Lawmakers, activists demand answers over delayed combat ship project

Updated at 10:41 a.m. ET on 2022-08-09

Calls are growing louder for Malaysia’s government to explain why a multi-billion dollar project to build littoral combat ships has produced nothing after eight years, with Transparency International’s local chapter calling it “a colossal procurement and governance failure.”

As he responded to questions in parliament on Monday, Defense Minister Hishammuddin Hussein – who initiated the project back in 2014 – said the first of these six ships for the navy would be completed “within the next year or two.”

He did not give a reason for the delay.

“We are trying to make sure our ship reaches the Royal Malaysian Navy. I am also disappointed but we must look forward,” Hishammuddin said.

Malaysian shipbuilder Boustead Naval Shipyard Sdn Bhd (BNS) has been paid just over 6 billion ringgit (U.S. $1.36 billion), according to a report released by Parliament’s Public Account Committee last week, but none of five of these ships scheduled for delivery this month has made it to port.

Meanwhile, Transparency International-Malaysia, part of the global anti-corruption watchdog group, called for a probe.

“With all this in place, how could the LCS [Littoral Combat Ships] project, which started in 2013 be allowed to become a colossal procurement and governance failure for so long,” it said in a statement Monday, noting that the project began before the contract was signed in 2014.

“How could they collectively have missed all the red flags? Where is the oversight, governance and accountability?”

Muhammad Mohan, the president of Transparency International-Malaysia, proposed stopping payments until the ships were delivered and for authorities to investigate contractors and subcontractors to determine if unnecessary, intermediary “dummy companies” were used.

The six-ship, 9 billion ringgit ($2 billion) award in 2014 to BNS, a subsidiary of Boustead Heavy Industries Corp Bhd, is the largest in the history of the country’s defense ministry.

On Thursday, Public Accounts Committee chairman Wong Kah Woh submitted his bi-partisan group’s 250-page report for parliamentary debate after a two-year investigation of the project.

“The result of the proceedings found that the LCS project was awarded to BNS through direct negotiations, with the government paying 6.083 billion ringgit, but that not one LCS ship had been completed despite the original schedule stating that five ships would be ready to be handed over by August 2022,” Wong told reporters.

The committee found 1.4 billion ringgit ($314 million) in overspending, including 400 million ringgits ($90 million) to pay debts from an old patrol ship project, Wong said as he called on the ministry to keep the committee informed about the project.

“The defense ministry is to present a substantive plan on military procurement to the parliamentary special select committee on defense and security from time to time by involving all stakeholders,” he said.

Wong said his committee recommended that the Malaysian Anti-Corruption Commission (MACC) act on his group’s findings and those from the Special Committee on Governance Investigation, Government Procurement and Finance. Prosecution, if called for, should be expedited, the MP said.

The committee also recommended that the ministry review all options and set the best direction for the project to ensure that public money is spent responsibly, and for the ministry to present a progress report every three months until the project is completed.

MACC probe

The commission is in the final stages of an investigation into the project, Malaysian media quoted chief MACC commissioner Azam Baki as saying over the weekend. But, he added, findings could not be revealed at this time because they involve sensitive matters.

“Investigations into the matter have been going on for the past few years. I have said many times that we are investigating and are nearly at the end of the probe,” he told reporters.

“I have to be mindful of the sensitivity of the investigation as it does not only involve the MACC, but other agencies as well, including the Attorney General’s Chambers,” he said.

Opposition seeks stoppage

Opposition leader Anwar Ibrahim, meanwhile, has called for construction of the project’s sixth ship to be canceled.

“We recommend Putrajaya to complete existing projects and stop the 571 million ringgit ($128 million) LCS project, which hasn’t started. This money should be returned to the people to address the rising cost of living and solve issues concerning the welfare and pension of the Armed Forces,” he told reporters at Parliament last week.

On Monday, Mohamad Sabu, who served as defense minister during the Pakatan Harapan government (2018-2020), and his former deputy, Liew Chin Tong, demanded that the defense ministry declassify documents and letters linked to the project, according to local media reports.

“Without the following documents being declassified, many questions will remain unanswered,” Mohamad Sabu said.

Nisha David and Noah Lee in Kuala Lumpur contributed to this report.

CLARIFICATION: This report has been updated to clarify the comments by the head of the anti-corruption commission.