PAC urged to probe non-delivery of warships

A littoral combat ship similar to the ones supposed to have been delivered by Boustead Naval Shipyard. (Bernama pic)

PETALING JAYA: A defence analyst has called for a Public Accounts Committee (PAC) probe into the delay in Boustead Naval Shipyard’s delivery of six warships for Malaysia’s defence.

Lam Choong Wah, formerly a fellow at Refsa (Research for Social Advancement), told FMT an in-depth investigation by the parliamentary body would be appropriate because of the company’s accountability to taxpayers.

He said PAC must find out the reasons for the Boustead Holdings unit’s failure to fulfil its obligation and added that the company needed to go through a holistic revamp to resolve the issues of wastage, inefficiencies and corruption.

The project, worth more than RM9 billion, was awarded in 2014 and the order was for six littoral combat ships (LCS) to be constructed. The first ship should have been delivered in April 2019, but not one ship has been built although the government has paid the company RM6 billion.

Defence Minister Ismail Sabri Yaakob said recently that Putrajaya was considering one of three courses of action: salvage the construction of at least two ships by Boustead, allow Naval Group France to build the two vessels through a deed of assignment or terminate the contract with Boustead and find other ways to save the project.

Lam criticised the options, saying the first two would see the government shortchanged and the third would see it bailing out the project.

“This is the first time the defence ministry has acknowledged that the LCS programme had encountered a big problem and potential corruption,” he remarked.

“According to the minister’s revelation in Parliament, the main problem lies with the contractor, Boustead, and the government is hesitating to bail out the programme.”

He said the government needed to strike a balance between its financial concerns and the nation’s defence needs, adding that the country’s defence would be struck a “fatal blow” if the arrangement with Boustead were to fail.

He urged Putrajaya to establish a review committee composed of representatives of the defence and finance ministries as well as shipbuilding experts and said the entire programme should be restructured.

Aruna Gopinath, who has retired from the National Defence University, noted that navy veterans last year lodged a report concerning the project with the Malaysian Anti-Corruption Commission (MACC).

She said a decision on whether to terminate the contract could be made only after completion of the MACC probe.

“But MACC will have to investigate the interests of all of the shareholders,” she told FMT.