BOUSTEAD Heavy Industries Corp Bhd (BHIC)’s latest report with the Malaysian Anti-Corruption Commission (MACC) on the possible irregularities in the RM9-billion littoral combat ship (LCS) project is a never-ending story of absent responsibilities. This latest report is intriguing and portrays a circus of deflecting blame.

An immediate question comes to mind as to whom the report was lodged against.

Forensic audits instituted by Mindef and BHIC led to this MACC report that has the making of a scandal. Although comparatively small by financial amount, this LCS project episode provides continuous fodder for cynicism and also instructive of how a seemingly good project can go awry due to incompetence among those in charge.

In 2014, the contract to design and build six LCS for the Malaysian Navy was signed between Mindef and Boustead Naval Shipyard Sdn Bhd (BNS), the contractor. Construction was based on the French Naval Group’s Gowind 2000 corvette design.

At least two ships should have been delivered in 2019. But no hulls have been launched so far due to inexperience, incapability, poor management and poor supervision from the top.

The main reason for the delay was the three variation orders that the navy insisted three years after the design and construction started.

Mindef and Putrajaya procrastinated on approving BNS’ request for the variation orders that initially had a figure of RM 1.9 billion, but later increased it to RM3 billion.

Meanwhile BHIC had to get funding from banks to meet expenditure. Payments to sub-contractors and suppliers were held back.

RM5.94 billion has been disbursed so far, out of which RM1 billion was reported unaccounted for. The answer to this billion-ringgit question should put behind bars either those in the BHIC/BNS management or somebody in Putrajaya. With the forensic audit report, MACC must now show it has teeth that bite.

Many veterans take a keen interest in this issue of the non-delivery of the LCS. As commanders, they know that duties can be delegated, but not responsibilities.

In this LCS project, command and control was lost, starting with LTAT (Armed Forces Fund Board), down to Boustead Holdings, to BHIC and lastly BNS. Command and control, checks and balances, and initiatives for problem solving, all important criteria for project success, were not apparent.

Glossy briefings by the project team hid absent site supervision by directors, which gave a feel-good atmosphere that all was well.

After all, why need to leave the cushy air-conditioned office in Kuala Lumpur for heaty Lumut, and why rock the boat when opportunities for fat salaries and bonuses were inherent right among those in government-linked companies?

Furthermore, it was only RM9 billion that came a-falling from the sky, nothing compared to the mega billions in other projects.

The current BHIC board of directors, especially those involved in the LCS task force, cannot claim ignorance to the problems faced in the project because they have been thoroughly briefed.

One wonders if the purpose of lodging the report with MACC was to deflect blame to previous management or to BNS. Operationally, BHIC and BNS were one entity for the LCS project.

Blame was put on the inability to come up with a good schematic design plan for the construction of the ships. This is only partially true, as the schematic design was already there to enable the project’s status of 56.6% completion.

The design plans need to be expanded to detailed engineering, like for piping works, which is a major construction challenge. Also, in view of the variation orders, the weight and centre of gravity needs to be recalculated, which requires help from the French consultants, but was not forthcoming.

While BHIC/BNS saw the project delay due to the variation orders, Mindef attributed the delay to cost overruns.

A variation order has implications of a budget overrun exceeding the RM9 billion allocated. Whereas cost overrun implies the contractor’s inefficiency, on which Mindef constantly puts blame.

The whole problem has to be seen in its entirety and with all levels of players taking responsibility – Putrajaya, Mindef, Navy, LTAT, Boustead Holdings, BHIC and BNS.

BHIC already has the experience in delivering the six New Generation Patrol Vessels (NGPV) after taking over from Penang Shipbuilding Construction in 2006. BHIC has the capacity to build and deliver the six LCS if the right people are put in charge.

The nonsense of deflecting blame has to stop. – December 3, 2020.

* Captain Dr Wong Ang Peng is a researcher with an interest in economics, politics, and health issues. He has a burning desire to do anything within his means to promote national harmony. Captain Wong is also a member of the National Patriots Association.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.