MP SPEAKS | Shortly after the Public Accounts Committee (PAC) report on the procurement of littoral combat ships (LCS) was tabled, a reporter friend texted me, asking “How did you feel?”
I replied: “Heart-breaking.”
We have conducted 10 proceedings, including a site visit at Boustead Naval Shipyard Berhad’s (BNS) dockyard in Lumut, calling 21 witnesses altogether. Eventually, a report of 247 pages, along with the 489 pages of the Hansard and 192 pages of slides were tabled as the full report.
The PAC decided to visit BNS Dockyard after getting evidence from the chief secretary of the Defence Ministry, witnesses from BNS, and former defence minister Ahmad Zahid Hamidi.
Site visit on Dec 11, 2021
We reached the dockyard at 9am on Dec 11, 2021. The proceeding started at 9.05am with the presence of witnesses from the Defence Ministry, the Royal Malaysian Navy, Boustead Heavy Industries Corporation Bhd (BHIC), and BNS.
The three important witnesses were the CEO of BHIC, Sharifuddin Md Zaini, the BNS LCS project director Capt (r) Azhar Jumaat, and the former navy project team head Rear Admiral Mohd Shaiful.
The proceeding lasted exactly three hours and ended at 12.01pm, and everyone proceed for the site visit.
The PAC was first brought to visit the warehouse. There are altogether 13 stores at the warehouse keeping LCS-related equipment, five of which are specifically for LCS equipment and the remaining eight are BNS general stores that have a mix of LCS and general equipment.
We visited a few stores. There were parts for ammunitions, for ship-building, and so on. Notably, there were some packages of Smart TVs, yes, for LCS use, that were kept in the store. We all know Smart TVs will no longer be that smart after a few years.
I am not too sure about others, particularly parts that involve the technology of the warship itself. From what we checked, many were bought way back in 2013, 2014, and 2015. A question in mind is whether the same will still be “smart” enough for the current needs with the advancement of technology day to day.
We were told the total equipment value on storage is RM1,757,791,266.02. I asked BNS how much of it has become obsolete, the answer given was approximate 15 percent. Meaning an approx. RM263,668,689.90 loss.
Has all the equipment been paid for by BNS? No, not all have been paid. That is why we can read there were huge debts owed to the original equipment manufacturers, which eventually caused the work and supply to stop.
We were then brought to visit LCS1 at the construction site. Looking at the outfit, one would not be able to tell that it was the same warship that was “launched” in 2017. But we know it is. Of course, the much-disputed mast is no longer there.
We went into the main block to see the progress of the actual construction. The Defence Ministry informed the PAC that the progress of the actual construction is 44 percent for LCS1.
We spent around one hour in LCS1 and went to the bus. The bus did drive us past the whole construction site for LCS 1 to LCS 5. There are no longer workers at the construction site, no locals or foreigners, no contractors, and no ongoing works. Totally zero, totally stalled. It is heart-breaking. As we all know, RM6 billion has already been spent.
No more money
In the earlier proceedings, we were told that BNS’ financial position is in dire straits due to the financial mismanagement of the company.
PAC member Wong Shu Qi asked whether all RM6 billion had been spent by BNS. BHIC CEO Sharifuddin admitted “memang duit kita sudah habis… company memang tidak ada duit dan memang akan lingkup pun besok silap-silap.” (Our funds had already run out, the company really has no money and can even fold tomorrow.)
Staff salaries had been cut since October 2020, EPF contributions have not been paid since May 2021. BNS is merely relying on some small jobs like repair works for the navy to survive. (Pg 49 Hansard)
Sharifuddin further informed the PAC that if BNS is gone, Boustead Holdings and the Armed Forces Fund Board (LTAT) will be affected severely. Plantations, Pharmaniaga, Boustead Properties and Boustead Hotels all will be affected. It will go as far as LTAT losing up to 46 percent of the fund size. (Pg 52 Hansard)
It is sad, really sad. Heart-breaking. The first thing in my mind was how could a company which landed an RM9 billion contract from the government come to this stage? It is more than mismanagement. Something is gravely wrong, with those who were in power and those who got the contract.
I hope the PAC Report on the LCS can help the nation by serving as a definitive textbook on how to not conduct defence procurement, and how power and processes should not be abused. The horror story of the LCS project shall serve as a lesson to those in power, now and in the future.
WONG KAH WOH is Ipoh Timor MP and PAC chairperson.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.