PKR vice-president Rafizi Ramli has accused the government of handing a RM740 million contract through direct negotiation to ailing TH Heavy Engineering Bhd (THHE).

He alleged this was a bid to cover up Lembaga Tabung Haji’s mistake of investing in THHE, and would come at the expense of national security as the contract required THHE to provide the Malaysian Maritime Enforcement Agency (MMEA) with three offshore patrol vessels (OPV).

He claimed this is despite THHE having no experience in the field,

“(Finance Minister Najib Abdul Razak’s) move to use an OPV supply contract to cover up Lembaga Tabung Haji’s weaknesses in investing in THHE and becoming exposed to losses up to RM554 million is desperate and very irresponsible.

“The security of Malaysia’s shores especially in east Sabah is already threatened with repeated instances of kidnapping. Awarding a contract for building OPVs to a company that has absolutely no experience is asking for trouble, because there is a big likelihood that the OPVs cannot be completed on schedule.

“This will hamper efforts to improve the security of our waters, and pirates and kidnappers will continue to be a threat,” he said in a statement today.

Rafizi also furnished a three-page letter dated June 2 to the media, which he claimed to be from the Finance Ministry and addressed to the director-general of the MMEA.

The letter purportedly from the ministry’s government procurement division informed the MMEA of the approval of the directly negotiated contract, following a Ministry of Finance government procurement committee meeting chaired by Najib on May 31.

The letter stated that THHE is to supply, deliver, test and certify three OPVs for the MMEA at an estimated cost of RM740 million, on the condition that THHE cooperated with a local company with expertise and capabilities in shipbuilding.

Rafizi said this condition is telling, as THHE has no experience in building OPVs at all.

“THHE is a company that builds facilities for offshore platforms. Since it is facing problems in its current business to the extent of facing delays and being suspended by Petronas Carigali from participating in its procurement contracts, surely THHE will face problems as well in providing the OPVs,” he added.

Malaysiakini is unable to independently verify the authenticity of the letter and has contacted Tabung Haji for clarification.

THHE told Bursa Malaysia in a filing yesterday that it is in preliminary discussions with relevant government agencies to secure the contract to supply offshore patrol vehicles.

"However, at present moment due to the preliminary nature of these discussions, the terms of the contract remains to be negotiated and is in a state of flux and therefore the company will be making appropriate announcements (if any) when the time materialises," it said.

It was responding to a The Edge report that it is close to securing a RM700 million deal.

THHE share price has shot up from 6 sen in mid-July to close at 16 sen today, prompting an 'unusual market activity' notice from Bursa.

The PKR vice-president has been a vocal critic of Lembaga Tabung Haji’s investments in THHE, which amounted to RM575 million.

He previously claimed that the pilgrimage fund already lost RM228 million, and stood to lose a total of RM554 million if the company folded as a result of failing to meet contractual obligations, and being unable to pay its creditors.