KUALA LUMPUR — Boustead Heavy Industries Corp Bhd (BHIC) has lodged a report with the Malaysian Anti-Corruption Commission (MACC) on possible irregularities in the RM9 billion littoral combat ship (LCS) project, which its associate Boustead Naval Shipyard Sdn Bhd (BNS) is undertaking.
BHIC said the findings of the forensic audit, which was commissioned in February 2020, were handed over to the MACC in September.
“This stands testimony to the BHIC’s group commitment in fighting corruption and bribery at all levels of the organisation and in all its business dealings. This is in line with its core corporate values of belonging, honour, integrity and commitment,” BHIC chairman Admiral Tan Sri Datuk Seri Ramlan Mohamed Ali, who is also a retired Chief of Navy, said in a statement today.
The project was awarded to BNS by the Ministry of Defence in 2011, and the order was for six LCSs to be constructed for the Royal Malaysian Navy.
News reports revealed that the first ship should have been delivered in April 2019, but not one ship has been completed although the government had already paid the company RM6 billion. Its first delivery was originally scheduled for 2017, according to a Dec 16, 2011 filing with Bursa Malaysia.
“BHIC Group would like to categorically state that it takes a zero-tolerance approach to bribery and corruption outlined in the MACC Act 2009. As enshrined in the group’s Anti-Bribery and Anti-Corruption Policy Statement, we abide by the Guidelines of Adequate Procedure pursuant to Section 17A of the Act,” BHIC said in the statement.
In fact, it highlighted that the board of directors have already undergone major revamp in 2019 and 2020 to enhance corporate governance by appointing personalities known for their expertise in their respective fields.
“BHIC reiterates that the company will extend its fullest cooperation to MACC and other authorities in any investigation on the LCS project. It has had several discussions with MACC following the submission of the forensic audit report,” it added.
Former deputy defence minister Liew Chin Tong, who is also a senator, told the Dewan Negara in September that Putrajaya’s special investigation committee on procurement, governance and finance, had discovered that RM1 billion of the RM5.94 billion paid for the warships could not be traced.
In August, Defence Minister Datuk Seri Ismail Sabri Yaakob said the ministry was considering three options to resolve the delay in the delivery of six LCS units, as BNS had completed none of the orders.
These options were for the appointment of Naval Group France as a rescue contractor to complete at least two LCS units, the completion of at least two units by BNS with the remaining contract ceiling, or the termination of the contract with BNS.
In August, The Edge weekly quoted industry sources as saying that the delays stem from BNS’ inability to come up with a good schematic design plan for the construction of the vessels. The schematic plan must be detailed and take into consideration all aspects, from engineering to workflow, so that the construction phase can be done smoothly.
BHIC, at the time, did not respond to questions from The Edge about what caused the delays.
BNS is majority-owned by Boustead Holdings Bhd, which has a 68.84% stake. BHIC owns a 20.8% stake in BNS through its direct subsidiary Perstim Industries Sdn Bhd. The remainder is owned by Lembaga Tabung Angkatan Tentera (LTAT), while the Ministry of Finance holds one share.