TRANSPARENCY International Malaysia (TI-M) has outlined measures that should be implemented by Putrajaya following the Public Accounts Committee’s revelation of the scandal involving the purchase of six littoral combat ships (LCS) for the navy.

The anti-graft group said it is important to ensure those responsible for the fiasco are held accountable and prosecuted.

“Any failure or delay to act by the government will show it lacks sincerity in its commitment towards institutional reforms and the fight to eradicate corruption,” TI-M said in a statement today.

“How many such debacles are going to surface before we learn our lesson that only leaders with integrity can be trusted?”

TI-M said the lack of good governance in the public sector is another reason Malaysia has for two consecutive years dropped spots in the Corruption Perceptions Index.

“Malaysia is now increasingly being known for its bad governance practices resulting in the loss of billions of ringgit of public funds, from 1MDB (1Malaysia Development Bhd) to this LCS project.

“Action has and continues to be taken on 1MDB; how long do we have to wait for those responsible for this yet another fiasco to be prosecuted?” it asked.

The anti-graft group made several recommendations that it said could be implemented immediately. The recommendations are:

– That no further payments be made until the delivery of ships meet contract specifications and is commensurate with the RM 6.08 billion (67% of the project value) that has been paid to date.

– To investigate all levels of contractors and subcontractors for the LCS contract to check if these were unnecessary, intermediary “dummy companies” used to unlawfully “take a cut” of the huge contract price.

– To implement a standard operating procedure for mid-stream audits to be conducted for all public sector projects that involve billions of ringgit. This will help spot potential issues and address them before they become a project risk that leads to delays and involve potential budget overruns.

– To mandate that all high-value, high-impact projects that involve taxpayer money be reviewed by parliament before they are approved, and ensure that competitive tendering processes are used.

– To take stern action if any civil servant is found to be negligent in discharging their fiduciary duties related to the project, specifically tasks related to oversight and reporting.

– To institute criminal proceedings against any person who is suspected to have committed offences under the various laws in Malaysia, notably, bribery, corruption and abuse of position, under the Malaysian Anti-Corruption Commission Act 2009.

The LCS programme, which began about 11 years ago, is worth RM9 billion. The contract was awarded to Boustead Naval Shipyard Sdn Bhd (BNS) to build the ships for the navy, but not a single vessel has been delivered.

However, despite the protracted delay, the government has paid RM6 billion to BNS, the largest shareholder of which is the Armed Forces Fund Board (LTAT) with a 61% stake.

A Public Accounts Committee (PAC) report found that BNS’ poor financials were caused by abuse of power and mismanagement.

The PAC also said the terms and conditions of the LCS contract are unfavourable to the government, as payment for the project was based on development and item procurement instead of the actual construction progress of the ships. – August 8, 2022.