THE defence minister, as well as the finance minister, must respond to parliament over the Public Accounts Committee (PAC) report on the procurement of littoral combat ships (LCS), a former defence minister and his deputy said.

In a joint statement, Mohamad Sabu and Liew Chin Tong said the Dewan Rakyat and the Dewan Negara should be allowed at least one day to discuss the PAC report.

“As the Dewan Rakyat session ends today, we would like to suggest to Prime Minister Ismail Sabri Yaakob, who is a former defence minister, to agree to a one-day special session early next month to find a solution to the LCS procurement issue,” both said today.

It is learnt that Mohamad and Liew will also be writing to the Dewan Negara president Rais Yatim to allocate a day during the sitting from August 8 to 16 for the debate on the PAC report. 

PAC today said in its report that the government’s due diligence on Boustead Naval Shipyard Sdn Bhd (BNS) had failed to detect the company’s financial weaknesses.

“As such, the government had to pay an upfront fee of RM1.36 billion to BNS, which is against government protocols,” said PAC in a statement.

“BNS’ poor financials were caused by abuse of power and mismanagement. As of 2018, BNS owed the OEM company RM801 million and another RM956 million to banks.”

According to PAC, BNS had appointed two other companies to procure equipment from the OEM company causing cost overruns.

PAC has released its report on the Defence Ministry purchase of LCS from BNS. Although the government has already paid RM6.08 billion, none of the LCS ships has been delivered. 

According to the original schedule, five LCS should have been delivered to ministry by this month.

According to PAC, the terms and conditions of the LCS contract was unfavourable to the government as payment for the project was based on development and item procurements instead of actual progress of the LCS.

Liew and Mohamad further said they both agreed with PAC’s proposal for a full declassification of the ministry’s report.

They also expressed disappointment with former prime minister Najib Razak and former defence minister Ahmad Zahid Hamidi for ignoring the then navy commander’s advice on the procurement.

Former navy commander Admiral Dr Abdul Aziz Jaafar had previously criticised the process. However the statement from Aziz was classified. 

“The government must transparently answer to parliament and the people about the direction of the LCS project.

“(Defence minister) Hishammuddin (Hussein) and the government must give transparent and clear evidence, and guarantee that there is no misappropriation of funds that will bring harm,” they added. – August 4, 2022.