Malaysian Oversight Body to Question UMNO Chief in Navy Ship-Building Probe

Ray Sherman and Noah Lee
Kuala Lumpur
2020-12-18
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Malaysian Oversight Body to Question UMNO Chief in Navy Ship-Building Probe The Royal Malaysian Navy’s fourth littoral mission ship is seen at the Wuchang Ship Building Industry Group’s shipyard in Wuhan, China, Dec. 16, 2020.
[Courtesy Royal Malaysian Navy]

A parliamentary committee here announced this week it would summon ex-defense minister and UMNO party President Ahmad Zahid Hamidi and other officials for questioning into why a Malaysian firm failed to deliver on time on a multi-billion-ringgit contract for building combat ships.  

The Public Accounts Committee opened an investigation last month into the RM 9 billion (U.S. $2.2 billion) contract awarded to Boustead Naval Shipyard (BNS) Sdn Bhd in 2014 for the construction of six littoral combat ships. But not a single ship has been finished.

 So far, eight people have testified before the committee.

 PAC “will continue with its proceedings related to the littoral combat ships in early January 2021, by calling in next witnesses such as former Defense Minister Ahmad Zahid Hamidi, former Navy Chief Abdul Aziz Jaafar, and the representative from the main contractor of the LCS project,” committee chairman Wong Kah Woh told reporters Thursday.

“The non-delivery of the ships not only reflects the weakness in terms of governance, procurement, and finance but also impacts the country’s national security and defense,” he said.

 Littoral mission ships are designed to conduct maritime patrols, surveillance and search-and-rescue missions.

 As of October, just over RM 6 billion ($1.5 billion) had been paid out for the contract, although at least two of the ships should have been built and handed to the Royal Malaysian Navy by then, according to the original ship-building schedule, Wong said.

 The committee, he said, would visit the shipyard in Perak state next month as part of the probe. PAC plans to submit its report to Parliament at the legislature’s next session in March 2021.

 According to an Auditor General’s report published earlier this year, the Ministry of Defense failed to claim RM 116.5 million ($28.8 million) in damages, which the Boustead Naval Shipyard owed it for being eight months late in constructing one of the littoral ships.

On Friday, Zahid, president of the United Malays National Organization – a main party in the ruling coalition – responded to the comments from the PAC chair.

“I held the Defense Minister’s post from April 2009 to May 2013. I would like to clarify that the [ship] supply failure by Boustead only arose in 2019 when I no longer held the post,” he said in a statement.

But Zahid added that he would cooperate with the parliamentary committee in its investigation.

Earlier this week, Ismail Sabri Yaakob, the current defense minister, told Parliament that his ministry was weighing options for what to do with the contract to build the littoral combat ships.

These included releasing a RM 3 billion ($742.6 million) payment to allow the shipyard to proceed with the project or to terminate the Boustead contract outright.

The project is still within the contract’s timeline, which expires in 2023, he said.

“If we are to let BNS continue, we must establish if they are up to the task,” he said.

On Nov. 26, Boustead Heavy Industries Corporation Berhad (BHIC), the parent company of BNS, announced that it had filed a report with the Malaysian Anti-Corruption Commission into possible irregularities in the littoral ship project after it commissioned an audit.

“This stands testimony to the BHIC’s group commitment in fighting corruption and bribery at all levels of the organization and in all its business dealings. This is in line with its core corporate values of belonging, honor, integrity and commitment,” Ramlan Mohamed Ali, the group’s chairman and a retired navy chief, said in a statement.

Ships built in China

In other developments related to Malaysia’s procurement of military hardware, the navy announced earlier this week that the last of four littoral mission ships being built by China was ready for delivery from the shipyard in Wuhan.

The patrols ships were built through a RM 1 billion (U.S. $256 million) contract signed between BNS and the China Shipbuilding & Offshore International Co. Ltd. in 2017.

Meanwhile on Friday, the Royal Malaysian Air Force chief announced that the military branch was looking to replace is fleet of Hawk jetfighters with 36 aircraft that could be used for light-combat operations and training flights.

Dizhwar Bukhari contributed to this report from Kuala Lumpur.

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