KUALA LUMPUR, Aug 7 — Datuk Seri Ahmad Zahid Hamidi has denied any involvement in the alleged financial improprieties regarding the Littoral Combat Ships (LCS) project, saying that he was not defence minister at the time the project was awarded.
The LCS project is the largest procurement in the history of the Ministry of Defence (Mindef) with a total cost of RM9 billion. The said contract began in 2013 with a ten-year time frame and six LCS ships were expected to be built and delivered to the country by the end of 2023.
"I held the position of Minister of Defence from April 2009 to May 2013. So any party that caused the construction delay should be responsible for providing an explanation to the Public Accounts Committee (PAC).
"(This is to) fully support the disclosure of this delay," he reportedly said when contacted by MalaysiaGazette. Umno's party organ, Umno Online, republished the report.
Cost overruns for the LCS project totalled RM1.4 billion, with RM400 million used to pay old debts from an old patrol vessel project, PAC chairman Wong Kah Woh said on August 4.
The Ipoh Timor MP added that 15 per cent of the equipment for the LCS project worth RM1.7 billion has also become obsolete after sitting in store for too long.
"The Littoral Combat Ship (LCS) was given to Boustead Naval Shipyard Sdn Bhd (BNS) through direct negotiation and we have paid them up to RM6.083 billion so far.
"However, not even one of the LCS ships has been delivered. According to our timeline, five LCS ships should have been completed and handed over to us by August 2022,” said Wong.
Umno Online quoted Ahmad Zahid saying that the LCS, built by BNS, is a subsidiary of Boustead Holdings Bhd, whose largest shareholder is Lembaga Tabung Angkatan Tentera (LTAT).
"Referring to the audit report from PAC, the contract to Boustead is in accordance with the direct negotiation procurement application guidelines dated April 17, 2002.
"Clearly it has nothing to do with me, in fact LTAT itself is the largest shareholder in the LCS construction company," he reportedly said, adding that he is ready to provide evidence or explanation to the PAC to complete the proceedings, soonest.
The issue was first reported in the Auditor General's Report 2019 Series 1 (Ministry/Federal Department Compliance Audit) and the Investigation Report of the Government Governance, Procurement and Finance Investigation Committee (JKSTUPKK), published in 2019.
Umno Online also reported Wong saying that Ahmad Zahid would be called by the PAC early next month, to complete the proceedings regarding the failure to supply the six LCS worth RM9 billion.
The report said that the former Commander of the Royal Malaysian Navy (RMN), Tan Sri Abdul Aziz Jaafar and the main contractor of the LCS ship project BNS, would also be summoned.
According to Wong, the appointment of BNS was carried out through direct negotiations and until last October, a total of RM6.083 billion had been paid, and not one LCS ship had been built even though according to the schedule two LCS ships should have been built so far.
When asked by reporters, he said that out of RM1.4 billion extra cost, RM400 million was used to pay old debts from the NGPV project, RM300 million was used for an integration facility in Cyberjaya, while the rest are cost overruns.
He also slammed Mindef for not considering the "benefit of end-user” when they are making the purchase of the combat ships.
"At the beginning, Mindef agreed to purchase the Sigma model but it was changed to Gowind on July 11 upon the proposal of BNS.
"Even (Admiral Tan Sri Abdul Aziz Jaafar), the then chief of Navy said that such a decision is gravely wrong,” said Wong.
Wong then suggested the government declassify the reports related to the procurement of LCS ships for public scrutiny.
He also urged the Malaysian Anti Corruption Commission (MACC) to take immediate action on PAC's findings and called for Mindef to present a progress report on the LCS project every three months.
"We understand that this project has been delayed for a long time, and there hasn’t been much progress over the last few years and has even stopped working,
"Therefore we want Mindef to report to us every three months until the project is completed,” said Wong.