PAC tells Defence Ministry to get proper explanation from BHIC on littoral combat ships

KUALA LUMPUR, Oct 6 — The Public Accounts Committee (PAC) has requested the Defence Ministry (Mindef) to get a full explanation from Boustead Heavy Industries Corporation (BHIC), the company awarded a government contract to build six littoral combat ships (LCS) for the navy.

PAC chairman Wong Kah Woh said there were currently two conflicting statements by BHIC and Mindef on the LCS project and that there had been parts that had been redacted in a forensic audit report about the procurement deal received previously.

“In the previous session, BHIC explained that the company received the forensic report that has been redacted from Mindef before submitting it to the PAC secretariat to be uploaded on the PAC website.

“However, Mindef secretary-general Datuk Seri Muez has stated to PAC that Mindef never received the report from BHIC and was not involved in partial redaction of the forensic report.

“PAC hereby requests that Mindef get an explanation from BHIC and submit comments to the PAC regarding what actually happened,” Wong told a news conference at Parliament today after chairing a PAC session.

On the audit report of the Governance Investigation Committee, Government Procurement and Finance (JKSTUPKK), the PAC maintained that there is no need to redact aspects of the report.

“The PAC is not satisfied and did not receive an explanation from the Attorney General’s Chambers regarding the reason for redaction.

“The PAC insists that the report in question be fully declassified as stated in the recommendation by this Committee and the Cabinet should instruct as such,” he added.

On August 17, Wong reportedly said the redaction of certain information on the declassified LCS audit report was unnecessary.

He was referring to several facts in the report which were redacted by the Prime Minister’s Department, prepared by the JKSTUPKK.

Wong added that the redacted information was related to the director and shareholders of Boustead Holdings Bhd, Boustead Naval Shipyard (BNS) and Perstim Industries Sdn Bhd.

He also reportedly said that the information was openly available, and it can be found via a Companies Commission of Malaysia (SSM) search.

During the press conference today, Wong also said the PAC was informed by the Malaysian Anti-Corruption Commission (MACC) that five investigation papers had been opened on this issue: one in February 2021, two in January 2022 and one each in February 2022 and August 2022 respectively.

“The PAC will provide comments on all seven actions that have been taken by Mindef on the recommendations of this committee’s report for the LCS ship procurement and will present this report in Parliament later,” he said.

In its report released on August 8, the PAC said BNS was awarded a RM9.128 billion 10-year contract from 2013 to 2023 for the supply of the six LCS.

The PAC report also said the Malaysian government had to date already paid RM6.083 billion to the contractor, but none of the six LCS vessels has been completed. Based on the original schedule, five of the six LCS vessels should have been completed and handed over by August 2022.

According to the PAC, the project had run into cost overruns of RM1.4005 billion as the government’s payments to the Boustead Naval Shipyard were not fully used for the LCS project, noting that the RM1.4 billion overrun included RM400 million that was spent to pay off an old debt for the New Generation Patrol Vehicle project.

The PAC report said equipment kept in storage for the LCS project is estimated to be worth RM1.7 billion, with an estimated 15 per cent of these already obsolete.