In a statement, Ismail said the former government’s inefficiency and delayed actions caused Boustead Group to incur losses and impacted other LCS projects.
The LCS construction project, worth RM9.128 billion was awarded by the defence ministry in 2011 but to date, no vessel has been handed to the Royal Malaysian Navy.
The project was for six LCSs to be handed over to the navy by April 2019. It has been reported that the government has already paid RM6 billion of the total amount.
Ismail blamed former defence minister Mohamad Sabu for the problem, saying he lacked forward thinking and that resulted in the issues faced by the project now.
“After PH took over the country’s leadership, the project lost its direction for 22 months and all work was stopped because it was overwhelmed with investigations,” he said.
Ismail added that the delays led to a loss of RM50 million every month, which negatively affected the Armed Forces Fund Board and its 130,000 contributors.
According to Ismail, the project’s contractor and sub-contractor, Boustead Naval Shipyard (BNS), had applied for three “variation orders” to be approved under the PH administration. In Feb 2018, it also offered to absorb RM400 million in losses so the project could be continued, but no decision was made.
He said the defence ministry had approved the orders in January 2019, subject to the final decision of then finance minister, Lim Guan Eng.
“However, no decision was made by the finance ministry. The failure to obtain an answer on the three variation orders severely affected the development of other shipbuilding divisions.
“In November 2019, the original equipment manufacturers halted operations as BNS was facing cash flow problems.”
Previously, Mohamad and his then deputy, Liew Chin Tong, had said Putrajaya’s decision to allow Boustead to continue with the LCS project did not put the navy’s interests first.
They said the continuation of the project, which had been delayed since 2019, seemed to be more in the interest of BNS.
Ismail claimed that Mohamad’s statement was simply a “political provocation”, adding that it showed his immaturity in dealing with the LCS issue.
He also denied the allegations, saying the Cabinet’s decision to go ahead with the project was made after considering the current situation, interests of the navy, capabilities of contractors and the economic impact.
“After conducting an in-depth study on all aspects of this project, the Cabinet found that there were more benefits and advantages for the government and people if this project was continued,” he said, adding that it would save some 8,000 jobs.
On the status of the RM1 billion in funds that went missing from the project’s account, Ismail said the MACC was still investigating the matter and his ministry did not wish to intervene.