold those responsible for the Littoral Combat Ship (LCS) project accountable.

Just days after Anwar said the government had "no choice” but to take over the troubled Boustead Naval Shipyard Sdn Bhd (BNS) to complete the project, TI-M president Muhammad Mohan said his organisation acknowledged the rationale behind Anwar’s decision since some RM6 billion of taxpayers’ money has already been paid out for the crucial defence project.

However, Muhammad reminded the government to not hide behind the Official Secrets Act or the pretext of "national security” should corruption be found in the awarding and management of the project.

"Datuk Seri Anwar Ibrahim has repeatedly stated his firm commitment to fighting corruption and improving governance and integrity practices in the public sector.

"Ensuring the LCS project is not abandoned is important. Holding those responsible for this problematic project accountable for their actions is vital,” he said in a statement here.

Muhammad said there were issues on governance and transparency related to the problematic LCS project which remained unanswered, including the rationale for awarding it to BNS in 2011 through direct negotiation.

He said red flags should have been raised when BNS first indicated its inability to deliver the LCS within budget, while also questioning those responsible for approving changes to the design specification from the Royal Malaysian Navy’s (RMN) preferred LCS.

Muhammad said these were some of the questions that TI-M had previously raised in August 2022.

"However, a quick look at the project status will show the following abysmal results; the first vessel was slated to be delivered in April 2019 — today after four years, not a single ship has been delivered; the project cost has increased from RM9 billion to RM11.2 billion and the RMN will now only be getting five LCS instead of six,” he said.

On Friday, Defence Minister Datuk Seri Mohamad Hasan said that the Finance Ministry has formed a special purpose vehicle (SPV) to acquire BNS to complete the delayed LCS project at a reduced scale.

Mohamad said the LCS project will still come under the Project Monitoring Committee (PMC) jointly chaired by the Treasury secretary-general and the Defence Ministry secretary-general.

In 2011, BNS won a RM9 billion contract to provide six LCS to the RMN, which were initially meant to be delivered starting in 2019.

In 2018, the short-lived Pakatan Harapan government formed a special committee to investigate the contract, which eventually discovered that over RM6 billion had already been paid out from the total contract amount even before a single vessel was delivered.

A forensic audit was also commissioned the same year on Boustead Heavy Industries Corporation Bhd (BHIC), the parent of BNS, which eventually led to criminal breach-of-trust charges against former BNS managing director, Tan Sri Ahmad Ramli Mohd Nor, last year.