BOUSTEAD Naval Shipyard Sdn Bhd (BNS) is facing legal action from two main contractors who had been terminated from the littoral combat ships (LCSs) project.

In their suit filed on September 27 at the Kuala Lumpur High Court, Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED) said that BNS’s decision to revoke their 12 letters of awards (LOAs) was invalid.

CAD and CED were previously appointed by BNS to purchase equipment from the original equipment manufacturers (OEMs) to build the vessels. 

Last month, BNS cancelled the LOAs issued to the two companies in view of allegations of misconduct, illegality, and fraudulent dealings. 

In a statement issued yesterday, BNS denied the assertions made by the two companies, claiming they were baseless and unjustifiable. 

It said it was positive it could prevail in the action. 

BNS’ major shareholders are Boustead Holdings Bhd, which owns a 68.85% stake; followed by Boustead Heavy Industries Corporation Bhd (BHIC), 27.77%; and armed forces fund, Lembaga Tabung Angkatan Tentera (LTAT), 10.38%. 

The LCS project has been in the news following findings of mismanagement by the Public Accounts Committee (PAC) and the Governance, Procurement and Finance Investigation Committee. 

None of the vessels has yet to be delivered to the Malaysian navy. 

In the action, CAD is demanding these outstanding payments from BNS: RM880,068.21, €39.87 million, £3.78 million and 55.94 million Swedish kronors. 

CED is demanding that BNS pay an outstanding amount of RM216,652,305.94. 

Both companies are suing for damages deemed appropriate by the court. 

CAD was incorporated in Malaysia on October 27, 1983 as a joint venture between BHIC Defence Technologies Sdn Bhd (BHICDT) and RD Investment AG (RDI). Its directors are Dr Salihin Abang and Syed Zahiruddin Putra Syed Osman, both nominated by BHICDT, and Gordon Douglas Hargreave and Franck Theodor Hoffman, both nominated by RDI. 

CED was incorporated in Malaysia on February 23, 2012, as a wholly owned subsidiary of CAD. Its directors are Salihin and Gordon Douglas. 

In their legal action, CAD and CED also want the court to declare that Salihin and Syed Zahiruddin had wrongfully conspired and acted in concert to injure and defraud the two companies. 

They said that these two directors had also breached their fiduciary duties owed to the companies. 

They also want an injunction to stop BNS from communicating or contracting with their OEMs under the LCS project in connection with the scope of work under the 12 LOAs. 

They further want an injunction to stop Salihin and Syed Zahiruddin and their agents from utilising, disclosing, distributing, or propagating any internal documents or information of the two companies to any unauthorised persons or the general public. 

Case management for the matter has been fixed for October 11. 

BHIC said it was currently assessing any financial and operational impact of the action to the group. – October 5, 2022.